challenges and opportunities for a clean technology revolution: a venture capital perspective

8/3/2019 Challenges and Opportunities for a Clean Technology Revolution: A Venture Capital Perspective

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Challenges and Opportunities for a Clean Technology Revolution:A Venture Capital Perspective

Abstract:

The United States, typically the birthplace for innovations and industries, finds itself

in a precarious position: either our government can work towards developing clear

policies to foster a homegrown clean energy industry, or our nation will risk becoming

a permanent consumer of renewable energy products manufactured overseas. This

paper provides insight on the prevailing uncertainty investors and companies currently

encounter in the alternative energy policy landscape in America. Venture capital firms,

ranging from multi-industry to energy-focused investors, are investing in high risk,

early stage, and potentially disruptive clean energy technologies. However, if our

government wants these firms portfolio companies to expand operations on American

soil, both financial and political roadblocks need to be cleared. In todays globalized

markets, foreign governments are providing enormous incentives for clean energy

companies originally incorporated in the United States to outsource their commercialization.

Though individual states have introduced renewable energy incentives and environmental

legislation, such as Californias Solar Initiative (CSI) and Global Warming Solutions Act

(Assembly Bill 32), venture capitalists concur that there needs to be a stronger consensus

at the federal level. If America desires to become a manufacturing hub for clean energy

products, this report details that the federal government needs to 1) enact clearerenvironmental policy and 2) bridge the financial valleys of death that nascent clean

energy companies experience on their road to market. In conclusion, this paper elucidates

our nations targets in order to remain relevant in the global clean energy conversation

going forward.

Author: Varun Mehra

Undergraduate Research Scholars Program

Aleph Undergraduate Research JournalUniversity of California, Los Angeles

Faculty Advisor: Professor Matthew Kahn

Department of Economics

Department of Public Policy

Institute of the Environment & Sustainability


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Revised: June 2011

Introduction

Climate change and global warming has put markets, governments, and society in a

unique yet pressing situation; standing idly by as carbon emissions and pollution externalities

exacerbate current climate conditions is not a viable solution to economic prosperity. However,

there does not need to be a negative correlation between environmental degradation and GDP

growth. In order to meet the needs of rising populations, markets must rethink their energy

dependence and move towards achieving low-carbon growth. If one looks at the major source of

energy in todays world, it took an enormous amount of time, policy implementation, andinfrastructure development for coal and oil to receive significant slices of Americas energy pie.

In America, coal emerged as a potential energy source in 1850 yet coal did not reach peak

production until 1910; similarly, oil was first struck in 1859 but oil did not reach its full-scale

capacity until the 1960s.1 What now needs to happen is a rapid deployment of a clean energy

economy that can stimulate jobs, investment, and technological innovation.

To give an example, increased prices caused by the 1973 Organization of Petroleum

Exporting Countries oil embargo forced firms and institutions to make forward-thinking

economic decisions and increase research and development. In todays world, an increase in

fossil fuel energy prices would allow further research activity and investment in the alternative

option: clean energy technologies. Any one of the options a carbon tax, cap and trade, or feed-

in tariffs for renewable energies would directly alter economic and business behavior towards

cleaner forms of energy. Price signals have the power to move markets, develop industries, and

allow investors to allocate capital in an efficient manner. Americas clean tech economy from

innovation to investment would move with a stronger sense of urgency if policies did a better

job reflecting pollution externalities within markets.

There is no doubt that America faces stiff competition in the emerging global clean

energy economy. Americas wavering policy commitment and neglect of clean energy research


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in our universities and institutions have admittedly set us back. It is important to remind

ourselves that other countries, specifically emerging economies like China, are out-investing and

out-deploying the United States in the realm of numerous clean technologies like solar, wind,

and electric vehicles. The window for decisive action to be taken is closing if the United States

wishes to be relevant in the global clean energy conversation.

This paper will analyze venture capitalists decision-making processes in clean

technology investments as a vehicle to explore necessary benchmarks California and the

country needs to reach in order to have a robust and globally competitive clean technology

economy. Venture capitalists are uniquely situated on the front lines of budding industries, and

their investment prowess guides the directions industries will take. Unlike any other financial

mechanism, venture capitalists are able to observe market barriers to entry, innovative

technological solutions, and global investment trends in developing industries over time. By

complementing anecdotal evidence from venture capitalists with relevant statistics and historical

trends, we will be able to paint an accurate picture on where America stands in the clean energy

race: though America may be leading in technological innovation, the reality is that we are

currently losing in manufacturing, deployment, and overall global market share. In addition

analyzing induced technological innovations in the past and the current state of investment from

a number of different angles will lead to recommendations for the future of our state and

countrys clean tech economy.

Historical Parallels: Induced Innovation Effects

The rate and overall size of the future clean tech economy in America is at a crossroads:

we can either adopt a crawling or sprinting pace, and this rate of movement will determine our

long-term prospects within the clean technology economy. In order to gain a firmer

understanding of the policy decisions were considering today, its helpful to comprehend similar

situations that have occurred in the past that spurred economic growth. In analyzing the effect

the 1973 oil embargo had on our economy amongst other examples, we can extrapolate relevant

tenants to shaping policy in todays world.


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When the Organization of Petroleum Exporting Countries (OPEC) enacted its oil

embargo in 1973, prices for oil spiked dramatically. However, the embargo did have beneficial

consequences on our energy consumption and innovation. The induced innovation theory

essentially states that increase in prices generate invention opportunities to economize costlier

resources. By studying patent data as a framework to measure invention activity before and after

the embargo, one can dissect the effect energy prices had on the induced development of energy

efficient and alternative energy technologies. Through a series of metrics and by monitoring

patent activity in a variety of technological industries, the results show that coal liquefaction and

gasification, solar, fuel cells, and more all saw an increase in patents after 1973, and that energy

prices had a positive impact on new innovations (see Appendix 1).2 Thus, the rise in energy

prices did have a causal effect on the development of energy technologies that were less

dependent or entirely independent of oil as an input. The embargo shows that energy price

signals in the past have had profound movements on innovation activity, and incorporating

polluting externalities within energy costs would have a similar beneficial effect for clean energy

technologies in todays world.

The second set of historical parallels is the effect government research programs have had

on the birth of explosive industries. Government research has the ability to tackle and finance

technological roadblocks in a way nearly impossible for private industry to undertake.

