Sunday, December 11, 2011

Will 2012 be the Year for Clean Energy Investing?

The United Nations’ 2007 Intergovernmental Panel on Climate Change reported that global sea levels would increase two feet by 2100. Recently, the study’s authors stated that their estimate was too low and sea levels will increase by least six feet (examples of potential impact - Mumbai, India would be under water and the New York City subway system would be flooded). This week, in Durban, South Africa, United Nations negotiators met to obtain an emissions reduction treaty by 2020. Contentious negotiations lead to an agreement between proponents of improved regulation (which included Brazil, South Africa and European Union countries) and the leading emission producing countries (the U.S., India and China).

The need to minimize environmental damage (and reduce dependence on fossil fuels) has not diminished. However, while energy, technology and infrastructure are high areas of investor interest, this year has not been kind to the clean technology sector. Drivers of negative performance include: 1) credit and financial crises related issues, 2) regulatory confusion, 3) pricing pressure and commoditization and 4) weak business models. The evolving global environmental challenges will drive both preventive (clean technology) and adaptive (seawalls, relocations, etc.) infrastructure spending. A review of potential clean technology investment ideas may be a good way to start the New Year.

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