Adam Lashinsky's dispatches on finance from the West Coast
Type Size  -  +
April 30, 2007, 5:16 pm

The green backlash?

By Adam Lashinsky, Senior Editor at Large

Some good stats out today from at outifit named Lux Research on the bubble aborning in green-tech investing. (Bubbles aren’t necessarily a bad thing, by the way, as a new book by my pal Daniel Gross argues.) Lux counts 930 energy startups in the world today, and firm president Matthew Nordan says “there’s no way that more than a fraction … can possibly succeed.” I made similar bubbleicious observations recently in a Fortune column.

Some other nuggets:

* There were $2.04 billion in green venture capital investments in 2006, about half again as much as the total invested since 1995.

* Just a few investments from VCs (think: Khosla Ventures, Kleiner Perkins, VantagePoint, etc.) account for a disproportionate share of the investments: the top 10% of investments have soaked up 39% of the cumulative VC capital deployed.

* “Major print media” mentioned green investing 3,485 times in 2006, representing 70% increases for each of the last two years.

If you read carefully, you’re starting to see a bit of a backlash on all things green, and not necessarily only from the Al Gore-hating rightwing media. Kurt Andersen penned a savvy piece in New York recently called So We’re Green. Now What? Yesterday’s New York Times also ran a thoughtful article in the Week in Review section on the limitations of carbon offsets. It also used the wish-washy headline-writing technique (see above) of asking a question: Carbon-Neutral Is Hip, but is it Green? Brandweek reports that Honda (HMC), a clever marketer, is pulling back on its Environmentology advertising campaign.

The point here isn’t that environmentalism is a crock. Just that merely driving a Prius or planting a tree doesn’t all by itself help the environment that much. Neither does owning shares of First Solar (FSLR), because it is one of the few green-tech success stories so far, or General Electric (GE), because it’s investing heavily in wind power. (Some interesting tidbits on First Solar, by the way, in this article by the one and only Carol Loomis.) And with every bubble comes a backlash. Watch for it.

Global warming has a better correlation with sunbursts than CO2. So what if glaciers are melting six feet a year…in two years in the early ’70s, glaciers grew by MILES! This past thirty years isn’t a spec on the timescale of this planet and people are trying to extrapolate it out to 2150. Gimme a break! People should read this: http://en.wikipedia.org/wiki/Maunder_Minimum

Posted By Sam, Oklahoma City, OK : May 2, 2007 7:46 pm

This article is choppy and non-substantive. “Green” is not an investment fad, it is an essential aspect of the continued thriving of the human life on this planet …True, the development of truly sustainable and “green” alternatives will be a precarious path just as any other engineering challenge. False, changes of beliefs and practices (eg: Prius, solar panels) won’t engender the sort of right thinking that will follow in the marketplace.

Posted By Clarice, San Diego CA : May 2, 2007 3:52 pm

“The problem that conservatives have with global warming has nothing to do with the facts or science and everything to do with the proposed remedies. ”

Really?

“In December 2004, Dr. Naomi Oreskes of the University of California at San Diego received widespread media attention for claiming her review of scientific literature showed scientists were in unanimous agreement that global warming is occurring and is being caused primarily by humans.

The May 1 London Telegraph, however, noted Oreskes’ “unequivocal conclusions immediately raised suspicions among other academics, who knew of many papers that dissented from the pro-global warming line.”

The newspaper reported that Dr. Benny Peiser, a senior lecturer in the science faculty at Liverpool John Moores University, “decided to conduct his own analysis of the same set of 1,000 documents [cited by Oreskes]–and concluded that only one-third backed the consensus view, while only 1 percent did so explicitly.”

The London Times then reported on Professor Dennis Bray, of Germany’s GKSS National Research Centre. Bray surveyed hundreds of international climate scientists, asking the question, “To what extent do you agree or disagree that climate change is mostly the result of anthropogenic causes?” Bray received 530 responses from climatologists in 27 different countries.

With a value of 1 indicating “strongly agree” and a value of 7 indicating “strongly disagree,” Bray reported the average of the 530 responses was 3.62, almost right down the middle. More climatologists “strongly disagreed” than “strongly agreed” that climate change is mostly attributable to humans.”

Posted By Gerald Apge, Alexandria, VA : May 2, 2007 1:24 pm

I’m a Republican, and I wear a suit and tie every day. Our number one objective as a nation must be to use less oil. I am constantly dismayed that people who call themselves “conservative” have no stomach for making the tough choices needed to make it happen. The “liberal media” doesn’t care how many miles per gallon your car gets … but the islamic fundamentalists do. Fellow republicans: stop looking for something to bitch about, and start proposing solutions to the oil debacle. And no, finding more oil, or getting 3 years worth of oil from Alaska, or getting oil from sand in Alberta, etc., are only band-aids.

