Clean tech investment boom set to continue

The scale of the clean tech investment boom was again underlined today after new data from Dow Jones VentureSource showed that venture capitalists invested a record $3bn (£1.5bn) in clean technology deals last year.

Spread across 221 deals, the $3bn of investment marks an increase of 43 per cent on the $2.1bn invested in 173 clean tech deals in 2006.

Jessica Canning, director of global research for Dow Jones VentureSource, said that record-high fuel prices and the prospect for favourable legislation following the US election meant the time was still "ripe for innovation and investment" in clean tech.

"The energy industry is so massive that any slice of it can produce substantial returns to the investor, regardless of whether they are targeting the consumer or enterprise," she added. "And there is no single clean technology leader, so there is significant opportunity to be gained from being the first to market."

The study showed that the US continued to dominate the market, with venture capital clean tech investment of $2.52bn marking a 79 per cent increase on 2006. The situation was less impressive in Europe, where $360m of investment spread across 56 deals marked a 27 per cent increase on the previous year.

The report also challenged the widespread belief that China is enjoying a green venture capital investment boom, revealing that investment fell from $424m in 2006 to $129m last year.

However, Canning insisted there was little chance the soaring levels of global clean tech investment will slow down. "What is really encouraging is that the clean tech industry is still in its infancy in the US," she said. "In fact, our data shows that 59 per cent of all US investment in the sector is going towards companies in the product development phase, which suggests that funding for clean technologies is likely to continue as these companies keep developing and start generating revenues."

In related news, the European Investment Bank announced yesterday that it quadrupled its support last year for clean energy projects, distributing loans of over €2bn (£1.5bn) to renewable energy projects both inside and outside the European Union.

Bank president Phillipe Maystadt said that with climate change remaining high on the EU's political agenda, the bank's "special focus" on energy investment was set to continue this year.