Cascadia Capital forecasts flurry of M&A and commercialization in clean tech in 2011; US Congress to discard Cap and Trade
13 December 2010
Cascadia Capital, a diversified, boutique investment bank serving both private and public growth companies, forecasts the energy sector will spur a flurry of M&A and investment activity in 2011 as renewable energy technologies mature. Sustainable Industries Predictions for 2011 include:
Cap and Trade Discarded by Congress in National Energy Policy. A national energy policy is a top priority that crosses party lines given its importance to the future of the economy and the environment. Cascadia believes that Congress will implement a policy in the coming year that focuses primarily on gas, nuclear and renewable energies; however, it will not include economic incentives for achieving a reduction in carbon emissions. There are too many loopholes, including free permits and offsetting, which prevent cap and trade from becoming a feasible option in the US.
Rising Oil Prices Lead to Investments in Natural Gas. Oil markets are traditionally sensitive to a pick up in economic activity. As the economy continues to slowly improve over the next 12 months, Cascadia predicts that oil will hit $100 per barrel. At the same time, oil companies will look to expand their operations by purchasing natural gas assets and companies that make technology for natural gas extraction. Although natural gas is not as clean as renewable sources, it will continue to be seen as a viable energy source readily available in the US.
Waste to Energy Technology Ready for Prime Time. Cascadia believes that technologies capable of converting municipal solid waste to energy will be ready for commercialization in 2011, with companies like Plasco Energy Group and InEnTec leading the charge. The industry will also see projects similar to the Salinas project in California roll out over the coming year.
Traditional Energy Companies Pursue Acquisitions in Renewable Energy. Cascadia predicts that traditional energy companies such as BP, Chevron and Shell will enter the renewable energy sector through acquisition. M&A activities will be primarily focused on companies in the wind, solar, waste to energy and energy efficiency markets.
Goodbye recession. This report indicates a healthy appetite for green energy with an emphasis on municipal waste to energy plants. The issue to watch out for, and that Congress should scrutinize is large oilcos buying up sustainable resources and sitting on them.
We know by now that acquisition is an easy way for big players to silence upstart products that threaten. Competition however only works if each product has access to the market.
We hope the politicians carefully consider the dangers of small innovative energy companies being consumed by acquisition. Energy is a national security issue and good ideas must not be shelved for protectionist purposes.
The more diverse our sources of domestic energy, the more secure. Energy Independence requires more than just the established oilcos and utilities. We need new, wholly independent energy innovators who can implement new ideas quickly and economically.
Posted by: Reel$$ | 14 December 2010 at 09:26 AM
"spur a flurry of M&A"
That is a good point Reel$$, antitrust used to prevent companies from doing that, but in the market based ideology anything goes. Exxon has done some work in algae but what if one day they started buying up all the algae fuel companies? Market proponents would say that is normal but others might not be so sure.
Posted by: SJC | 14 December 2010 at 12:29 PM
but in the market based ideology anything goes.
Not entirely true SJC. A functional market allows access to all products and services. Acquisition for suppression of innovative products retards market evolution. In the case of energy, since it is a national security issue, corporations buying innovation and shelving it - should be subject to review and divestiture. This extends the protections of antitrust legislation already in place.
Posted by: Reel$$ | 14 December 2010 at 08:31 PM