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Australia the untapped market – new report on Australian Cleantech investment activity

by Nick Bruse

A new report co-authored by the Cleantech Network and Cleantech Ventures will be released today that details the PE & VC investment occuring in Australian cleantech companies.

At the launch breakfast this morning we heard from Jan Dekker (CV) and Anastasia O’Rourke (CN) present the key findings of the study. I’ve summarised some of these below, but you can download the full report from the Cleantech Ventures website.

Key findings

  • A$540m of venture capital dollars invested from 1999-2007
  • 174 rounds in 75 companies
  • Around 3% of total VC invested
  • 66 IPOs between 1974-2006 and 24 in 2005-06 alone

The Cleantech space in Australia is becoming more and more interesting as international and domestic investors are realising that Australian cleantech investment opportunities are relatively untapped, compared with the rest of the world.

Key drivers that are seeing a growth in the sector in Australia are:

  • commodity boom increasing economic activity
  • technology readiness from research institutions
  • environmental pressures including water shortages and climate change impacts
  • increasing policy push as a result of upcoming election
  • strong media interest in the sector
  • increasing capital availability

However there still remains some challenges for Australian Cleantech including:

  • lack of early stage capital
  • more technology transfer to business required from Australian University and Research institutions
  • more corporate venture funds and company investment & engagement required
  • stronger policy particularly around Mandatory Renewable Energy Targets, emissions trading and Kyoto
  • better analyst coverage of listed companies

By way of reference Cleantech Ventures has screened around 450 companies and made 11 investments via its CEGT fund over the last 4 years. In October this year Cleantech Ventures announced it has completed the first close of its new Cleantech Australia Fund.

The fund’s first closing of $50 million is made up of $20 million provided through the Australian government’s Innovation Investment Fund (IIF) program and $30 million from VicSuper, a superannuation fund committed to sustainability.

Article posted from The Cleantech Show


Nick Bruse is runs Strike Consulting, a growth venture consultancy specialising in the cleantech sector and hosts The Cleantech Show, a weekly podcast of interviews with leaders involved in clean technology research, entrepreneurship, commentary and investment.

Is Australia approaching ‘K’ day?

by Nick Bruse

Last night in Australia we had Prime Minster John Howard and opposition leader Kevin Rudd go head to head in a televised debate. Key issues were the economy(interest rates and tax cuts), the war in iraq and climate change- you can check out a video summary here

Interestingly for Australia one might say that all three of these issues are highly integrated with foreign policy and have quite significant leverage points with the US. Namely our involvement in Iraq, and the governments position on climate change.

I think its worthwhile to provide some insight as to what is happening in Australian politics right now on The Cleantech Blog because the climate change policy of both contenders is quite different and may have significant bearing on world politics if Australia does sign the Kyoto agreement – ‘K’ day.

Essentially, if Kevin Rudd wins the next election and he is winning by around 10points in polls currently, he will has promised to sign up to Kyoto, and commit to the proposed Australian state government coalition recommendations on an emissions trading program.

The Howard government announced last night that it plans to start up a clean energy technology fund, though with little details on it currently. “He says its priorities would be to invest in clean energy technology and to support households who are most affected by the higher prices after a carbon price is set. He also said that if he wins the election he would try to push the United States to do more on climate change, including lobbying George Bush.”

In addition to the most notable action in the climate space by the Howard Government have been:

  • Establishment then removal of the Mandatory Renewable Energy Target of 2% in early 2000s
  • A taskforce report on carbon emissions trading – but no commitment
  • No commitment to Kyoto protocol – but to a new Kyoto framework
  • A$100m to Asia pacific technology pact
  • A taskforce report on bring nuclear power to Australia
  • A$200m to reduce regional deforestation
  • Establishment of A$500m Low emissions technology development fund – of which $335 has been spent on coal projects
  • Achievement of our Kyoto targets, predominantly through our reduction in land clearing in 90s, not by curbing our emissions. (clive hamilton – scorcher)

Many criticise the current government for its years of inaction on climate change due to lobbying and strong personal links to the mining and energy industries – See the maniac times article for a critical view

So the real question is if we vote for Howard, has he really changed his tune – sceptic to realist, and is a vote for Kevin Rudd a vote for a greener cleaner future with his promise to sign Kyoto. For many the promise of becoming a kyoto signatory is a strong impetus.

What for one I would like to see is a strong commitment by both parties to a comprehensive acknowledgement that many different technologies, and solutions will play a part here. It seems that politicians struggle to implement bipartisan solutions from bodies specifically setup to take climate change like The Australian Greenhouse office. They also need to commit to the fact that we need to alter the playing field significantly to pro-actively support low emissions – through a tax or a trading scheme. More funds are all well and good – particularly to companies that require them – but it still means that someone is picking winners and that’s where the politics keeps weighing in. If the Howard government is throwing so much money at cleantech in Australia, why couldn’t Ausra get funds to build their plant here instead of the US?

