The Unstoppable Growth of Cleantech

May 2008

The Clean Technology sector will be the success story of the next 20 years. Its global revenue has grown exponentially over the last few years and this growth is forecast to continue for many years to come.

Some commentators have dismissed the phenomenon as being a mere ‘green bubble’, similar to the IT bubble of the turn of the century. However the drivers behind cleantech’s growth are significantly different. Firstly, there are many real assets being constructed to provide core services such as power, water, waste and recycling. Secondly, the demand for these core services is growing due to population growth and increasing wealth. Thirdly, as the world continues to use and deplete its natural resources there is increasing pressure on communities to act sustainably. Finally there is the recognition of climate change and consequent regulatory regimes. This is a separate driver from those above and, whilst it will result in additional growth in some cleantech sub-sectors, it does not underpin the cleantech sector as a whole. As a result, the growth of cleantech will be unstoppable.

Research and forecasts by Clean Edge indicate that the clean energy sector alone had global revenues of US$77.3Bn in 2007 and this is forecast to rise to over US$250Bn by 2017.

In Australia, the definitive measure of cleantech performance is the ACT Australian CleanTech Index. This tracks 73 cleantech companies listed on Australian exchanges with combined forecast FY08 revenues of over A$13Bn and a combined market capitalisation at the end of April 2008 of over A$15Bn. The ACT Index outperformed both the S&P/ASX200 and the S&P/ASX Small Ordinaries during the 2006-07 financial year with a gain of 42.9%. Over the first four months of 2008, the ACT Index has again outperformed both of its benchmarks. If the Australian growth matches the global forecasts, annual revenue for the Australian cleantech sector could exceed $40Bn within the next 10 years.

The future for cleantech, both here and abroad, is bright. It has multiple global drivers and government backing which makes it stand out from previous growth industries. As it grows, mainstream corporate Australia will buy in through purchasing and acquisition decisions and this will enable the entire economy to move towards sustainability. By combining industry with investors, the cleantech sector will underpin and be essential for the transition to a sustainable world.

This is an edited extract of an article written by John O'Brien. Full a copy of the full article please contact info@auscleantech.com.au