trends and challenges in clean technology chapman

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TRENDS AND TRENDS AND CHALLENGES IN CHALLENGES IN

CLEAN TECHNOLOGYCLEAN TECHNOLOGYByBy

James C. ChapmanJames C. ChapmanPartner, Foley & Lardner LLPPartner, Foley & Lardner LLP

975 Page Mill Road975 Page Mill RoadPalo Alto, CA 94304Palo Alto, CA 94304

[email protected]@foley.com

©2011 Foley & Lardner LLP©2011 Foley & Lardner LLP

INTRODUCTIONINTRODUCTION

“Clean Technology” – “A diverse range of products, services, and processes that harness renewable materials and energy sources, dramatically reduce the use of natural resources, and cut or eliminate emissions and wastes.“

Clean Edge, a leading cleantech research firm


Question????Question????

Which contains more energy? Kwh of electricity Gallon of gas Cubic foot of natural gas Pound of coal


MARKET SIZEMARKET SIZE

Bio-fuels, windpower, and solar voltaics ALONE combined to create a $188.1 billion industry in 2010. Projected to grow to $349.2 billion in 10 years.


WHAT DOES A CLEAN TECH WHAT DOES A CLEAN TECH ATTORNEY DO?ATTORNEY DO?

Helps companies get startedHelps companies build their legal infrastructureHelps companies attract financingHelps companies navigate the complex regulatory environmentHelps companies grow and prosperHelps founders and investors exit – M&A, IPO


CURRENT WORLD-WIDE CURRENT WORLD-WIDE TRENDS TRENDS

Since 2000, the developing world has contributed 90% of the total increase in green house gases (exempt from Kyoto Accord)Since 2000, green house gases in the developing world have increased 50%Coal consumption will double between 2005 and 2030 (China and India will comprise 80%)There are 45 nuclear power plants under construction (none in the U.S.)


U.S. TRENDSU.S. TRENDSTop three investment sectors for clean technology - Investors are looking to companies with proven, capital-efficient technologies that are ramping up revenue and achieving profitability Energy efficiency – Top sector for

venture capital Energy products tied to cloud computing Building controls and consumer

efficiency


U.S. TRENDS - ContinuedU.S. TRENDS - Continued

A renaissance in LED Lighting – Limiting factor is Consumer confusion over phase out of incandescent bulbs, efficacy of CFL’s, and which actions actually lead to energy savings. Consumers tend to pick the feel-good alternatives rather than actions that lead to real savings such as changing light bulbs.


U.S. TRENDS - ContinuedU.S. TRENDS - ContinuedIncreased role of natural gas – Clean safe alternative will be increasingly intertwined with solar and wind projectsIncreased use of bio-fuels for commercial and military aviation – Hedge against rising oil pricesChallenge over “rare earth” materials – China is the leading producer and limits export


CALIFORNIA TRENDSCALIFORNIA TRENDSCalifornia energy policies and realities are in conflict. Goal is 33% renewables by 2020, yet developing alternative energy facilities will get harder.Energy will become more expensive in California. Siting power plants in California will become even more difficult.Increased use of renewables and natural gas, less coal and no nuclear


CALIFORNIA TRENDS - CALIFORNIA TRENDS - ContinuedContinued

Innovation and consumer products are difficult in a regulated environment. Standards, not the marketplace, will drive demand for clean tech products and services (buildings, appliances, renewables, fuels, storage, etc.).Renewables are a very expensive way to reduce carbon dioxide.


CHALLENGES WITH CLEAN CHALLENGES WITH CLEAN TECHNOLOGYTECHNOLOGY

Tremendous technology risk, i.e. ethanol, energy storage, etc.High capital requirementsCustomers that are very conservative, risk averse, and late adopters of technologyHuman resources –Lack of domain expertiseHighly regulated environment


CRITICAL CHALLENGES FOR THE CRITICAL CHALLENGES FOR THE NORTH AMERICAN ENERGY INDUSTRY NORTH AMERICAN ENERGY INDUSTRY (By Order of Importance)(By Order of Importance)

Environmental regulationAging infrastructureNon-environmental regulationAging industry workforceNeed for new pricing mechanisms

*Survey of over 100 Canadian electric and natural gas utility executives.


THANK YOUTHANK YOU

James C. ChapmanPartner

Foley & Lardner LLP975 Page Mill RoadPalo Alto, CA 94304

[email protected]

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