Monday, January 30, 2006

Kyoto & Cleantech Investment: an Australian Perspective

Mitra recently attended the Cleantech Finance and Investment Forum in Melbourne, and reports the impact of government policy on renewable energy development and cleantech investment in Australia.

At this conference were representatives from pension funds, investors, venture capital, local government and the renewable energy industry.

A couple of points stood out.

Contrary to what the government is saying about backing emissions reduction, speaker after speaker talked about moving their investment offshore - mostly to Europe - because of the lack of government support here. The most interesting example was Viridis Energy with investments so far in four countries in Wind, Hydro and Waste to Energy.


  • the lack of signing Kyoto means that the carbon credit trading system doesn't bring them the ability to sell their credits on the international market.
  • The failure to raise the Mandatory Renewable Energy Targets, which are set at the absurdly low level of 2% by 2010. Essentially both the investors, and the industry were saying that this in effect puts a cap on the renewable energy industry in Australia, so it was safer to take funds offshore.

Which could help explain the connection between the similarly aggressively unaggressive US carbon policy and the fact that carbon is currently trading at $1.70 per ton of CO2 in the US and $27.53 in the EU.

On the bright side, though, 8.1% of US venture investment was aimed at cleantech in Q3 2005, according to Cleantech Venture Monitor -- vs. 6.1% the previous quarter, a pretty hunky growth rate. Still, the US is vulnerable to yielding leadership in this emerging sector to other countries that are apparently more eager to have the business. (And the competition isn't just from Europe and Japan.)

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