Furthermore, government should take advantage of its ability to guide markets, promote

investment, and stimulate innovative activity. Take the aviation industry as a brief example: the

first successful airborne flights took place by the Wright Brothers on American soil in 1903, but

our government ranked 14th in aviation industry investment by 1913. This startling news

prompted the creation of the National Advisory Committee for Aeronautics in 1915 to coordinate

research and development in flight. This committee helped spur Lockheed Martin aircraft to

reach a new maximum speed as well as develop the first passenger aircraft, the DC-3, which

gave rise to todays airline industry.3

Historically speaking, another fundamental government program has been the Defense

Advanced Research Projects Agency (DARPA). A subset of military research, DARPAs goal is


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to make transformational technological discoveries, and many world-changing innovations have

come through this agency: GPS systems, stealth technology, gallium arsenide as a semiconductor

material, and more.4 One of the most groundbreaking projects through DARPA was the birth of

the internet. The concept originated when the military desired computers to share information

across the globe during the Cold War era in the 1950s. By 1962, federal government was

investing in computing more than the rest of the world combined. Thanks to these efforts, we

saw the first version of the Internet in 1969 on American soil.5

The takeaway point is that having a similar DARPA-like institution for the realm of

federally funded energy research can provide system-wide change in energy usage. In both

financially and intellectually capital-intensive industries like renewable energy, the optimal level

of government intervention needs to be relatively high. It is up to the federal government to

jumpstart innovation and early-stage investment in order for new energy technologies to see the

light of day. Institutionalizing these research grants through a government organization, similar

to how the National Institutes of Health or the National Science Foundation operate, would

provide for a competitive landscape for American firms, laboratories, and universities to contend

for. The government cannot overlook the need to fund the research of truly innovative energy

technologies not only for the sake of national energy security or climate change, but to also

encourage the development a homegrown clean energy economy for the future.

Relating Innovation to Market Size

Since all industries share common characteristics, both of the examples in this section

have important aspects that can be relevant to clean energy. What we can generally extrapolate

from the following two examples is that progressive policy measures, profit incentives and

increased competition can help create a large future market here in the United States. The

overall clean energy market is potentially worth 2.2 trillion dollar worldwide market between

now and 2020 and can generate as many as 20.4 million jobs worldwide by 2030.6 Using these

two industry parallels as a backdrop, we can begin to formulate how the United States can

acquire a considerable share of these numbers.


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In such an interdisciplinary field such as renewable energy, pioneering government

policies are only one piece to the puzzle; another unique angle worth studying is how innovation

itself can similarly affect market sizes. In the first example, a unique analysis of the

pharmaceutical industry found economically significant and relatively robust effects of

potential market size on innovation activities; federal drug policies gave pharmaceutical

manufacturers a glimpse into the future and served as a profit incentive. 7 In the second example,

its shown that higher levels of imports from low-cost regions forced firms in Europe to reassess

their product strategies and allocate more capital and labor towards R&D. Together, the

pharmaceutical industries growth and European countries technological advancement over

recent decades can be attributable to both policy and globalization-induced endogenous

technological change; both instances are ideal case studies for todays policymakers to grasp

when looking at the clean technology industry.

There are many valid points seen in the pharmaceutical industries growth that can be

understood within our industries of interest. Interestingly enough, if we exploit a potentially

exogenous source of variation on market size, theres a way to link innovation rates to current

and future market size in the pharmaceutical industry. This can be accomplished by investigating

the effect incoming drug entries into markets had on market size. Specifically, some estimates

showed that a 1% increase in the size of a potential market for a particular drug category resulted

in a 6% responsive increase in total amount of new pharmaceutical drugs entering the US

market. Granted, the response may have partially been due to entries of generic drugs that are

bioequivalent to an existing drug no longer under patent protection, i.e. copycats. Regardless,

non-generic drugs saw a 4% increase with a 1% increase in potential market size. These would

be drugs with new molecular entities, and shows the importance future market size had on

genuine pharmaceutical innovation.8

Government policies were the main underlying drivers behind these outcomes. For

example, the Orphan Drug Act of 1983 pushed for drugs for orphans with rare medical

conditions that resulted in a decline in mortality; this was the effect of the variety of policy

incentives within the act to develop new drugs for these diseases. Additionally, the 1991 Center


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for Disease Control policy for hepatitis B vaccines for infants, the 1993 Medicare decision to

bear the costs of influenza vaccine, and the 1986 introduction of funds to protect vaccine

manufacturers against product liability lawsuits for a handful of other vaccines were other policy

provisions that changed profitability opportunities.9 All of these policy changes were associated

with an increase in clinical trials to develop new vaccines a metric to put a figure on innovation

rates. These results are fascinating, as there is quantifiable evidence on government policies

effects on research and development of new drugs; this is a significant finding not just for the

pharmaceutical industry but also for markets in general.

The second example is to see the positive effects of global competition by estimating the

economic impact imports from low-wage countries have on high-wage countries. Looking at the

effects Chinese import competition has had over the period of 1996-2007 on European countries,

the results actually yield two effects: an increase in R&D, patenting activity within firms, and a

reallocation of labor between firms towards more technologically advanced firms. The low-

wage import competition materialized in a 15% upgrading in European technology between

2000-2007. Consider Chinas import effects chronologically: China only accounted for 1% of

the United States and European Unions imports in the 1980s, and that number was only at 2%

by 1991; however, by 2007, Chinas share of imports rose to about 11%.10

There is an underlying survival of the fittest argument here, i.e. that only firms with

advanced and capital intensive technologies will be able to withstand these imported obstacles.

Essentially, Chinese import competition lowers employment and survival probabilities in low-

tech firms; those firms that faced higher levels of Chinese import competition ended up filing

more patents and spent more on R&D. To be specific, its estimated that an increase in 10

percentage points of Chinese imports is related to a 3.2% increase in patenting and a 12%

increase in R&D in the twelve countries evaluated.

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The overall point is that China is actuallyan important factor for technological advancement, and can have a transitive positive effect on

economic growth in developed countries such as the United States.

We have now understood a variety of historical parallels, ranging from government

research initiatives to market size and innovation rates, which we can extrapolate to the clean


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energy industry. Progressive institutions, universities, energy technology companies, and

investors would similarly react the way pharmaceutical-related research centers and companies

did to the news of an augmented future domestic market. Furthermore, global competition in

clean energy can and will require energy companies to respond with additional iterations of their

technologies. Now that we have compiled a wide-ranging set of historical parallels, we will soon

understand where we can apply these lessons in the clean technology economy.

Trends in Clean Technology & Venture Capital

Venture capital can be described as arguably the most significant early stage investors in

the development timeline of a company; venture capital firms aggregate and pool together funds

to invest in high-risk, high (potential) reward start-up companies (see Appendix 3). There are a

handful of reasons why this paper chooses to analyze venture capital investment processes.

