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Cleantech covers a diverse range of topics, but recognition and understanding of the sector is growing. Even Wikipedia (www.wikipedia.org) has an entry: cleantech is a term used to describe knowledge-based products or services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution.
Large multinational companies are investing billions of dollars in cleantech. An increased global awareness of climate change and the rising cost of fossil fuels means that the clean technology sector is likely to grow fast. According to Library House, venture capital investment in European cleantech companies went from £407m in 2006 to £805m in 2007. Globally, the figures for total investment have risen from around $850m (£467m) in 2004 to $6bn in 2007 and now to over $8bn in 2008.
Cleantech in its broadest sense is set become one of the biggest creators of wealth and jobs of the 21st century, with the total market predicted to reach $186 billion by 2012 (source – 3i). There is, of course, always the risk that the bubble of this new technology revolution may burst as happened with longer-established technologies – but cleantech is so diverse and intertwined with political objectives that it is less likely to happen in the same way.
World governments are currently grappling with the problems that cleantech tries to solve – energy dependency, pollution and climate change- and are trying to agree a deal that would restrict emissions and stabilise carbon levels at 450ppm. The UK is well-placed to take advantage of cleantech. A recent report from analysts Frost and Sullivan suggests that Great Britain could derive 20 percent of energy needs from ocean power, with electricity production valued at as much as £190 million annually. Internationally wind power, ethanol and biodiesel are now all competing against traditional energy sources, and even solar provides comparatively cheap power in some remote areas.
Companies are not just investing in technology development: Intellectual Property investments are now growing. Results from the Clean Energy Patent Growth Index (CEPGI) shows a growth to 230 granted US patents in the 3rd Quarter 2008 which is up 13 from the second quarter of 2008 and up from a value of 211 in the third quarter of 2007. Fuel cells dominated the other components in absolute numbers. As the Clean Energy Patent Growth Index also states, recent litigation in this sector indicates that the technology is becoming sufficiently financially viable to justify patent enforcement.
The European Patent Office, with the European Commission and the Slovenian EU Presidency, made patents and eco-technology the focus of the last European Patent Forum. The EPF was the first major conference ever to tackle the question of how the patent system needs to be adapted to foster innovation in the climate change sector. Participants included leading experts with contrasting views on the current patent system, and the changes needed to face up to one of the most interesting and controversial challenges of our times. At the heart of the debate were the questions of cost and access to new technologies. The former is a huge concern for the developing world countries whose ability to contribute to combating global warming is obviously constrained by the cost and availability of green technologies. Does patent protection significantly add to these costs? And is access to green technologies too severely limited by companies holding patents on these technologies? ...EPO President Alison Brimelow commented that, “eco-innovation may prove the next battle ground for the reputation of patents.”
We can all agree, however, that the patent system must not become an obstacle to the development of green technologies in Europe. Initiatives such as Eco-Patent Commons managed by the World Business Council for Sustainable Development have already been launched to boost the spread of clean technologies. Companies participating in this project are making available patents on clean technologies free of charge. A slightly different approach is planned for the "Green Intellectual Property Project," which will pay a proportion of patent-derived income into a trust fund for supporting the development of patent-protected green technologies.”
It is not surprising, then, that cleantech is becoming a major area of focus for intellectual property practitioners and investors alike. Cleantech has entered the VC mainstream and we are working with a growing number of organisations in the field.
Oxford Capital Partners is a specialist investment manager with extensive experience of investing in and supporting technology businesses with high growth potential, on behalf of institutional and private investors. Oxford Capital looks for the best opportunities, backing exceptional entrepreneurs and investing across all stages of development, from start-up to IPO. Oxford Capital’s focus is on emerging technologies in the areas of sustainability, healthcare and communications, and its expertise lies in accelerating businesses with potential for high growth in global markets.
As part of its due diligence process Oxford Capital commissioned Coller IP Management to undertake an IP audit of a clean biotech business seeking funds for its proposed business expansion plans. Our work indicated that there is an increasing level of activity in the area, encompassing small start-ups through to large multi-national corporations. However, the IP being developed occupied its own ‘IP space’ and is sufficiently novel (i.e. the potential for generation of differentiated IP) to have the prospect of generating patentable inventions that will protect and support the commercial goals of the company going forward. We believe that such businesses are the focus for the future of cleantech.
February 2009
