The Clean Tech concept is not old. In fact, there were electric cars produced in the 1830s and the first wind mills are reported to have been built in the 9th century. However, the combustion engine became the driver of innovation in the second industrial revolution due to convenience, efficiency, and price – oil was very cheap. In fact, many entrepreneurs have been trying to start clean tech companies for the past 40-50 years, but they did not get traction because oil seemed plentiful and cheap.
We based an entire revolution on those assumptions, and in the last 10 years, our assumptions have been challenged and, some would argue, broken. Oil is not cheap and abundant anymore. Here’s a graph from http://www.wtrg.com/prices.htm with historical oil prices.
The second factor is availability. When the second industrial revolution started, oil was abundant and easy to extract. Now we are seeing oil becoming more and more difficult to extract. Per square foot of land, oil provides more energy than solar or wind energy sources. I don’t think we’ll run out oil, we just won’t be able to extract it in a cost-effective way. There will be some ‘sustaining innovation’ in drilling technologies to help extract oil that is otherwise difficult and not feasible to extract. There are varying estimates, but the most widely accepted peak oil forecast is the year 2020.
The instability in the Middle East is another variable that affects this factor. I think much of the reason there’s so much investment in alternatives to oil is because of political reasons. Western countries want to remove their dependence on foreign oil because instability in the Middle East region makes it hard to plan and forecast oil prices and supply.
Conceptually, Clean Tech means using processes in nature to help us produce energy, without disrupting the earth’s natural processes. Since usage of oil emits CO2, nature is disrupted by more than natural emissions of CO2. Using solar or wind energy sources just use existing sources in nature to generate electricity.
We can break down the Clean Tech industry into the following areas
· Energy Generation: Using alternative sources to generate energy. This includes Solar, Wind, Tidal, Geothermal, etc...
· Energy Distribution: Enabling a new way to efficiently distribute energy in a network by upgrading existing power grids into smart grid
· Energy Storage: Innovating in new ways to store energy so houses
· Energy Services: Each industry has a ‘services’ industry which entails technical support, reselling, and distribution of the products in the clean tech industry
Next, I will blog about each area.
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