Firstly, venture capital has the greatest ability to absorb technology risk versus other financing

models. As a result, venture capitalists are on the front lines observing the true happenings of the

clean energy technologies, from Series A financing to initial public offerings. Another reason is

that venture capitalism is perhaps the most efficient driver of job creation. Its estimated that

2,700 direct jobs are created for every 100 million dollars in venture capital investment ($37,000

per job). When you compare that figure to the American Recovery and Reinvestment Act

stimulus spending, its estimated that it took $235,000 for each job to be created, which is around

six times more expensive than venture capital.12 Despite venture capitals effectiveness, the 2008

financial crisis negative effects did not spare private investment in the nascent renewable energy

economies worldwide.

To be clear, the term clean technologies encompass energy technologies that do not

have an adverse affect on our climate and harness our planets renewable energies (i.e.

geothermal, solar, wind, biofuels, etc.). Zeroing in on clean technology venture capital, there


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was a 55% decrease in capital invested at the end of the third quarter of 2010 to 575.6 million

dollars, when compared to a year before.13 Furthermore, venture capitalists had to carry

investments for longer periods of time and divert more capital to existing investments.

California is unique in its ability to quickly adapt to changing technological conditions of

our time, and Silicon Valleys willingness to finance these efforts is distinctive. Silicon Valley

has always been a region that takes the first step and accurately anticipates future technological

change. From semiconductors to software to social media, the valley has been the catalytic

source for nascent industries to grow and mature. In recent years, the rise of innovative

renewable energy companies is becoming a valuable asset in Silicon Valleys diverse technology

portfolio. Overall, California has consistently been in the lead for clean technology venture

capital and has attracted considerably more than any other state in every quarter since 2006. One

can credit Californias progressive and guinea pig-esque Global Warming Solutions Act

(Assembly Bill 32) that was signed into law in 2006. However, California took a major hit in

sheer venture capital investment dollars, with a 71% decline to $295 million when compared to a

year ago; Massachusetts came in second place and saw a surprising 65% increase in clean

technology venture capital invested versus the year before.14

The venture capital infrastructure in Silicon Valley allows investors to adapt to varying

technology cycles and anticipate technological evolutions. Conversations with leading Silicon

Valley investors provides for a clearer understanding of how and why investment theses

developed within the realm of clean technology. Recent investment within clean technology,

especially within Silicon Valley, has accelerated for a variety of reasons. Long-run technology

cycles wax and wane over time; in regards to energy sources, the next set of innovations were

going to come in an area where there had been a historic lack of investment in early

technologies. Years ago, the outdated yet prevailing perception of energy was that it wasmatured and very well understood.15

While venture capitalists identified renewable energy as an industry that had been under-

invested, they also keenly noted that its an industry where parallel areas of innovation can be

applied (Fezzani 2011). One parent industry worth examining is biotechnology; the


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methodology and techniques being used to sequence DNA and produce biomedical innovations

could be used and applied to energy. As the biofuels industry gained momentum, technologies

were adapted to sequence and synthesize molecules to produce gasoline distillate or chemical.16

Another parent industry venture capitalists point to is semiconductor materials. There

was a natural evolution from the semiconductors technologies to a lot of the green energy

technologies, such as solar and energy efficient lighting (Harrus 2011). Historically, venture

capitalist investments involved microchips and a variety of consumer electronics companies. For

example, if you take those technologies and apply them to thin-film solar panels, you end up

creating something thats destructive to the solar industry.17 Both biotechnology and

semiconductor industries are examples of industrial segways that allowed renewable energy

technologies to take root.

Moreover, an additional reason for the growth of investment in clean energy industries is

the parallel growth in energy demand. Overall, the energy industry has enormous markets that

dwarf industries such as information technology. Mass urbanization leads to rise in energy use

and demand; the challenge is now how to decouple economic growth from energy usage

growth (Nazre 2011).18 The growth potential of an energy company due to forecasts of leaps in

demand is a major factor in investments in todays landscape.19 As a result, progressive investors

are turning to sensible renewable energy technologies as areas with exponential growth that has

potential to keep pace with demand and wean our addiction away from polluting fossil fuels.

In addition, another common trend on why venture capitalists are choosing to invest in

clean technology companies now is the timing of commercializing the innovation due to market

forces. For example, though solar cells were invented in the 1950s, technology advances for

scalability, cost reduction, and complementary legislation were not available until recent

decades. When Sunpower and First Solar went public in 2005 and 2006, two of todays largest

solar companies, they had around 30 megawatts and 70 megawatts of capacity, respectively.

Now, each company has multi-gigawatt capacity, and the generally accepted requirement for

solar has risen to more than 150 megawatts of capacity to consider filing for an initial public

offering.20


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Despite clean energys social, health, and environmental benefits, it is important to note

that venture capital investors are very bottom-line oriented. Though clean technology

installations do have net positive effects on carbon dioxide abatement, venture capitalists usually

do not base investment decisions on moral or ethical criterion. Venture capitalists are looking for

opportunities for returns on investment over 5 to 10 years and then hand over the reigns to major

bank to bring the company to a successful initial public offering. Generally speaking, time to

liquidity in reality is closer to 10 years in venture capital, and prospective companies are looking

to have eventual market capitalization of a billion dollars or more. Its also important to note that

return profiles do need to be roughly the same across industries for venture capitalists.

Another tenant of venture capitalists investment theses is the differentiation aspect

needed in start-up companies. For many VC firms to consider pulling the trigger, the value

proposition of the products a company wants to bring to market needs to have roughly more

than a 25% advantage in some sense: increased productivity/efficiency, lower costs, time

savings, energy usage, etc. (Green 2011). These investments are also supposed to be risky;

looking at a graphical representation in Appendix 3, venture capitals role in the food chain is to

de-risk technologies on their journey from laboratory to market.21 Thus, the business model of

these companies needs to be game changing and impacting while creating barriers to entry.

Having technological barriers-to-entry also minimizes the potential for competitors.

Nancy Pfund from DBL Investors elaborated on her firms early investment in Tesla Motors as

an example. In the case of Tesla, the firm was betting on electric vehicles; similar to other

clean technologies, electric vehicles have very high initial capital costs as well as infrastructure

roadblocks. However, electric vehicles are predicted to be a high growth area, and the model

that Tesla was bringing to the table was a no-sacrifice no-compromise model. The notion that

could drive an attractive sports car to be green was an attractive attribute for Teslas early stageinvestment. Tesla has the potential to mainstream expensive electric sports cars, while using that

revenue to help build R&D and develop cheaper cars going forward.22 In summary,

understanding the different variables that go into venture capital investors equation is crucial, as

venture capital is a strong indicator of the overall clean tech economys trajectory.


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Policy Requisites at the State and Federal Levels

After California enacted more stringent energy efficiency standards in the 1970s, the

state moved off the national trend path of electricity demand by reducing per capita requirements

to 40% below the national average. Energy policies are extremely important, as they provide

secure backdrops for existence of markets and buttress fledgling renewable energy industries.

