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Cleantech: Renewables To Rebound From Hype Deficit

by Melody M. Bomgardner
January 13, 2014 | A version of this story appeared in Volume 92, Issue 2


Excitement about cleantech has hit bottom, according to analysts. But that’s to be expected, because it has been several years since the sector was considered new. Venture capitalists have moved on, and this is the year corporations and private equity firms will take over to advance the most desirable technologies.

Renewable chemicals and fuels became a real, live industry last year, with a first batch of commercial-scale facilities. Advanced biofuels firms KiOR and Beta Renewables scaled up production, as did biobased chemical makers Myriant, Elevance Renewable Sciences, and Amyris. Genomatica’s partner BASF began commercial production of 1,4-butanediol in December.

This year, cellulosic ethanol makers Enerkem, POET-DSM, and DuPont will open their first large facilities. And BioAmber will follow Myriant in producing commercial quantities of succinic acid when it opens its plant in Ontario.

All new technologies follow a pattern of initial hype followed by disappointment and then a trough. “Climbing out of the trough is where we are today in cleantech,” says Dallas Kachan of consultancy Kachan & Co. Kachan predicts a rebound this year, saying business demand for green products is high.

But there won’t be any major surprises, or failures for that matter, adds Mark Bünger, an analyst at Lux Research. “Now we’ll see people pull it together. It’ll be more like normal business day to day.” Renewable chemical firms should take their next batch of products off the shelf and put them into the market, Bünger advises. “We’re done with the ethanol thing. And makers of adipic and succinic acid—they too can go make something else now.”

Excitement about renewables will move from simple chemicals to more complex compounds—such as man-made spider silk, Bünger predicts. Start-ups should work to “really understand how biology forms those materials and how we can tweak them to make different types of molecules,” he says.

The changing energy landscape will have diverse effects on renewable industries. Solar is set to soar this year, with global installations growing by 25%, according to GTM Research. But demand for lithium-ion batteries for electric vehicles and industrial uses will remain small, predicts Yoshihiro Azuma, equity analyst at Jefferies.

Cleantech analysts caution that technologies to extract and use shale gas in the U.S. are attracting investment. As the infrastructure to make fuels and chemicals from natural gas grows, demand for ethanol and other two-carbon chemicals made from renewable resources may take a hit, Bünger says.



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