Posted By Nathan – Oregon : May 2, 2007 10:50 am

Alex is right, there is no energy stream in sight that can provide the net energy and energy density of fossil fuels. We’ve clearly dug ourselves into a deep hole over the last century. In order to get out of the hole without being buried in it, it will be necessary to stop digging.

Posted By Glenn, Maryland : May 2, 2007 6:21 am

The problem that conservatives have with global warming has nothing to do with the facts or science and everything to do with the proposed remedies.

Conservatives do not like the idea of using the government to fix the problems in the environment. It all sounds like a liberal attempt to raise taxes and increase government bureaucracy.

If liberals want conservatives to go along with fixing global warming, then they need to set up market incentives to align business goals with environmental goals, all without raising taxes.

Posted By Chris V, Seattle, WA : May 1, 2007 6:52 pm

The GLACIERS are Melting! … on Mars. Hmmm… I’m betting on the return of coal fired steam engines, once 2/3 of the public dies when the oil runs out kinda sudden like… ;-)

Posted By Frank Jones, Los Angeles, CA : May 1, 2007 5:40 pm

Strange how there were no Oscar-winning global warming films, no carbon offset opportunists, no VC feeding frenzies, no celebrity carbon-neutral Prius drivers when oil prices were under 2 bucks a gallon (or even 3). True blue (or green) environmentalists may not need hard economic incentives, but the remaining 99.9% of us do. Phase in a $3 tax and watch this bubble magically disappear. The “green” movement will be here to stay. Unfortunately, it won’t happen in my lifetime.

Posted By Elliott, San Francisco, Ca : May 1, 2007 5:25 pm

There is no way to replace fossil fuels. No other energy source has a similar energy density. You think you can run an Expedition using solar panals? Or ship cheap Asian goods across the Pacific on fuel cells? Think again. Our current consumption pattern is unsustainable. The net result will be a decline in standard of living for all Americans.

There are clearly some big problems in the economic pipeline.

Posted By Alex, Washington, DC : May 1, 2007 2:56 pm

Where is the American spirit that was the standard for this country i.e. solutions for problems? By this I mean we need to invent are way out of the global warming crisis. The only solution a politician can bring to the table is to tax the problem to death. Lets get off the carbon based ecomony and go with solar photo cells to produce electricity, and lets have Detroit design cars that can get 40 miles per gallon of fuel. Buying carbon credits is just a tax and will not solve anything.

Posted By Paul Hetter, Whitney, TX : May 1, 2007 2:24 pm

Despite what uneducated commentors think, driving a prius is actually WORSE for the environment than driving any other small car.

Creating hybird cars causes three times as much pollution than creating conventional cars.

Of course, this doens’t matter to hybrid owners; they care more about “looking” green than actually being green. If that wasn’t the case, they would never even consider buying a new car.

Posted By Paul, Cary NC : May 1, 2007 10:54 am

If our government wakes from its oil-induced hangover, they can finally do something to promote trains and walkable communities instead of more highways, sprawl and driving – all three of which keeps up addicted to oil. We can actually live better lives with a higher standard of living if we are not stuck in traffic all the time, but riding fast, sleek trains, walking, and riding bicycles. If our government stops spending hundreds of billions of dollars building roads, and instead started investing heavily in state-of-the-art trains such as the Eurostar, and the Japanese high speed trains, we could actually have a bright future free from endless oil wars. We need major investment in wind and solar power, as well as ocean wave power to power the trains and our communities.

Posted By Al Johnson, Alexandria, VA : May 1, 2007 10:40 am

The biggest reason this has become an issue lately is that the changes in the environment over the last 10 years is dramatic enough to show. Melting glaciers, droughts, and whole islands starting to be emerged underwater are harder to ignore than statistics which anyone can say are “inconclusive” due to the general populations poor statistical reasoning and understanding of what makes science valid. Will global warming effect the baby boomers? Probably not unless Forida ends up under water but it will definitely have an impact on their grandchildren. What kind of impact is debatable. As long as energy prices continue to rise being green will continue to be “hip” but I hope a better term people would use is “responsible”. If you are a rational thinking adult taking the time to recycle or saving some money by putting in energy efficient light bulbs is not that much of a hassel. I don’t look at this as liberal or conservative. It just makes sense.

