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Cleantech investment risks

Cleantech investing has enough challenges as it – there are the same risk factors as any technology investment (market, team and technology) but you also have to contend with factors outside your control such as weather.

Yesterday's New York Times had an article about corn production for Ethanol - see "Rise in Ethanol Raises Concerns About Corn as a Food". The article described a looming risk for the Cleantech industry looking to turn corn into Ethanol – the demand for corn as a fuel source could use more than half of America's corn crop next year.

Demand for corn for Ethanol production is already driving the price of corn to record highs which in turn have encouraged America's farmers to plant more of the crop – the forecast is for 2007 to have some 85 million acres of corn planted – the largest corn planting since 1985.

The article goes on to project that food prices will rise as demand for corn for fuel competes with demand for corn as a food, feed for livestock, exports etc.

It's interesting that that the article didn't comment on what might happen to the Ethanol industry if there is a poor harvest. What if we get an extended period of bad weather across America's corn fields and the harvest comes in short? Obviously prices will be driven even higher – an ugly and vicious cycle.

The long term hope is that the efficiencies of deriving ethanol from plant waste (such as the corn stalks, not the cobs) and nonfood crops gets high enough to be cost effective.

New investment areas often come with unforeseen risk factors – you can add weather and environmental issues (that usually result in tighter regulations) to the list for Cleantech.

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STU PHILLIPS
MENLO PARK, CALIFORNIA

Intense Brit, lived in Silicon Valley since 1984. Avid pilot, like digital photography, ham radio and a bunch of other stuff. Official Geek.

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