Energy policies can also generate multiplier effects that lead to growth in other industries.

Interestingly enough, there has been a spillover effect of the monetary savings from these energy

efficiency measures. California households have had the luxury of redirecting their discretionary

income away from their energy bills and towards other goods and services. Its estimated that

households have saved $56 billion from 1972-2006, and households additional expenditures

have created around 1.5 million full-time equivalent jobs. Though these numbers may not

entirely be caused by Californias energy efficient standards, the statistics do underline that

CARBs unique policies resulted in an indirect stimulus package for economic growth and

employment for the state.23

In todays world, Californias landmark Global Warming Solutions Act (AB32) has made

California a hub for clean technology development complementing other state-enacted energy

measures. Similarly, we can aim to quantify the overall economic effects of reaching all of the

greenhouse gas reduction targets within AB32; if that turns out to be the case, then Californias

gross state product could potentially increase by $76 billion. Household incomes could also

increase by up to $48 billion that could indirectly create as many as 403,000 energy or climate-

related jobs.24

Californias AB32 legislation has a number of different contributing components. If we

attribute percentage weights to what effect measures within AB32 would add to overall carbon

dioxide emission reductions, the largest contributors, the low carbon fuel standard and the

renewable standard for electricity (33% from renewables by 2020), would contribute 9.20% and

7.7% respectively. Note that additional policy measures outside of AB32 also have significant

contributions to Californias carbon dioxide reductions: the Pavley tailpipe emissions standards


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add 15.90%, energy efficiency measures add 8.8%, and the renewable portfolio standard (20%

from renewables by 2020) tacks on 4.5%, making the aforementioned economic multiplier

predictions a lower bound for Californias future economy.25

Though California is progressive in its legislation, what effect does policy have on

venture capital investment decision-making in non-emitting technologies? California has taken

the lead in policy commitments towards greenhouse gas abatement and clean technology

incentives. However, the recurring answer from leading venture capitalists is that investment

decisions in companies that require a new piece of legislation or regulatory policy for potential

markets are companies not on the radar. Venture capitalists simply cannot invest in business

models that heavily rely on regulatory processes as legislative battles are marathons, [and] you

do not build a five to eight year plan dependent on legislation (Prabhakar 2011).26 For example,

venture capitalists seemingly find it difficult to invest in carbon credit companies, as the long-

term growth of the companies is so heavily dependent on short-term policy cycles. The

variability of energy policy needs have long-term stability for long-term investments to be made

with confidence.27 Nonetheless, venture capitalists are looking for disruptive technologies that

can get to a competitive cost point, regardless of government subsidies. But in such capital-

intensive industries such as many renewable energy technologies, investors have realized that

some sort of push is needed in the form of mandates, subsidies, or government partnerships with

energy companies.

Policies can undoubtedly be a wind in firms sails but only if the direction of the wind

is known. A supportive macroeconomic policy can serve as an accelerator to early clean energy

companies growth rate.28 Venture capitalists point to the recent California Solar Initiative, a

clear statewide incentive program with step-down subsidies and predetermined allocations of

funds over time, as an example of well-crafted policy. However, when it came to the Waxman-Markey federal climate bill this past year, some believed that it was actually quite hard to

navigate. At the end of the day, policies need to do more good than harm; though Waxman-

Markey had the right intentions, some venture capitalists agree that it was not as well crafted as it

needed to be to unleash private investment and new technology deployment.29 Properly


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developed policies can be transitional mechanisms to help get technologies to markets in a

timelier manner and can give investors comforting legislative backdrops; however, venture

capitalists certainly reiterate that policy cannot be a basis.

From a macroeconomic perspective, venture capitalists overwhelmingly agree that

legislation like AB32 is absolutely essential to maintain Californias entrepreneurship,

innovation, and clean economy future. The controversial Proposition 23, which couldve

suspended AB32 until unemployment dropped below 5.5% for a full year, was fortunately

defeated in November 2010. If Proposition 23 had passed, it would have sent out a very negative

signal to investors. Inconsistencies, such as the suspension of AB32, are undoubtedly the worst

types of policies. Nevertheless, its generally agreed that AB32 is not sufficient and clear-cut

federal policy is considered necessary to complement what California has in place.

Globalization of the Industry

The founding of any start-up, company, or industry must all start with an innovative idea;

after all, markets exist to provide solutions. America has built a society that is the most

conducive to innovation, and that remains relatively true within the clean technology space. The

venture capitalists interviewed for this paper are noticing that real energy breakthroughs are not

coming out of the Chinas and Indias of the world. America has an extensive network of

institutions and universities that promote values like innovation and entrepreneurship, allowing

us to originate the majority of todays clean technology inventions.30 But after numerous

conversations with venture capitalists, the good news seems to stop there.

Historically speaking, globalization has swept away American manufacturing in many

industries, including textiles, consumer electronics, retail, and even automobile assembly. There

seems to be two overarching reasons for Western companies to move offices and production to

the developing world: ability to produce at a lower cost point and proximity to growing demand

from modernizing populations. Multi-national corporations have and will continue to outsource

their production facilities and jobs to countries with lower costs while also producing closer to


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markets. We will see that clean technology manufacturing in the United States is no exception to

experiencing this phenomenon.

Globalization of clean technology production and worldwide market share is not playing

in Americas favor and is seemingly happening at a much faster rate than preceding industries

witnessed. Countries like China have the ability to offer low-cost manufacturing as well as

plenty of other government subsidies and incentives that the United States cannot even dream

about. The simple truth as many venture capitalists observe is that over the past few years, the

United States has become a nation of innovation while the commercialization has been exported.

Venture capitalists have daily evidence that once innovation and headquarters are set up in

Silicon Valley for example, scale-up manufacturing move across the Pacific Ocean (Prabhakar

2011).31

So why are clean tech companies, incorporated and invented in laboratories on American

soil, following the path textiles, automobiles, and other industries have taken at a faster rate?