Posted By Matt, Indianapolis, IN : May 1, 2007 10:38 am

High failure rates among startups are a way of life, so I’m not quite sure why anyone would expect so-called “green” startups to differ from conventional investments. I’m personally pleased with green initiatives that will reduce our foreign dependence (and trade deficit) from energy suppliers. The peripheral benefits of green energy (e.g., reduced emissions and economies of scale) are just icing on the cake.

Posted By Tim Munyon, Tallahassee, FL : May 1, 2007 10:14 am

Liberal Media Hype!! Green speen
Invest in fossil fuels and grow wealthy.

Posted By bill milwaukee wisconsin : May 1, 2007 4:17 am

Adam
You are bang on. I have been in the solar industry for 19 years, one of the first “dreamers” to believe that I could promote a technology which was not quite ready for “prime time”. As time has gone by, I have adjusted our strategy, mainly to deal with a whacking we took by the Chinese starting 3 years ago. Now we’ve gone public (ICPR NASDAQ OTCBB) and we are finding that valuations for commodity players are far out from what they should be. The market is buying on blue-sky without understanding the companies they are investing in completely. Solar companie are still thinking that either vertical integration or commodity plays can last forever. How many computer makers make their own microchips? How many utilities build their own turbines? This market is in need of a correction for its own good. I’m hoping that our new “apple of solar” strategy will distinguish us. Time will tell. Thanks for being one of the few to point out that there is something that doesn’t make sense out there.

Sass Peress
CEO
ICP Solar Technologies
http://www.icpsolar.com

Posted By Sass Peress, Montreal, Quebec : April 30, 2007 8:37 pm

Was just talking about this at lunch today! Felt there might be a backlash soon as there has been SO much coverage.

Still this is one of the great public policy challenges of our time and one of the biggest markets around so I think it will go in cycles but that a line fundamentally has been crossed and there is no going back. That line was crossed when caring about green/environment became a mainstream concern because of awareness of global warming and interest in energy security. Until global warming ceases to be a concern and the Middle East becomes a bastion of pro-American sentiment this area will be market opportunity.

BTW, don’t forget that interest in Green is for some driven by concerns about global warming/environment and for some is driven by energy security. 66% of the oil we import goes to transportation so actions like driving a Prius (which you mildly disparage) are critical for reducing our dependence on oil, an increasing amount of which will be imported from the Middle East.

Posted By Josh Becker, Menlo Park, CA : April 30, 2007 7:31 pm

The “right wing media”, by which I assume he means Limbaugh, Boortz etc., are not against “all things green”. They are against attempting to panic the public into demanding expensive government regulations based on inconclusive science, which Gore and others dishonestly portray as conclusive. No one in the conservative talk shows cares whether a company produces green technologies or whether anyone decides to use it. Lashinsky’s another in the MSM who lives in a liberal bubble and gets his information about what’s in “right wing media” from other liberals.

Posted By Gerald Apge, Alexandria, VA : April 30, 2007 6:12 pm

You’re wrong about it not helping the environment that much to drive a prius or plant a tree. The point is, if EVERYONE does their part it will help the environment a lot. The attitude you’ve just adopted is the same attitude as why should I vote? My vote doesn’t count… it’s about everyone doing their part and collectively great strides are made.

Posted By Clarissa Jacobson, Los Angeles, CA : April 30, 2007 5:58 pm
CNNMoney.com Comment Policy: CNNMoney.com encourages you to add a comment to this discussion. You may not post any unlawful, threatening, libelous, defamatory, obscene, pornographic or other material that would violate the law. Please note that CNNMoney.com may edit comments for clarity or to keep out questionable or off-topic material. All comments should be relevant to the post and remain respectful of other authors and commenters. By submitting your comment, you hereby give CNNMoney.com the right, but not the obligation, to post, air, edit, exhibit, telecast, cablecast, webcast, re-use, publish, reproduce, use, license, print, distribute or otherwise use your comment(s) and accompanying personal identifying information via all forms of media now known or hereafter devised, worldwide, in perpetuity. CNNMoney.com Privacy Statement.
Adam LashinskyWall Street watchers think of capital markets and financial players out west as being on the "other" coast. That's not how it's viewed in the Pacific time zone. From the venture capitalists of Sand Hill Road to the bond kingpins of Orange County to the corporate finance department at a certain software company in Redmond, Wash., there's plenty going on "out there." Adam Lashinsky should know. A native of Chicago, he has covered West Coast finance for a decade, with an emphasis on money matters in Silicon Valley. If it involves money and it's happening west of the Mississippi, look for it in Go West.
* : Time reflects local markets trading time.† - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges.• Disclaimer
Powered by WordPress.com VIP.