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This Week in Clean Economy: ARPA-E's Clean Energy Bets a Hard Sell with Congress, Investors

Amid a tough political and economic climate, ARPA-E, the U.S. energy innovation agency, held its annual summit. Also, mixed reviews for U.S. in new survey.

Mar 1, 2012
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Secretary of Energy Steven Chu and Bill Gates, Chairman of Microsoft, hold a fir

That's largely due to timing and to the nature of the projects. Many venture capitalists invested in clean energy inventions in 2008. That year half of all cleantech deals included at least one new investor, the Journal reported. Since then, they've learned firsthand of the enormous risk and time commitment involved in developing cutting-edge technologies to commercialization, and have opted to wait for returns on what they have, rather than seeking new projects. Last year only 30 percent of deals had new backers.

Mix of Good and Bad News Comes in New Global Ranking

On Monday, there was a mix of good and bad news for the United States in a new ranking on investment conditions for clean technology startups in 38 countries.

The first-ever survey, from the World Wildlife Fund and Cleantech Group, a San Francisco market research firm, found that the U.S. government spends the most worldwide on R&D for clean energy technologies, and it has the greatest number of cleantech startups and investors.

The report said that cleantech firms are thriving in America because of the country's strong entrepreneurial culture, namely in Silicon Valley, where a startup ecosystem exists that allows young tech companies to tap local venture capital funding with relative ease. The U.S. has "by far the most venture capital spending" on cleantech firms of the 38 countries studied, it said, with more than $5 billion in investments in 2010 alone.

But the news is less hopeful when it comes to three other indicators: renewable energy use, strong and steady policies for encouraging clean energy generation and the amount of revenue its cleantech firms generate. Relatively low marks in these categories, among others, landed the United States a fifth-place ranking in the index.

Denmark, meanwhile, topped the list. Israel came in second place, Sweden in third and Finland in fourth.

The rankings are based on an analysis of each country's scores in 15 different categories. In addition to things like how much countries spend on R&D and how much renewable energy they generate, the report looked at whether their electric grids can support a large amount of green power, and if they have a streamlined application process for clean technology patents. It also examined the survival rate of fledgling startups, and the percentage of total workers that are employed in the cleantech sector.

Denmark was No. 1 in part because of its large use of wind power and aggressive greenhouse gas reduction goals. It also has a strong record of getting homegrown cleantech companies to scale up to commercialization. Chief among those firms is Vestas, the world's largest wind turbine manufacturer.

The goal of the analysis is to show investors which countries are likely to thrive in the cleantech space over the next decade, while pointing out those that are lagging. It uses data between 2008 and 2011 from third parties and the Cleantech Group. The latest government spending figures were from 2009. In that year the Obama administration alloted more than $50 billion in federal stimulus for clean energy projects over four years.

China, which is often labeled the clean energy leader, ranked twelfth in the index. That’s mainly because the study focused on early-stage cleantech firms and emerging energy inventions. China boasts few such firms relative to the size of its economy and has a low number of cleantech patents. Its sector is dominated by solar and wind manufacturing giants that churn out long-established technologies like solar photovoltaic panels and wind turbines.

But that could change. The country is planning to broaden its cleantech focus to include new technologies by pouring $18 billion in R&D funding over the next few years, according to a Lux Research report released on Tuesday, a move that could attract U.S. and European innovators to China.

The goal is to combine foreign expertise with Chinese spending. "This will create unforeseen opportunities for Western companies," Lux Research said via news release.

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