The common answer from venture capitalists is that it starts with the top-down approach

respective governments take. One reason is that no one knows what the rules are in America; in

China, the opposite is true. China has laid down annual mandates and goals for clean energy

targets in a very clear way, and provinces compete amongst each other to attract projects as well

as jobs. Things in the United States progress too slowly in regards to climate legislation or

energy deployment, so from a business point of view, you cannot wait otherwise you will file

bankruptcy!32

In addition, the adoption and implementation rates are much higher in China compared to

America for renewable energies as significant sources of energy. If you look at the financial

timeline of a company (see Appendix 3), the early stage financing like venture capital gets

energy products to a stage when it can be mass-produced and deployed. According to many

venture capitalists, the real issue is the deployment of these new energy products.33 Worldwide

deployment (asset finance) of renewable energy products totaled $101 billion in 2009, but the

main driver of this was China (see Appendix 4).34 Chinas population and cities are urbanizing

quickly, and they have the fortunate opportunity to incorporate energy efficient and renewable


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energy technologies within their infrastructure from the onset. On the other hand, the United

States is a mature nation, which makes infusing new technologies within outdated infrastructure

much more difficult. Regardless, the establishment of new energy technologies as a viable

source of energy is where the United States is lacking, and private capital will not be unleashed

to actually install these new energy technologies unless the federal government gets policy right.

In order to classify winners and losers, you also have to distinguish the source of invention and

the sink of deployment.

A prime anecdote to illustrate this pattern can be seen in the case of Alain Harrus from

one of Crosslink Capitals portfolio companies: Twin Creeks Technologies. Twin Creeks

originally set up headquarters in San Jose, and located a 100-megawatt solar panel

manufacturing facility in Senatobia, Mississippi in May 2010. When it came time for further

scale-up for the company, Twin Creeks Technologies turned to Malaysia, as the Malaysian

government gave an offer Twin Creeks could not resist.35 In December 2010, the executive

decision was made for Twin Creeks second 100-megawatt facility which would provide at

least 1,000 local jobs to be located in Malaysia. Not surprisingly, Malaysias government has a

clearly articulated solar strategy: solar has been targeted within Malaysias Economic

Transformation Program as a major source of growth and Malaysia aspires to be the third largest

producer of solar cells in the world.36 This type of commitment is what investors such as Mr.

Harrus need to make confident investment decisions. And if this is the type of the commitment

the United States will not provide, the flow will continue to be from west to east.

There are many contributing reasons why domestic investment and job opportunities are

lost to more aggressive international players. As the aforementioned example showed, the main

attractiveness is available capital, simply put. Venture capitalists note that sovereign funds from

governments are impacting decision-making processes. On one hand, Western countries arerunning deficits and have limited capital restraints; on the other hand, Asian governments are

pouring in expansion capital within proven renewable energy companies. As venture capitalists

point out, the amount of no-cost capital the Chinese have to spend is overwhelming. The

Chinese are ready and waiting to immediately scale-up clean energy technologies on their dime.


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With this upper hand, these governments are able to approach clean energy start-ups and offering

irresistible opportunities for growing their business overseas. Venture capitalists also point to the

bureaucratic red tape and elongated timeframe companies are forced to work with in the United

States as another reason for this loss.37 The success of American government programs has had

in the past to catalyze private sectors to develop industries is flatly not working the way it should

for clean energy technologies. As a result, the speed of execution for clean energy deployment is

roughly 5 to 10 times faster across the world.38 It is because of this broad trend of outsourcing

that the United States is disappointingly not as competitive as we can be.

To paint a clearer picture, we can take a closer look at the history of the solar industry.

Less than a decade ago, China was not a household term for the solar industry. Today, silicon-

basedphotovoltaic solar manufacturing is completely dominated by China. Venture capitalists

are keen to notice that China has been exceptional at taking ideas, scaling them at an

unconventionally fast pace, and then dominating the industry for the long-term.39 The

fascinating part is that the origins of most of these clean technology innovations were not taking

place in China. To take this a step further, venture capitalists are surprised at the number of

companies that do not get started because of Chinas overall effects in these industries. Venture

capital investors end up passing on many companies because the conclusion is that once Chinas

low-cost structure and energy subsidies take over, the Chinese will eat their lunch (Tong

2011)!40 If the United States continues to systematically neglect the attention budding clean

technology industries require, someone else will end up eating our breakfast and dinner as well.

International Competition

The fact of the matter is that in the realm of clean technology in todays world, other

governments are simply taking more convincing stances to generate domestic clean energy

economies. A successful example that the United States can learn from is in the case of


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Germanys swift deployment of renewable energy technologies over the past few decades.

Europe has decided to directly stimulate technologies by guaranteeing to make up differences

between solar cost points versus energy prices from fossil fuels. Theres no doubt that Germany

had to work through a battle of institutions to push through legislation. However, the

government achieved key legislative victories the Feed-In Law of 1990 and the Renewable

Energy Sources Act of 2000 that allowed a rapid expansion of the clean energy market. The

Feed-In Law of 1990 was a sign of a breach into an old structure and allowed firms to enter a

buoyant industry.41 In a country with relatively low amount of solar irradiation, there had to be

ubiquitous desire from various actors in the political landscape at the time for a robust a solar

industry (Aslin 2011).42 The German Parliament continually pushed support for policies in favor

of renewable energy in the face of severe opposition from nuclear and coal interests an eerily

similar and all-too familiar storyline.

One can split hairs between the paths Europe and the United States have taken in

renewable energy policy incentives; on one hand, direct subsidies for the German solar industry

has had significant growth, while the United States indirect credit-based subsidies have stagnated

growth potential. The United States took a contrary approach, and moved towards a tax-based

credit system for multiple renewable energy technologies. The main flaw with this process is

that you need to have taxable profits to benefit from the credit system. With the recent recession,

profits dipped, thus there were less taxable profits available. As a result, renewables rates of

growth slowed, as they did not raise the share of capital required to utilize these tax credits. 43 If

the United States desires to become a significant global player, similar breakthroughs for

stronger policies against the gripping control of coal and oil lobbies has proven to be a great

place to start.

International players are again taking more aggressive steps to make clean energyinvestment and commitment a priority. In Ernst & YoungsRenewable Energy Country

Attractiveness Index, its apparent why China earned the top ranking and jumped ahead the

United States in 2010 for the first time. A part of the explanation on why other countries are

leaving the United States in the dust is due to the vibes of uncertainty that Congress continues to


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let reverberate for a prospective federal climate bill. The report also cites the expiration of the

Treasurys grant program after 2010, providing a dearth of investment mechanisms in the United

States clean energy market. Contrarily, China has set clear clean energy installment provisions

that are conducive to investment: 300 gigawatts of hydropower, 100 gigawatts of wind, and 20

gigawatts of solar installed by 2020.44

If we take a look at government spending, an average Department of Energys budget is

25 billion dollars, of which only 3 billion dollars is allocated towards clean energy. However,

this is merely 4% and 17% ofhow much China and South Korea respectively spend annually on

clean technology government investment. Looking at clean energy investment relative to

countries GDP, the United States ranks 7th despite being the largest economy in the world (see

Appendix 5). This past July, China announced a pledge to invest 738 billion dollars over the

next decade in clean energy research, infrastructure, technological development, and grid

deployment.45 Chinas unwavering commitment shows how relentless and intent the government

is on aspiring to dominate the clean energy economy going forward.

