John Doerr: Not nearly enough money going to green tech

Speaking at the MIT Energy Conference, famed venture capitalist sees a "green-tech boom," but he says it's happening too slowly to address global energy challenges.

CAMBRIDGE, Mass.--Famed venture capitalist John Doerr is conflicted. He says pace of innovation in green technologies, breathtaking in the past five years, is far from fast enough to address the scale of the world's energy problems.

Doerr was the keynote speaker at the MIT Energy Conference here Saturday. He alternated between expressing wonder at the progress in addressing global warming and discouragement at the overall state of affairs.

Kleiner Perkins investor John Doerr sees a 'green tech' boom whose scale is falling short. Martin LaMonica/CNET Networks

The theme of the conference is "scale," as in finding the right technologies and policies to address burgeoning global energy demand without polluting the planet to the point of dangerous greenhouse gas levels.

Doerr is a partner at Silicon Valley venture capital icon Kleiner Perkins Caufield & Byers, where he has invested in Google, Amazon.com, Sun Microsystems, and several other successful technology companies.

Thousands of people have seen a video of a talk Doerr gave at the TED (Technology, Entertainment, and Design) conference last year, in which he broke down crying, telling the story of how, after seeing the movie Inconvenient Truth , his teenage daughter angrily told him to fix the global-warming problem because his generation caused it.

Two years ago, Kleiner Perkins announced the creation of its first green-tech investment fund, and Doerr has become a high-profile investor and policy advocate in the field.

Altogether, the company has invested more than a half million dollars in 30 green-tech ventures, many of which Doerr touted during his talk.

Fisker Automotive, founded by a former Aston Martin and BMW sports car designer, will have a four-door plug-in hybrid electric vehicle out next year. Another investment, Amyris Biotechnologies, is using synthetic-biology engineering to create low-cost malaria drugs and synthetic biofuels that mimic the characteristics of hydrocarbons .

Doerr also successfully lobbied to pass the California Global Warming Solutions Act of 2006, which seeks to reduce greenhouse gas emissions by 25 percent by 2020.

"So what's happened in the couple of years since my daughter yelled at me? We've invested a lot, we've lobbied a lot, and I've learned a lot. Think about it: who would have thought that a designer of gas guzzler vehicles would make a 100-mile-per-gallon plug-in hybrid?" he said in reference to Fisker Automotive.

But despite all the accomplishments of these innovative companies, he struck a downbeat tone on both technology and policy. After listing some of the technologies being generated by Kleiner Perkins-backed companies, he said:

"To the point of scale, who would of thought that all of that is not going to be enough? To get solutions that scale, we are going to have to find answers that are economic for all people everywhere. We are going have to use policy to harness innovation to make sure the right thing to do is the profitable thing to do, so that it becomes the probable thing to happen. There's more money that flows through markets in a day than all the word's governments in a year...

The energy market is $6 trillion. I like to say it's the mother of all markets. Compared to that Internet, which is a big deal, this is much bigger, much more exciting. But the challenge is much larger. Going green--solving that problem will be largest transformation on the planet."

Doerr said the entire planet needs to "reindustrialize" to adopt less-polluting forms of energy.

Many people have called for the equivalent of an Apollo Project or Manhattan Project in the United States to solve the energy challenge. But Doerr said that those, which were multibillion-dollar, single-government agency projects, "fail miserably to convey the size of the challenge."

To underscore how little is being done at the federal level, he said government funding in U.S. research and development on renewable energy was less than $1 billion last year, while oil giant Exxon makes $1.1 billion in revenue a day.

The $5 million in federal research for geothermal power is "so low, it's almost criminal," he said.

He predicted that the three leading presidential candidates will address climate change regulation far more aggressively than the current Bush administration, which has opposed mandates and sought to stay outside United Nations-led climate talks.

Despite Doerr's concern for inadequate action on clean energy, he touched on the question of an investment bubble in green tech. Overall, he said there isn't a bubble, but he does see some problems.

"There's too much money chasing too few good ventures, despite the size of this problem," Doerr said.

Venture capitalists have poured billions of dollars into the sector, making it one of the fastest-growing areas of investment, though it still garners fewer venture capital investments than biotech and information technology. That rapid capital influx, along with the challenges of large capital demands and regulatory complexity in energy, have caused concern that investment has been too aggressive.

In response to a question, he said the venture capital industry will not change to fund more capital-intensive energy projects. And he noted that returns in venture funds have been getting worse .

But he predicted that returns for green-tech investments will be good, once more recently funded start-ups go public in 2009.

Echoing the comments about a " global-warming bubble " made earlier this week by investor and tech luminary Bob Metcalfe, Doerr said "booms," or large investment waves, are generally good for the economy.

"I think that we're at the beginning of a green-tech boom. I can assure you we don't have an overinvestment to deal with the scale of the problem."

 

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