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April 23, 2014  |  Login
Clean Technology: This Time It's for Real
By John Rubino

It was nice while it lasted. More than nice. The age of cheap energy, free water, and abundant food was the smoothest stretch of highway that humanity has ever traveled. But now that road has developed some very big potholes. Oil is no longer cheap. Fresh water has become scarce or poisonous in many places. Food prices are soaring at double-digit rates. Sea levels are rising while deserts are spreading. Commercial fish stocks are collapsing. International tensions are growing over the remaining cheap oil, and civil wars are being fought over water. And industrial chemicals are saturating our kids' bodies. Whew!

The consequences of the past century's mistakes range from inconvenient to disastrous. But focusing solely on the bad news ignores the other side of the coin: Problems create opportunities, and big, complex problems create vast opportunities. Solving any of the looming environmental crises is worth literally trillions of dollars, so extraordinary amounts of capital are flowing into "clean" technologies, with completely predictable results: New energy sources, benign techniques for managing waste streams, even new ways of fishing and farming are being developed that have the potential to put us on a path to sustainable abundance-or at least to avert disaster. The rise of clean tech is, in other words, an investment theme with long, long legs.

Third Time's the Charm

Readers of a certain age may find this talk of a green boom familiar. That's because we've been here before-twice. The first time was in the late 1970s, when oil shocks and gas lines led Jimmy Carter's administration to boost funding for things like coal gasification and shale oil. But before the private sector had a chance to jump on board, oil prices receded, government funding evaporated, and alternative energy was largely forgotten. The next clean-tech mini-boom came at the tail end of the 1990s tech bubble, when hot money sloshed over into solar and fuel cell stocks, sending some of them through the roof. But that was just the irrational exuberance of the dotcoms rubbing off on other flashy stories. When the bubble burst, clean-tech stocks plunged along with and Nortel Networks, and investors left in search of greener pastures (so many clean-tech puns, so little time).

The current revival of interest began a few years ago, as rising oil prices and ominous climate data put energy efficiency back on investors' radar screens. But this time it's for real, for the following reasons:

  • Peak Oil: The oil shocks of the 1970s were primarily political and structural: Saudi Arabia halted oil exports in response to the Arab-Israeli conflict, and the United States failed to secure adequate new supplies. But there was plenty of cheap oil in the ground, and when the political turmoil subsided, the flow resumed and prices fell. Today, there is emphatically not plenty of cheap crude. (You can read more about our energy fiasco here) The world's great oil fields are in decline, and replacements are scarce. As a result, global oil production has hit a plateau (hence the proliferation of books with "peak oil" in their titles) while the growing number of cars on Chinese and Indian roads is sending demand inexorably higher. more

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