Overall investment in clean energy in 2009 stood at 162 billion dollars, a decline from

173 billion in 2008. A portion of this was due to the recessions impact on North America and

European markets which led to the lack of capital availability. Most importantly, the glaring

trend in recent years is the shift of focus and balance towards Asia: out of the 119 billion that was

invested by private financial sector in clean energy companies or renewable energy projects, 40.8

billion took place in Asia and Oceania and exceeded investment amount in the Americas for the

first time (see Appendix 6).46 Over the years, another consequence of this lackluster

commitment in the United States has resulted in a startling 6.4 billion clean energy trade

deficit.47 If America continues to choose the path of divergence with the rest of the worlds

course, well be left behind.

Conclusions & Recommendations


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The overall goal of this paper was to give a qualitative analysis of the status quo and

future prospects of Americas domestic clean energy economy. To summarize, taking a snapshot

of past parallels, such as the effects of energy prices after the oil embargo in 1973 and DARPAs

transformational inventions, are important to give historical context to the issues we face today.

This paper also answered a variety of questions of the variables in decision-making processes for

clean technology investments. Utilizing interviews with leading venture capitalists provided

valuable insight on how far weve come and, more importantly, how far we need to go. The

mixture of anecdotal examples and political targets from these plugged-in investors shed light on

the reality of Americas dwindling share in the global renewable energy market and the necessary

goals America needs to aspire for.

Having this synthesis of background research and front-line evidence from venture

capitalists has shown that in order to be taken seriously, our state and our country need to realize

our disadvantages and respond by a) maintaining our edge in high-level innovation through

increasing government and private research, b) developing advanced policies to foster a thriving

domestic clean energy manufacturing economy, and c) committing to install renewable energy

technologies to make it a relevant source of our nations derived energy. These changes need to

happen sooner rather than later for America to receive the direct and indirect benefits of a

thriving national clean energy economy.

Though the lack of consistent policy consensus at the federal level has dragged on, there

still is a window of opportunity for America to assert its rightful position as a global clean energy

leader. Generally speaking, venture capitalists incorporate how international firms and

governments act in regards to clean energy commitment within their investment strategies. But

when the playing field is not level, things get a lot harder; Asian countries are taking Western

technologies, leveraging their governments ability to finance investments, applying multipleinnovative iterations on the product, and bringing them to market much more quickly. Despite

this disadvantage, it is not in Americas nature to roll over and play dead. What America needs is

a set of policy requisites and benchmarks for the country to develop a competitive advantage.


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The first recommendation venture capitalists have is to remain competitive in innovation

and play to our strengths. What California and Silicon Valley does so well is to take a

technology or idea, apply expertise, leverage financing options, and come out with a product

thats faster, better, and/or cheaper than it was before. And just as China can replicate our

technologies, we must be ready for a response. Consumers around the globe not classify cheaper

Chinese products as substitutes for higher quality American products. The positive aspect of

globalization is that it welcomes competition.48 The iterative nature of innovation, especially

when it comes to maturing new energy technologies, is something American companies,

investors, and policymakers need to anticipate. Just as we saw European countries encounters

with low-income countries like China, American clean energy companies better be ready with

second, third and fourth acts of technologies to remain cutting-edge. Solaria, a company that

takes solar panels and put glass over them making them 2x-3x more efficient, are the types of

answers that will can make overseas products merely inputs in companies supply chains.49

America needs to take pride in its long history supporting innovation at all levels. Not every

technology will pan out, but the probability of failure has never and should never hold our

innovation power back.

Another recommendation generally received is the need for the federal government to

provide ample financing mechanisms to deal with the various valleys of death. Venture

capitalists job is to de-risk technologies on their way to market, but there are some

technologies that the private sector frankly does not have the ability to finance. There are the

various valleys of death that prevent young companies move along their path of development

(see Appendix 3). The first valley of death is the lack of traditional venture capital; this funding

is needed but not available for researchers to develop their innovations. The second valley of

death is when it comes time for a company to reach efficient scale. Within this valley, you see

companies lost on their way from lab bench to pilot scale and then to commercial

manufacturing scale. Having additional government programs to financially link the innovation-

manufacturing-deployment chain will ensure Americas global leadership.50


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22

The American Recovery and Reinvestment Act helped address some of these issues. The

Department of Energy was allocated $36.7 billion dollars, which was a 5x increase of the

conventional base budget. In addition to stimulating technological development, the secondary

goal of this money was to draw private capital off the sidelines. Every project the government

invests in requires complementary private capital; as a consequence, the Department of Energys

$36.7 billion in ARRA spending drove more than $100 billion total in clean energy projects.

More efforts like this are critical, as they instill confidence in investors and lay foundations for

successful future initial public offerings. 51 In order to escape from these detrimental valleys of

death, the government should not waver on using taxpayer dollars or divert subsidies for

polluting energy sources. Using public money to ensure the longevity of these transformational

technologies will reduce negative climate and environmental externalities, eventually lower costs

for cleaner forms of energy, and ensure employment and additional investment within our

borders.

When it comes to politics, the unfortunate prospect is that federal climate legislation or

the likelihood of a carbon tax or cap-and-trade has been put on the backburner, especially after

the recent failure of the Waxman-Markey Bill. The price and policy signals seen after the oil

embargo of 1973 is something we unfortunately cannot wait around for in todays policy

landscape. Trying to compete with oil and coal lobbyists that garner enormous subsidies is

something that will take a long time, time that we realistically do not have. Venture capitalists

give various short-term estimates, ranging from 5-15 years, which will tell us who dominant

player(s) in the new energy technology markets will be. The biggest stigma with implementing

renewable energy technologies again comes down to one thing: levelized cost of electricity.

Instead of pushing to rid oil and coal subsidies or pulling for clean energy feed-in tariffs that are

not likely, another way to drive clean energy costs down through policy measures is by heavily

funding research.

As we saw earlier, DARPA efforts led to the formation of GPS systems, Internet, and

other society-changing technologies. President Obama did establish the Advanced Research

Projects Agency for Energy (ARPA-E), which was intentionally modeled after DARPA. ARPA-


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E is not about incremental innovations, but about major leaps forward for high-risk concepts

with high-payoff potential. ARPA-E was only allocated $400 million through ARRA, and

originally received 3,700 concept papers. After a rigorous screening process, the agency decided

to fund 37 of these projects for a total of $151 million, but there were many projects left

unfinanced.52 ARPA-E is starting to bridge the gap of laboratory stage technologies becoming

real-world technologies. Venture capitalists cannot sufficiently invest in technologies with risks

this high, and this is where ARPA-E eliminates a valley of death. More research investments like

this, which are politically agnostic, are needed to progress transformational technologies to see

the light of day.