Unfortunately with all the politicking going on at the moment prior to an election, its hard to see the real vision and leadership that’s required to actually make a difference on climate change. Perhaps we need an Australian version of Mr Gore? A change agent. Someone that can be both political and apolitical at the same time, singular minded and belligerent.


Nick Bruse is runs Strike Consulting, a growth venture consultancy specialising in the cleantech sector and hosts The Cleantech Show, a weekly podcast of interviews with leaders involved in clean technology research, entrepreneurship, commentary and investment.

Al Gore opens FEX SIM launch – dedicated cleantech stock market

by Nick Bruse

Yesturday I had the pleasure of being present when Al Gore opened the new FEX-SIM sustainability and cleantech stock exchange in Sydney. Here’s a wrap up.

The exchange is the creation of Brian Price, whom I interviewed recently on the cleantech show during which we discussed the FEX-SIM in detail. You can listen to the show here if you didn’t catch it earlier.

The launch has been covered in a AAP news article to a degree particularly about the FEX-SIM, if you want a few more details at a glance the FEX website has a press release.

Much of what Mr Gore had to say was about the worlds past experiences and success in dealing with the global problem of chloroflurocarbons (CFCs) and ozone layer depletion, a future where in 25 years we may no longer have an artic sea ice in summer, and the near future and how select countries and companies are showing the way by moving quickly to deal with climate change.

He highlighted that both in Australia and in the US we are seeing significant movement amongst the state legislators and governments in driving emissions reduction targets and signing onto the Kyoto protocol limits at a state and city level. In the US he stated that 600 cities and 12 states are in the process of have done this already. In Australia state governments have moved quickly also to push an emissions trading and reduction goals.

In fact he went so far as to say that activities and the speed of change in industry, investment and policy in Australia may well allow it to regain a leadership position in this issue if it continues on this path.

He highlighted during question time that we do face significant challenges when it comes to issues of nuclear proliferation based around nuclear energy as a solution to climate problems. He highlighted that historically all cases where nuclear material has found its way into weapons program in countries have been found to be associated with nuclear energy programs.

An innocent question was asked by a young 10 year old student, there as a result of winning a school competition, which was “If you were elected to be the president of the united states in 2008, what would you do to deal with climate change.”

Mr Gore’s response was “Bless your heart” with a lot of laughter in the room, followed by, “I’m not running for president… but… if I was in that situation I would look at abolishing employment taxes and instead place taxes on pollution.” He said it was ridiculous that we live in a world where we are happy to penalise employment but not penalise pollution [including emissions]

I had the opportunity to pose a question myself, and asked Mr Gore if over the last year since he was in Australia had he come up with a dinner party ‘Zinger’ response sceptics of climate change, as posed by Andrew Denton in an interview on Enough Rope in September 2006, given we still need to move more quickly.

His response was no he didn’t have the zinger yet to convince climate sceptics but said that the challenge with climate change is “This this change is hard… really hard.. in fact its at the limits of what we as a society can do.” He went on to say that for laggards and sceptics at this stage of the process, we must lead by example, help bring them along, as the world is changing under their feet and its tough.

I’ll leave you with the quote from the end of his presentation, an old African quote, which sums up our future pretty well.

“If you want to go quickly, go alone. If you want to go far, go together” The problem Al Gore highlighted is that we need to go quickly and far, so we must devote ourselves close to completely to this challenge.

If you want to catch the first 5 mins of his 20 minute presentation you can catch it on the FEX website

Cheers
Nick

Article posted from The Cleantech Show


Nick Bruse is runs Strike Consulting, a growth venture consultancy specialising in the cleantech sector and hosts The Cleantech Show, a weekly podcast of interviews with leaders involved in clean technology research, entrepreneurship, commentary and investment.

Market demand for green buildings – no less than 5 star

by Nick Bruse

Currently I’m doing quite a bit of work in the Green Building Industry and we are currently seeing a very rapid transformation in the thinking of leading developers around green building development.

In today’s ‘The Age’ one of Australia’s major newspapers we have Daniel Grollo, one of the high profile developers in Australia, admitting to the market that 2 years ago he was wrong in only shooting for a 4 star Green Building Rating (6 currently the highest) on a number of developments. The demand from tenants has sky rocketed recently, and luckily design consultants advised him to go for one star higher. While this cost the company more, had they not done so they would have delivered an obsolete building.

Next week I will be heading down to Tasmania to moderate a panel session of the ADPIA (Australian Direct Property Investment Association) dealing with sustainability and green building development. Through my work with my current client who advises property developers and project manages construction projects, the biggest issue clients are stating is “How do I achieve sustainability in my property portfolio or asset effectively?”

Whilst the technologies to achieve significant reductions in energy use, water consumption and waste production, and the tenant market in Australia is demanding green star rated buildings, there is still a lot of uncertainty in developers of how to actually transition their portfolios. Quantifying the returns, choosing between alternative solutions, even choosing a service provider is challenging in this space.

