Merrill Lynch predicts clean-tech ‘revolution’
London, 27 November: Investors can expect significant long-term opportunities in clean technology, according to a Merrill Lynch report, that says clean-tech and biotech will be the basis of “the sixth technology revolution”.

The need to moderate global warming, secure energy independence and offset rising fossil fuel costs will drive the development of technologies that optimise the use of natural resources and reduce environmental impacts, the report says.

“We believe clean-tech is at the beginning of a high-growth period much like computing was in the early 1970s. The application of technology to resource problems should cause profound changes in the energy, utility and automotive industries,” said research analyst Steven Milunovich.

He expects the current pressure on clean-tech stocks to continue for the time being, but a combination of friendlier government policies and an economic upturn should lead to investment opportunities in 2010-11.

The report argues a portfolio of renewable energy technologies is needed, but notes that solar should be the long-term winner. Despite being expensive today, the sun is “by far the largest energy source and solar enjoys the steepest price-performance improvements”.

The report is bullish on energy efficiency opportunities, but argues that energy efficiency will not reduce energy demand. “History teaches that greater efficiency leads to more energy consumption,” it says.

Venture capital (VC) is critical to the success of clean-tech projects and “clean-tech is becoming the third leg of the VC stool, complementing information technology and biotech”, the report says, even though the long timeframes and high capital needs do not perfectly match the VC model.