Declan Butler, reporter This is the personal blog of Declan Butler, a senior reporter at Nature. All views expressed here are mine, and not those of Nature. Contact me at d.butler@nature.com

December 5, 2007

“Don’t make the mistake of looking for the future in your rear-view mirror.”

Filed under: Energy,Venture capital — admin @ 9:35 pm

I love this quote; it’s the sort of inspirational one that you’re tempted to stick above your computer screen. It’s from Vinod Khosla, a veteran entrepreneur who co-founded Sun Microsystems, was a partner in Kleiner Perkins Caufield & Byers in Menlo Park, California — the company that nurtured the likes of Amazon, Google and Genentech — and who now heads Khosla Ventures, also in Menlo Park, one of the most prominent clean-energy venture-capital firms

It’s from a two-page article I published tonight in Nature, which details what is probably one of the most significant trends in energy research for over 40 years: the current huge interest of venture capitalists in green energy. As the article makes clear, this is more than a fad, but a potentially world changing development.

Excerpts:

Silicon Valley is greening. Investors are flocking to low-carbon (clean) energy technologies, fuelling a boom in the sector, with investments set to overtake those in Internet start-ups. But does this venture-capital explosion herald another dotcom bubble?

Last week, Google announced its entrance into the green-energy field — hundreds of millions of dollars for a technology push to make renewable energies cheaper than coal. And in the same month, Nobel prizewinner Al Gore and his London-based firm Generation Investment Management joined forces with one of Silicon Valley’s foremost green-energy investors, Kleiner Perkins Caufield & Byers in Menlo Park, California — the company that nurtured the likes of Amazon, Google and Genentech — to create an alliance to fund global climate solutions.


The US venture-capital industry has spent $2.6 billion on clean-energy technologies in the first three-quarters of this year — up from $1.8 billion last year, and $533 million in 2005


The increases significantly buck a trend — total public and private spending on energy research in the United States and elsewhere has been dropping steadily since the 1970s. In an analysis of energy-research spending published in January (G. F. Nemet and D. M. Kammen Energy Policy 35, 746–755; 2007), the authors estimate that the US invests $1 billion less in energy R&D than it did a decade ago, and that this now represents just 2% of all federal R&D, compared with 10% in the 1980s. By contrast, spending on defence and health has been increasing by 10–15% annually during that period.

The surge in new investment in energy by venture capitalists, established energy firms such as General Electric and new entrants such as Google is therefore “extremely important”, says Gregory Nemet of the University of Wisconsin-Madison. “It’s difficult to envision successfully addressing concerns about energy independence and climate change without fully engaging the capabilities, resources and human ingenuity that these entities can apply,” he says.

….And the context for that initial quote:
Venture capitalists will no doubt create stunningly successful new energy companies — the Googles and Amazons of tomorrow’s lower-carbon world — but only time will tell whether these can be sufficiently disruptive to the gargantuan energy industry on the massive scale needed to affect climate change. Solar energy and other renewables hardly make it above the x -axis on a bar chart of world-energy use, after all. But, Khosla advises, “don’t make the mistake of looking for the future in your rear-view mirror”.

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