Fear Triumphing Over Hope in Capital Markets

by Richard T. Stuebi

Those of us in the cleantech arena frequently tout that we’re in one of the hottest sectors of investment. But, apparently, not the hottest.

It seems that an even hotter investment market deals with private security and defense technologies. So says a recently published article entitled “Guns Beat Green” in The Nation by noted author Naomi Klein.


“So why is ‘homeland security,’ not green energy, the hot new sector? Perhaps because there are two distinct business models that can respond to our climate and energy crisis. We can develop policies and technologies to get us off this disastrous course. Or we can develop policies and technologies to protect us from those we have enraged through resource wars and displaced through climate change, while simultaneously shielding ourselves from the worst of both war and weather….In short, we can choose to fix, or we can choose to fortress. Environmental activists and scientists have been yelling for the fix. The homeland security sector, on the other hand, believes the future lies in fortresses.”

In our capitalist economy, money flows to the area of greatest perceived opportunity, and the market in 2007 is saying that fortresses are a better bet than fixes, with $6 billion in venture capital going to security/defense vs. $4.2 billion for green. By contrast, in 2006, these two sectors were neck-and-neck. For those deploying capital, fear has thus leapt ahead of hope.

I’ve often said that cleantech is getting only a small fraction of the capital investment it should be getting. These numbers only convince me further of my sentiments.

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

1 reply
  1. Get Solar
    Get Solar says:

    While I share your concern at the disparities between investment in cleanteach and national defense/security, to reduce military spending to funding for the aftermath of "resource wars" is rather simplistic. There are plenty of legitimate reasons to maintain an effective military, in addition to effective defense measures, beyond resource protection. In addition, claiming that we have a choice between spending on national security and spending on fixing energy problems is silly; we have more than enough resources to do both. As well, the necessity of an effective military for the United States will not magically vanish if our nation fully embraced the need for cleantech. In explaining the reasons for acting to help fight climate change, what is of the utmost importance is ensuring that we do not simplify or over-hype. Framing the choice as "green or a secure country" will simply lead people to choose a "secure country" and ignore the merits of the case for climate change. Why can't the United States pursue multiple objectives at the same time?

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