Ron Pernick and Clint Wilder's new book, The Clean Tech Revolution: The Next Big Growth and Investment Opportunity, is not intended as an investor's guide to what has been called the biggest economic opportunity of the century, but it does serve as a useful primer for those looking to bone up on their understanding of "clean tech" -- a term the authors define as "any product, service, or process that delivers value using limited or zero nonrenewable resources and/or creates significantly less waste than conventional offerings."
The six "c's"
By that definition, the field of clean tech is incredibly broad and diverse. The authors do an excellent job of covering the space, though, and devote individual chapters to each of the following clean tech areas: solar energy, wind power, biofuels and biomaterials, green buildings, personal transportation, smart grid, mobile technologies, and water filtration.
Before delving into those topics, though, the book explains the six factors -- or what the authors call the "six c's" -- driving the clean tech revolution. In so doing, they make a compelling case that clean tech is not just some fad. The first "c" they cite is cost. With the price of oil now hovering near $100 a barrel, one needn't be a rocket scientist to understand why the economics of a variety of clean energy sources are suddenly becoming more attractive.
The second "c" relates to the amount of capital pouring into the field. The book cites the $1.5 billion that General Electric (NYSE: GE) is dedicating to its "Ecomagination" campaign, the $8 billion that BP (NYSE: BP) has committed to its alternative energy group over the next decade, and the $8 billion investment in research and development that Toyota (NYSE: TM) has made in hybrid and fuel cell technology as another reason why clean tech is growing at such a torrid pace.
The third and fourth "c's" relate to competition and consumers, and the other two big "c" drivers are China and climate change. As the book points out, in the next decade, the size of the Chinese middle class is estimated to more than double to 200 million. And not only will all these people be consuming more energy from conventional fossil fuel sources such as coal (and thus contributing to climate change), they are also forcing the Chinese government to get serious about developing clean energy alternatives. To this end, China expects to triple the amount of clean energy it produces by 2020.
Long-term thinking for a long boom
In total, these six drivers will add up to some big numbers. According to the book, the market for biofuels will grow from $20 billion today to $80 billion in 2016. Wind power will triple from $18 billion to $60 billion over the same period, and solar energy will more than quadruple from $15 billion to $70 billion. Even fuel cell technology is estimated to grow from a modest $1.4 billion today to more than $15 billion by 2016.
In spite of these impressive numbers, the book does a good job of not hyping the field, instead stressing that clean tech investing requires patience and a long-term investment horizon.
Each chapter ends with a useful section entitled "Ten companies to watch." The companies mentioned are not offered as investment recommendations, but from my experience, they do offer investors a solid starting point for beginning one's due diligence. For instance, the chapter on solar energy highlights Suntech Power (NYSE: STP), and the chapter on wind power mentions the innovative work FPL Group (NYSE: FPL) is doing in that field. Even the chapter on the smart grid profiles two new publicly traded companies working in the field of smart metering -- Comverge (Nasdaq: COMV) and EnerNoc (Nasdaq: ENOC).
Foolish final word
If I have any criticism of the book, it's that it gives short shrift to nuclear and "clean coal" technology. The authors provide a rationale for their exclusion, but I'm of the opinion that both energy sources are likely to provide a sizeable percentage of the world's overall energy picture for the foreseeable future. As such, they not only represent compelling investment opportunities in and of themselves, but they could also diminish the marketplace success that some of the other clean energy sources might be able to achieve.
Having said this, though, I will conclude by parroting a line from the book: "Clean-tech investing is all about the green; and this green has nothing to do with the environment." Rather, it's all about making money, and for individual investors interested in profiting from this opportunity, The Clean Tech Revolution offers an excellent overview of this exciting opportunity.
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