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2013 could be rough year for cleantech, insider predicts

The amount of venture capital available for clean technology, a key indicator of the industry's health, will seriously decline in 2013, predicts an international cleantech consultancy with offices in Vancouver.

"To our analysis, 2013 will be something of a year of backtracking for the cleantech industry," Dallas Kachan, managing partner of Kachan & Co., wrote recently. "Does that mean cleantech is finished? Not at all. But much like young Skywalker learned in Episode V, cleantech is about to find out that the Empire sometimes gets its revenge."

The past couple years have been tough for the global clean technology industry. Government subsidies in North America have been scaled back, or outright abandoned. Falling solar and battery prices, which may ultimately create a more financially stable industry, have nonetheless cut into profit margins.

Many prominent cleantech firms, including A123 Systems and Solyndra, have declared bankruptcy.

All these factors are eroding investor confidence in clean technology, Kachan argues. That will make it harder for innovators to bring their inventions to market. But it will also force cleantech firms to create more effective business models -- "to do more," he writes, "with less."

The upshot is that the industry will likely rely more than ever on alternate sources of capital, direct from larger corporations, for instance, or from sovereign wealth funds.

"What it really means is that venture capital, as we know it today, is not proving itself suited to the unique characteristics of cleantech investments," Kachan argues.

This year contained some discouraging signals for Canada's $10.6 billion cleantech industry, as The Tyee reported last week. One of Canada's most highly respected cleantech programs, Sustainable Technology Development Canada, did not receive the $560 million in funding it had requested in the Conservative government's 2012 federal budget.

"Disgraceful," is how one cleantech observer described the funding decision.

Across the Pacific, however, China remains dedicated to creating the world's largest cleantech market. (Click here to read an in-depth Tyee article reported from Beijing this past summer).

And new policies in Japan supporting renewable energy, Kachan recently argued in Business in Vancouver magazine, "are among the most impressive the planet has ever seen."

Geoff Dembicki reports on energy and climate change for The Tyee.

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