As we examined earlier, Germanys exponential renewable energy growth was a result of

a penetration of the then status quo that resulted with the emergence of Germany as a global

renewable energy leader. The stronghold that coal and oil has on policy is hard to break through,

and so leveraging the power of the market for pricing carbon and externalities may not feasible

in the short-term. Thus, our politicians have to foresee that investments in research innovations

do not payoff within a political cycle. We have to move past the quarter-by-quarter profit

maximizing mentality and look at the results of these investments for the long-term. Developing

research policies to create accessibility of venture capitalists to start-up technologies is an

underfunded and ignored solution. The prevailing myth today is that clean energy sources are

almost ready to completely replace fossil fuels; the consensus from the interviewed venture

capitalists is that this notion is false.

What we really need is an exponential, military-like deployment on research and

installations to compete with the rest of the world and drive down costs. Historically speaking,

federally funded research has had the ability to drive down costs: Pentagon research in the

1950s drove microchip prices down from around $1,000 per chip to $20 per chip.

53

BrookingsInstitution and the American Enterprise Institute recently released a joint proposal to increase

federal funds for clean energy research to $25 billion per year. This type of funding will

eliminate a multitude of valleys of death and bring more transformational technologies from lab

to market, and will keep innovation and manufacturing on our soil.54 As this paper just explored,


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our path towards a clean energy future here in America faces many hurdles to clear. California

has clearly taken the lead with legislation such as AB32, but venture capitalists believe that

AB32 is not sufficient without federal supplements. Though Californias role in the past has

been an indicator for the country to follow, California is not a large enough market for venture

capitalists to solely rely on; other states and the federal government need to enact clear measures

to buttress various clean energy technologies. The status quo is making apparent that other Asian

countries are vying for dominance, and clean technology companies are locating potential

American jobs and products in other areas of the world. This trend needs to be reversed

quickly as the rate of change is happening more rapidly within the clean technology industry

than in the past.

The above analysis is distinct in its combination of specific industry parallels of the past

with common themes from interviews with established venture capitalists. Depending on

venture capitalists thoughts, as a basis for investigation, is reliable; as a result of these

interviews, this paper shed light on where America truly stands in the global clean energy

competition. In the eyes of most venture capitalists, America still remains the most innovative

country in the world. New technologies are not coming in the same volume from other

countries, but there are expectations that this can change. Investing heavily in research that will

in turn promote education in the sciences and engineering, can produce the next wave of our

countrys renewable energy leaders; as President Obama said in his 2011 State of the Union

speech, Its not just the winner of the Super Bowl who deserves to be celebrated, but the winner

of the science fair.

To conclude, our society needs to accept the political realities we face and work on

alternative solutions in order to win the clean energy future. From a number of different angles,

our country can unleash our private sectors potential to generate a thriving clean energyeconomy here at home, but the current state of uncertainty is frankly allowing clean energy jobs,

manufacturing, and deployment to drift overseas. Unlike any other research paper, these quality

interviews showed that if the government provides sufficient financial mechanisms, policy

incentives, and research commitments, venture capitalists would have more confidence to absorb


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risk, invest earlier, and scale-up clean energy technologies in America. Furthermore, if we can

sufficiently realize globalizations current adverse affects on our clean energy markets capability

while breaking through infrastructure barriers, we can steer our economys trajectory towards a

more favorable destination. This can be done if we leverage our governments ability to

jumpstart our renewable energy industries through finance mechanisms, policy commitments,

and transformational research projects. As with similar situations in our nations industrial past,

these catalytic actions will result in a strong nationwide clean energy economy going forward.

Appendices

Appendix 1: Energy Prices and Patent Activity


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Source: David Popp,Induced Innovation and Energy Prices, 55

Appendix 2: Levelized Costs of Electricity by Fuel Source (including subsidies)


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Source: Third Way


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Appendix 3: Financing Stages and Commercialization of a Clean Energy Company

Source: Harvard Business School/Mohr-Davidow Ventures


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Appendix 4: Global Transactions in Sustainable Energy, 2009

Source: Bloomberg New Energy Finance, 2010


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Appendix 5: Top Countries in Clean Energy Investment, as a % of GDP

Source: Third Way


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Appendix 6: Total Regional Investment, 2004-2009

Source: Bloomberg New Energy Finance, 2010


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Acknowledgements

Thank you to the following interviewees for taking the time to provide valuable knowledge,

which helped develop the direction and substance for my undergraduate thesis paper:

Ms. Nancy Pfund, Managing Director, DBL Investors. Mr. Reyad Fezzani, former Chief Executive Officer of BP Solar. Mr. Robert Walsh, Chief Commercial Officer of ZeaChem. Mr. Alain Harrus, Partner, Crosslink Capital.

Ms. Arati Prabhakar, Partner, US Venture Partners. Mr. Josh Green, General Partner, Mohr-Davidow Ventures. Mr. Bryant Tong, Managing Partner, Nth Power Investors. Mr. Ajit Nazre, Partner, Kleiner Perkins Caufield & Beyers. Mr. David Aslin, Managing Director, AslinVC. Mr. Martin Lagod, Managing Director, Firelake Capital Management. Mr. Patrick Sheehan, Partner and Founder, Environmental Technologies Fund. Mr. Warren Hogarth, Partner, Sequoia Capital.


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List of Works Cited

1. Acemoglu, Daron and Joshua Linn. Market Size in Innovation: Theory and Evidence

From the Pharmaceutical Industry. Quarterly Journal of Economics. 119(3): 1,049+.

Aug. 2004.

2. Anders, Scott J. Proposition 23: An Analysis of Which Scoping Plan Measures could be

suspended and for How Long. Energy Policy Initiatives Center, University of San Diego

School of Law. Sept. 2010.

3. Aslin, David. Telephone interview. 31 Jan. 2011.

4. Bloom, Nicholas, et al. Trade Induced Technical Change? The Impact of Chinese

Imports on Innovation, IT, and Productivity. National Bureau of Economic Research.

Working Paper 16717. Jan. 2011.

5. Cleantech Thriving in California Under AB32, Shows Data. Cleantech Group, LLC

Apr. 2005. http://cleantech.com/news/5755/cleantech-thriving-AB32-data.

6. Fezzani, Reyad. Telephone interview. 15 Dec. 2010.

7. Freed, Josh, et al., Creating a Clean Energy Century. The Clean Energy Program, Third

Way. Nov. 2010.

8. Global Trends in Sustainable Energy Investment 2010. Bloomberg New Energy

Finance 2010.

