Why Invest in Green Tech?

from http://www.sustainability2008.com/invest.htm 2008


What is GreenTech?

GreenTech can be understood as innovative products or practices that reduce environmental costs while enhancing performance. More specifically, the GreenTech sector encompasses clean and renewable energy, power storage and efficiency, water and waste management, pollution control, green construction, recycling, green agriculture, and clean products. In a period of heightened environmental concern, GreenTech is of increasing interest to governments, companies, and investors alike.

What factors drive the GreenTech sector?

Growth in the GreenTech sector is largely a result of environmental issues which have forced heightened eco-consciousness. In particular, the rising price of energy and natural resources, a growing global energy demand, concern over energy security, increasingly stringent environmental regulations, and the economic and environmental volatility of fossil fuels continue to stimulate GreenTech development and practice.

What can GreenTech offer investors?
Through investment in GreenTech, investors are provided the dual opportunity to support the environment while generating profit. Of GreenTech’s many appealing attributes, no single technology lends itself as the sole solution to environmental concerns and high energy demand. Instead, a wide array of technologies are likely to become successful in specific areas of application, and as such, investors are presented with a diverse range of profitable opportunities. Additionally, as GreenTech remains a relatively young marketplace and renewable energy in particular a relatively small portion of global energy demand, the sector offers immense growth potential.

Facts and Figures

- Over a ten year period to May, 2004, the Vortex-Cleantech Index (+267%) out-placed both the Nasdaq (+181%) and the Russell 2000 (+146%). The VCI’s solid showing was built on a broad foundation – no single industry segment dominated overall performance. 1

- GreenTech acquisitions returned a median 4.1x invested capital. 2

- Using a sample of 56 GreenTech IPO’s, the median estimated IPO returns were 433%, or about 5.3 times invested capital. 3

- Annual revenue for the four clean energy technologies – biofuels, wind power, solar power, and fuel cells is up 40% from 2007, and is projected to quadruple by 2016. 4

- GreenTech markets represent annual global revenues upwards of $150 billion. 5

1. James LoGerfo, Cleantech Venture Investment: Patterns and Performance (2004) 8.
2. James LoGerfo, Cleantech Venture Investment: Patterns and Performance (2004) 8.
3. James LoGerfo, Cleantech Venture Investment: Patterns and Performance (2004) 7.
4. Clean Edge Inc., Clean Energy Trends 2008 (2008).
5. James LoGerfo, Cleantech Venture Investment: Patterns and Performance (2004) 6.