The Green Bubble

In the April Edition of Entrepreneur, the article by Julie Bennett poses the question "Are we headed toward a green bubble?" A bubble, if you did not already know, is the situation in trade where the value of goods or services are greatly exaggerated and inflated. The problems arise when the bubble pops, or that people realize the true value of the inflated goods and services are much less than what they should be. For the green bubble, there supposedly is an artificial growth in the market due to the optimism of the technology to make a profit. It is the optimism of venture capitalists and governments that fuels this potential bubble; they are pouring money into renewable energy predicting the needs of a sustainable future.

INVESTMENT
. The amount of investment: Venture Capitalists have spent ($4.9B into 356 alternative energy in 2009 (Greentech Media Research). Stock index is up 25% for clean energy from Feb 2009-10. $79 billion of the US federal stimulus package (which totaled $787 billion) was allocated for Renewable Energy. And in January of 2010 Obama awarded $2.3 billion of that money in tax credits to renewable energy companies.

GROWTH.
In 8 years (2018), CleanEdge predicts that the market will be $325 billion for the combination of global biofuels, wind and solar energy. Greener World Media Inc. reported in their "State of Green Business 2010" report that many organizations are transforming delivery vehicles into hybrid fleets; over 1,000 clean-energy patents were issued in 2009; and green building certification grew at a rate higher than ever.

Despite the large amounts of funding and signs of growth
in energy efficiency, energy production still needs to be developed. Energy production is the biggest chunk of the pie where green technology can really profit. However, there is simply not a large enough market penetration for renewable energies to make a dent in carbon emissions caused by coal-fired power plants. For example, the "State of Green Business 2010" reported that only 3.4% of US electricity is produced by the combined efforts of solar, wind, biomass and geothermal sources. Solar, the most coveted of all energy supplies labeled renewable, is the least used technology for all renewable energy currently in use.

So are we headed toward a green bubble? That is actually very hard to determine. To recap, there are abundant resources being poured into the solutions of climate change. The input is large. The output on the other hand tells us that in the energy sector, coal and oil are still king. Mentioned on the Earth Day, there are top down and bottom up solutions. The problem I see is that renewables cannot make it on their own, they need some form of legislation to deter the use of coal and oil. The private sector is ready, entrepreneurs are everywhere, now its up to the governments of the world to promote renewables and demote fossil fuels to make sure that this green bubble turns itself into a money tree.

Photo Credit: BrokenChopStick