That said, the expectation is that there is unlikely to be any new major developments in Australia now with a green star rating of less than 5. Water pressures is one thing driving this issue, but for the most part, major tenants are willing to pay more for a green star rated office in Australia, because it offers them better productivity, better employee attraction and retention and lowers their overall costs.

For more information on the Australian Green Star Building Rating you can go to www.gbcaus.org you can find the background articles on Daniel Grollo’s comments here ( 1 and 2 )


Nick Bruse runs Strike Consulting, a growth venture consultancy specialising in the cleantech sector and hosts the cleantech show, a weekly podcast of interviews with leaders involved in clean technology research, entrepreneurship, commentary and investment.

Australian voluntary carbon market Opened

by Nick Bruse

Australia’s first carbon trading exchange opened last week and its now one week on. The initial prices for carbon was set at A$8.50 (US$7.50) per metric ton under the voluntary scheme. Current price isA$8.55 per metric ton. I’ve pieced together my research on the ACX from a variety of stories run after its opening.

Australian Climate Exchange (ACX) established the joint venture aimed at cutting the country’s greenhouse gas emissions and bracing firms for possible pollution limits five years ahead of the introduction of a government-backed scheme.

About 1,600 tonnes of Voluntary Emission Reductions (VERs) changed hands, opening at A$8.50 per tonne for 2007 and closing at A$8.60. The total value of the trades was A$13,610, according to data on ACX’s Web site http://www.climateexchange.com.au/

This compared with prices of 19.50 euros ($26.96) for European Union carbon emissions on the ECX exchange for delivery in December 2008, the first year of commitments under the U.N. Kyoto Protocol on climate change.

Australia has not ratified Kyoto, which sets binding limits on emissions and envisages global emissions trading, but Prime Minister John Howard has pledged to establish a national carbon trading scheme by 2012.

The ACX exchange is the fourth voluntary market, following schemes in the United States, UK and Japan.

ACX Limited Managing Director Tim Hanlin said businesses wanted an opportunity to sponsor clean technology now.

“This is a voluntary emissions trading market and it’s business to business trading of greenhouse gas emissions,” Hanlin told Australian Broadcasting Corp. (ABC) radio.

Carbon trading involves putting a price and limits on pollution, allowing companies that clean up their operations to sell any savings below their allocated level to other companies. ACX is a joint venture with companies trader Australia Pacific Exchange
Reuters

“Under the ACX system, buyers and sellers trade the VERS in minimum lots of 100 tonnes. Each offset unit is certified by the government greenhouse watchdog and must be lodged with the ACX registry first before it can be traded. The registry tracks the traded offsets until they are extinguished – that is when an owner acquits the offset against emissions.”The Australian

The ACX is the first cab off the rank with further initiatives to be launched by the National Stock Exchange (NSX) and the Australian Stock Exchange (ASX)

The NSX, which recently bought a water trading exchange used by farmers, has said it wanted to launch a carbon emissions trading platform next month. The ASX has said it would proceed with its scheme after the federal government’s pricing details were known. The Australian

Whilst presenting an opportunity for companies to begin mitigating their carbon emissions, and also providing a market to source credits for voluntary offset retailes, not everyone is so sure that these voluntary schemes are a positive step. The world bank was quoted in a May 2007 article in the UK paper the Guardian.

The World Bank cautioned that moves in carbon offsets outside the regulated “cap and trade” systems could pose a threat to the development of the overall market. There has been growing criticism that schemes where companies or individuals seek to offset their emissions by investing in projects to cut emissions elsewhere, are either not delivering or funding developments that would have been financed anyway. Critics say that the system needs a greater degree of standardisation.

The World Bank said that on some estimates voluntary carbon offset schemes could rise to 400m tonnes by 2010. It added: “This high potential voluntary sector, however, lacks a generally acceptable standard, which remains a significant reputation risk not only to its own prospects, but also to the rest of the market, including segments of regulated emissions trading and project offsets.” The Guardian

If you would like some more dialogue with the Managing Director of the ACX, Tim Hanlin you can find it here, in an ABC radio interview transcript. There is a conference, Voluntary Carbon Markets, set to be held in London in a few months to address some of these questions regarding voluntary carbon markets as well.

If your interested in understanding the detail of carbon emissions trading schemes, you can listed to an interview I conducted with Rob Fowler from Abatement Solutions Asia Pacific on The Cleantech Show. Rob is heavily involved in helping the Australian Greenhouse Office with the development of the Australian Emissions Trading Scheme. On the show he provides a significant amount of insight into the trading schemes and the process of setting them up. You can listed to the show here.


Nick Bruse runs Strike Consulting, a growth venture consultancy specialising in the cleantech sector and hosts the cleantech show, a weekly podcast of interviews with leaders involved in clean technology research, entrepreneurship, commentary and investment.