- Reuters
- Tuesday February 5 2008
By Gerard Wynn
LONDON, Feb 5 (Reuters) - Private sector billions being
spent on the fight against climate change may be leaving a
stocks boom-and-bust legacy as money pours into listed companies
but leaves private entrepreneurs starved of cash.
The private sector is expected to foot the bill for climate
action, policymakers say -- with governments' role limited to
tilting charges and subsidies in favour of low carbon-emitting
renewable sources of energy like wind and solar, away from
fossil fuels like coal.
And investment is soaring above $100 billion annually after
a blitz of government rhetoric, while continuing government
backing will be needed to counteract a global credit crunch and
economic slowdown.
But most environmental funds, which are launched on an
almost weekly basis, particularly target listed stocks,
prompting stock bubbles and crashes in some sectors while
unquoted companies and entrepreneurs queue for cash.
"Clearly areas of the market are overvalued...(but) the
environmental technologies sector has grown very fast and
continues to do so," said Nick Smith, chief executive of Allianz
Global Investors (AGI) UK, expressing concerns about
over-valuation in Chinese solar stocks.
AGI next week launches a UK-domiciled Allianz RCM Global
EcoTrends Fund which aims to build on the 1.7 billion euros
($2.52 billion) AGI already holds in clean energy, pollution
control and water stocks. AGI has to invest in listed companies
for compliance reasons.
Shares in one of the world biggest solar power companies
Norway's Renewable Energy Corp nearly halved last
month, compared with a 7 percent drop on the MSCI index of world
stock markets.
Many solar stocks have dived, due to a mix of falling oil
prices, worries about a consumer downturn -- because households
are important solar panel customers -- and concerns that a
shortage of raw material silicon may become a glut, which could
slash solar panel prices and profit margins.
Such falls follow a similar dive in the biofuels sector last
year after a production glut joined spiralling input costs.
An economic downturn may weigh some renewable energy
investments further.
Evidence is emerging that banks are already charging
slightly higher rates for large wind power projects following
the credit squeeze, according to Tom Murley, head of renewable
energy investing at private equity firm HG Capital.
"Banks are more cautious to underwrite deals, they want club
deals, and so are asking for a little bit more. It's certainly
not as hard as leveraged finance but there are signs it could be
getting more difficult."
SHORTAGE
Start-up unquoted companies in Europe are facing a money
shortage across the board compared to counterparts in the United
States. A lack of risk-taking spirit among investors with
accounting rather than entrepreneurial backgrounds is blamed.
North American cleantech companies raised three times more
such venture capital funding compared to their counterparts in
Europe in 2007, according to the Cleantech Group.
"There are entrepreneurs and technologies in Europe but
funding is the challenge -- call it entrepreneurial capital,"
said Nicholas Parker, chairman of Cleantech Group. "The danger
for Europe is...on the prosperity agenda it will lose out.
California is going there and will reap the benefit."
European Commission President Jose Manuel Barroso last month
acknowledged that America was ahead on venture capital, a view
backed by London-based operators.
"The Americans have the money," said Mungo Park, chairman of
Innovator Capital, which advises cleantech and biotech companies
on raising funding and other matters.
Promising technologies recently surveyed by Park included an
electrically-active solar spray which can be applied to the
windscreens of cars and scooters and now in the lab of a
Dublin-based physicist.