9. Green, Josh. Telephone interview. 14 Jan. 2011.

10. Harrus, Alain. Personal interview. 17 Dec. 2010.

11. Jacobsson, Staffan and Volkmar Lauber. The Politics and Policy of Energy SystemTransformation Explaining the German Diffusion of Renewable Energy Technology,

Energy Policy, 34.3 (Feb. 2006): 255-276.

12. Lagod, Martin. Telephone interview. 2 Feb. 2011.

13. Leonhardt, David. A Climate Proposal Beyond Cap and Trade. The New York Times

12 Oct. 2010. Http://www.nytimes.com/2010/10/13/business/economy/13leonhardt.html.


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14. Nazre, Ajit. Telephone interview. 28 Jan. 2011.

15. Nordhaus, Ted and Michael Shellenberger. How to Change the Global Energy

Conversation. The Wall Street Journal 29 Nov. 2010. Http://online.wsj.com/article/

SB10001424052748704312504575618972157288244.html?mod=WSJ_topics_obama.

16. Pfund, Nancy. Telephone interview. 11 Nov. 2010.

17. Popp, David. Induced Innovation and Energy Prices. The American Economic Review.

92.1 (March 2002): 160+.

18. Prabhakar, Arati. Telephone interview. 10 Jan. 2011.

19. Renewable Energy Country Attractiveness Indices. Ernst & Young. Issue 26 (Aug.

2010).

20. Roberts, Michael J., et al. U.S. Department of Energy & Recovery Act Funding:

Bridging the Valley of Death. Harvard Business School. 29 June 2010.

21. Roland-Host, David. Energy Efficiency, Innovation, and Job Creation in California.

Department of Agricultural and Resource Economics, University of California, Berkeley.

Oct. 2008.

22. Sheehan, Patrick. Telephone interview. 14 Feb. 2011.

23. Tong, Bryant. Telephone interview. 28 Jan. 2011.

24. U.S. Venture Capital Investment in Cleantech Falls 55% to $575.6 Million in Q3 2010.

PR Newswire 1 Nov. 2010. http://www.prnewswire.com/news-releases/us-venture-

capital-investment-in-cleantech-falls-55-to-5756-million-in-q3-2010-106434063.html.

25. Walsh, Robert. Telephone interview. 16 Dec. 2010.


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Endnotes


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1 Michael J. Roberts, et al., U.S. Department of Energy & Recovery Act Funding: Bridging the Valleyof Death, 2, Harvard Business School, 29 June 2010.

2 David Popp, Induced Innovation and Energy Prices, The American Economic Review, Vol. 92 No. 1,160+, March 2002.

3 Josh Freed, et al., Creating a Clean Energy Century, 17, The Clean Energy Program, Third Way, Nov.2010.

4Ibid. 1, at 6.

5Ibid. 3, at 3.

6Ibid. 3, at4.

7Ibid. 6, at 1,049.

8 Daron Acemoglu and Joshua Linn, Market Size in Innovation: Theory and Evidence From thePharmaceutical Industry, Quarterly Journal of Economics, 119(3), 1,049+, Aug. 2004.

9Ibid. 6, at 1,053.

10 Nicholas Bloom, et al., Trade Induced Technical Change? The Impact of Chinese Imports onInnovation, IT, and Productivity, 2+, National Bureau of Economic Research, Working Paper 16717,Jan. 2011.

11Ibid. 8, at 15.

12 Cleantech Thriving in California Under AB32, Shows Data, Cleantech Group, LLC, 5 Apr. 2005.http://cleantech.com/news/5755/cleantech-thriving-AB32-data.

13 U.S. Venture Capital Investment in Cleantech Falls 55% to $575.6 Million in Q3 2010, PR

Newswire, 1 Nov. 2010. http://prn.to/cEQwCX.14Ibid. 13.

15Ibid. 15.

16Ibid. 15.

17 Interview with Mr. Alain Harrus, 17 Dec. 2010.

18 Interview with Mr. Ajit Nazre, 28 Jan. 2011.

19 Interview with Mr. Patrick Sheehan, 14 Feb. 2011.

20

Ibid. 18.21 Interview with Mr. Josh Green, 14 Jan. 2011.

22 Interview with Ms. Nancy Pfund, 11 Nov. 2010.

23 David Roland-Host, Energy Efficiency, Innovation, and Job Creation in California, 4, Department ofAgricultural and Resource Economics, University of California, Berkeley, Oct. 2008.

24Ibid. 24, at 35.


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25 Scott J. Anders, Proposition 23: An Analysis of Which Scoping Plan Measures Could be Suspendedand for How Long, 10, Energy Policy Initiatives Center, University of San Diego School of Law, Sept.2010.

26 Interview with Ms. Arati Prabhakar, 10 Jan. 2011.

27Ibid. 20.

28 Interview with Mr. David Aslin, 31 Jan. 2011.

29 Interview with Mr. Martin Lagod, 2 Feb. 2011.

30Ibid. 19.

31Ibid. 26.

32 Interview with Mr. Robert Walsh, 16 Dec. 2010.

33Ibid. 26.

34

Global Trends in Sustainable Energy Investment 2010, 12, Bloomberg New Energy Finance, 2010.35Ibid. 18.

36 Twin Creeks Malaysia SDN BHD Ground Breaking Ceremony Press Release, Deputy Prime

Ministers Office of Malaysia, 14 Dec. 2010.http://bit.ly/fJz3Hr.37 Interview with Mr. Bryant Tong, 28 Jan. 2011.

38Ibid. 19.

39Ibid. 23.

40Ibid. 41.

41 Staffan Jacobsson and Volkmar Lauber, The Politics and Policy of Energy System Transformation Explaining the German Diffusion of Renewable Energy Technology, Energy Policy, Issue 3, Vol. 34, p.255-276, Feb. 2006.

42Ibid. 29.

43Ibid. 15.

44 Renewable Energy Country Attractiveness Indices, Ernst & Young, Issue 26, Aug. 2010.

45Ibid. 3, at 11-13.

46Ibid. 33, at 21.

47Ibid. 3, at 7.

48Ibid. 23.

49Ibid. 22.

50Ibid. 1, at 7.

51Ibid. 1, at 6.


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52Ibid. 1, at 7.

53 Ted Nordhaus and Michael Shellenberger, How to Change the Global Energy Conversation, The WallStreet Journal, 29 Nov. 2010. http://on.wsj.com/eu5qVO.

54 David Leonhardt, A Climate Proposal Beyond Cap and Trade, The New York Times, 12 Oct. 2010.http://www.nytimes.com/2010/10/13/business/economy/13leonhardt.html.
http://on.wsj.com/eu5qVOhttp://on.wsj.com/eu5qVO

challenges and opportunities for a clean technology revolution: a venture capital perspective

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