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The Biggest Economic Opportunity of This Century

Jack Uldrich
December 11, 2007

Venture capitalists are people, just like you and me. They put their pants on one leg at a time, and they're prone to making investing mistakes just like the rest of us. That said, it's hard to deny that some VCs are clearly better than others. John Doerr is one of Silicon Valley's more successful and higher-profile VCs, with big wins including early investments in Symantec,, and more recently, Google.

This success, I believe, gives his words some weight. So when he says that global warming is real and "cleantech" is "the biggest economic opportunity of this century," my ears -- and yours -- should perk up.

The future for cleantech
It's not that the idea of cleantech as a big investment opportunity is new. The Motley Fool, others, and I have been writing about it for some time. Instead, it was Doerr's explanation of how cleantech can help address global warming that I found so interesting. He laid out four steps for solving global warming which, when viewed in aggregate, can provide investors with a useful framework for thinking about how to invest in cleantech.

First, Doerr said the U.S. government should adopt a mandatory goal of reducing greenhouse gas 25% by 2010. This is an ambitious goal, and even with Democrats in control of both houses of Congress, I don't think it's likely. Nevertheless, I do believe some controls are coming, and investors can profit by understanding which companies are getting ahead of the curve and positioning themselves to benefit from government mandates. For instance, I have written before about Duke Energy's willingness to embrace mandates and explained how this progressive position -- when backed with strategic investments in cleaner coal-burning technologies and large-scale carbon sequestration and alternative fuel energy projects -- could position it ahead of its peers if and when government mandates on carbon emissions are imposed. More recently, IBM announced its Big Green Innovations initiative as a way to take advantage of this emerging market. Another way to play this opportunity is to consider investments in companies manufacturing "negawatts" -- that is, decreasing energy usage by better managing the demand side of the equation -- such as EnerNoc, Comverge, Itron, and Echelon.

Second, Doerr called for the adoption of renewable sources such as solar and wind power. This is hardly a bold call, but investors should give serious consideration to investments such as Motley Fool Rule Breakers recommendation Suntech Power. Another company with growing solar resources worth considering is First Solar, which continues to make great progress in lowering the cost of manufacturing its solar cells. In the wind field, Siemens (NYSE: SI  ) and Zoltek (Nasdaq: ZOLT  ) each offer unique ways to profit from the growth of the sector.

Third, Doerr said the United States needs to reinvigorate its biofuels industry. To a degree, this is already happening. Archer Daniels Midland now has a 50-million-gallon facility in production and, earlier this year, Imperium Renewables raised a substantial amount of venture capital to build a 100 million gallon biodiesel facility. With the advent of tougher EPA regulations requiring cleaner-burning diesel -- which biodiesel meets -- the demand for biofuels could grow stronger in the near future. And both companies, by positioning themselves at the forefront of this biofuels "reinvigoration," could profit nicely from its expansion.

Another opportunity worth keeping an eye on is the emerging field of synthetic biology. To this end, BP (NYSE: BP  ) has invested an undisclosed amount in Synthetic Genomics to explore innovative methods for employing "designer bacteria" to efficiently produce biofuels.

Finally, Doerr said there needs to be more investment in technologies that