Low-Carbon: Venture Capital, Policy - at i4Energy

I was a bit disappointed with John Zysman talk at Citris/i4Energy last Friday (2/19/10) at UC Berkeley, entitled:

 "The Transition to a Low Carbon High Efficiency System: Implications for Venture Capital, Policy, and Climate Negotiations"

I am not a venture capitalist, whom I think was his target, and I did not understand some of the language or references.

And Prof. Zysman announced, a little too boldly, that he is not a scientist or engineer, and indeed I thought his talk showed a lack of data or evidence or causality that I would expect.

And at times I thought he was repeating, in a different vocabulary, what is obvious to all of us:  a change to low-carbon high-efficiency economy is going to be a big change, an "system systems transition."

So why write about this talk?

Because it needs to said, in every possible language and to every possible audience: the old rules must change, and this includes financing.

Unlike the IT/semiconductor revolution, which Prof. Zysman seemed to know well and  referenced several times in which VCs profit (or 'bet') on  'incremental' improvements, such as  transistor density or CPU power to an established base, the move to renewables is anything but clear and will be difference from IT.   It will  not be a bet on a specific product, not a bet on a specific technology, but more correctly:   a bet on whole suite of technologies, which won't work if one technology is missing.

He cited electric cars, for example.   Without a recharge grid, electric cars won't take off.   Without a truly smart grid, perhaps renewables can not take off.   And if you bet on wind, and then solar takes off, where does that leave the VC?

So it is more than a carbon price, more than optimizing an old technology in a new form.  (He cited the problems of building a lighter aluminum engine as replacement for internal combustion engine - tried and did not work.)

He mentioned the semiconductor industry road-map and urged a similar carbon road-map.  He stressed the need for policy to drive technology, i.e. choose a 'trajectory' and not discrete technologies alone, so multiple developments are completed correctly, and in parallel.  The old VC model isn't going to cut it.

And he argued, which we all know, that India and China are pursuing systems change and we are just not a player.

I'd like to see Prof.  Zysman rewrite his talk in a form and language non-VC professionals can understand and not use words with ambiguous meanings to laypeople (paradigm shift, transitions, hedge vs. VC models).   Perhaps he could draw more concretely on past energy transitions, wood to coal, which he said took 100 or so years.  

Then we can appreciate what he is trying to tell us, which may be of vital importance.

And what if the VC model fails?  Energy supply and climate change are world problems.   Surely we should consider that huge pools of capital, talent, ideas can be tapped with different rules.


Announcement
http://www.citris-uc.org/events/i4e-Feb19
Video
http://www.youtube.com/watch?v=p_3JMWJQMiI