**<u>Box 5: “Pinstripe greens”</u> – Private financiers making millions from clean tech ventures** Although global VC investment in green energy declined with the 2008-09 recession, and shares in cleantech businesses have underperformed the wider market by a large margin recently, a world of US solar titans, German wind moguls, Brazilian bio-fuel magnates and Chinese battery tycoons has emerged over the past decade. One often hears that ―green energy could be the biggest economic opportunity of the 21st century‖. In 2010, the global clean energy sector (wind farms, solar parks and related technologies) attracted a record $243 billion in new investment, nearly 5 times the volumes six years earlier. And between 2000 and 2010, the global market for solar and wind power rose from $6.5 to $132 billion, the number of hybrid electric car models jumped from 2 to 30, and the number of certified green buildings grew from 3 to 8,138. Examples of private green financing include:

- Khosla Ventures: a venture capital firm founded by Vinod Khosla in 2004 with a clean tech portfolio spanning utility-scale and distributed generation, electrical and mechanical efficiency, batteries, building materials, plastics and chemicals, agriculture, cellulosic alcohol and advanced hydrocarbons, and including investments in a low-emission engine (with Bill Gates) and two-bladed wind turbines (with Goldman Sachs)

- Bloomberg New Energy Finance: a provider of analysis, data and news about clean tech, including on renewable energy, energy smart technologies, carbon, carbon capture and storage, renewable energy certificates, nuclear, power markets and water; founded by Michael Liebreich in 2004 and generating over $1 billion in profits in the last 12 months

- Suntech: Chinese company founded in 2001 by Dr Zhengrong Shi and floated on the NYSE in 2005; the world‘s largest producer of solar panels, with solar modules installed in over 80 countries (and a low-carbon museum in Wuxi, west of Shanghai, opened by Al Gore)

- Source: ―How green were their ventures‖, _Financial Times,_ November 5, 2011.

# **_3.1.2 Provide global technology-push support for BoP and neglected technologies_**

It is not advisable for countries with low technological capabilities and no comparative advantages in creating frontier technologies to be dedicating significant public resources to this objective within their own country. However, given the global nature of the benefits from green innovation, stable, long-term _global_ public spending on R&D needs to increase and be channeled into programs that facilitate the development and adoption of technologies applicable to developing country contexts.

**Prize** funds are one relevant demand-pull mechanism to promote technologies at the global level for the needs of countries with lower technological capabilities, and for BoP and neglected needs. Typically, a pre-announced prize is given to whoever comes up with an innovation that meets defined objectives. Prize funds are most appropriate when objectives can be well defined but the technologies are unknown. The researcher only gets the guaranteed return, in principle more than sufficient to cover time and other resources spent, if the research is successful before that of rivals. Prizes can be designed to be paid out only when specific outcomes are delivered. The size of the prize and the number of prizes can be calibrated by the novelty and magnitude of contribution of the innovation. Like patents which are a form of prize, these more generic prizes are decentralized and based on self-selection. However, once the prize is awarded, developed knowledge can be made freely available, widely disseminated and used by all.<sup>24</sup> A proportional prize makes rewards proportional to the measured impact of any successful innovation, providing incentives to public and private sectors to generate evidence on the results of innovations, measured for instance by the degree of adoption and productivity improvement – though auditing and

> 24 If the prize limits post-reward market competition, for example through exclusive marketing arrangements, then the full social benefits of competition that drive prices as close as possible to cost will not be realized.

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