Cleantech is certainly a long-term trend and not a short-term bubble on the stock markets. Jack Uldrich gives six reasons for the long-term growth of clean and renewable energy in his book. Green Investing. A Guide to Making Money through Environment-Friendly Stocks.
The first is the rising cost of oil. Oil is a scarce natural resource and finding oil continues to get more costly. As the price of oil rised, alternative energies become more attractive than in times of cheap oil.
According to Uldrich, many alternative energy products make little or no financial sense when the oil is below $50 a barrel. When the price is higher, alternative energy projects suddenly become attractive. At the moment, oil is around $70 a barrel.
The second reason that facilitates the growth of cleantech is that the environmental costs are on the verge of being calculated when determining the total cost of energy. At the moment, many national and international organizations are developing rules and regulations that will tax carbon emissions.
If the environmental costs are captured in economic costs, coal, oil and gas will become less attractive as sources of energy. Alternative energy, on the other hand, will become more cost competitive.
The increase in global demand for energy is the third driver for alternative energy. Countries like China and India are still adding to the population. Furthermore, they are developing economically at exceptional rate. This demand-side change will force the equilibrium price of the energy to an even higher price.
The fourth driver for the change is can be found in the public’s growing awareness of climate change. The change is already now evident even in the USA. As a result, politicians are passing legislation that requires the states to reduce carbon dioxide emissions.
The fifth driver of cleantech is the money invested in clean energy technologies by governments, corporations and venture capitalists. The huge amount of investments will help to continuously make new innovations in cleantech.
These six drivers of cleantech and alternative energy should make it more than clear that the cleantech will be a megatrend of the 21st century. Investing in cleantech and other green investments should be very profitable in the long run — cleantech could well be the largest economic opportunity of the twenty-first century.