Year in review: Green tech grows flush with green

Venture capitalists strayed further from the comfortable confines of Internet and biotech investing and plowed $2.6 billion into clean-tech start-ups during the first nine months of 2007, which compares with $1.8 billion in all of last year.

Solar technologies and biofuels netted the biggest catches, with other areas such as energy efficiency, green building materials, and alternative transportation getting attention as well.

The question of whether this is an overheated investment bubble, asked last year as well, remains unanswered, although corn-based ethanol and solar companies have had bumpy rides in the stock market.

In the meantime, many new technologies, once dismissed in the days of cheap fossil fuels, are being actively pursued because of high energy prices and environmental concerns.

One of the most viable technologies is solar thermal, where heat is produced by reflective troughs or mirrors to drive electric turbines. Start-up Ausra announced that it received $40 million in financing and has plans to build a 177-megawatt solar thermal plant for California utility PG&E.

But even the dirtiest of fuels is getting its clean-tech treatment.

One of the biggest deals in 2007 was a $100 million investment in GreatPoint Energy, a company that has a process for converting coal to natural gas, a cleaner-burning fuel.

In other nitty-gritty sectors, building materials has emerged as an area of innovation.

Serious Materials, a company that has come up with a more energy-efficient formula for making drywall, raised $50 million to ramp up its manufacturing. Hycrete, which makes an additive to make water-resistant concrete, also raised money.

Outside of big industry is a budding green consumer movement, which has picked up steam as more people become aware of global warming and the growing variety of eco-conscious products.

Despite complaints about greenwashing, or making false claims about green attributes, studies indicated that people want to buy "green" products, and in some cases, like electronics, appear to be willing to pay more for them.

That consumer green streak goes right into the home, where many people are looking to lower their utility bills.

One of the best places to see just how green homes can be was at the Solar Decathlon competition in Washington, D.C., in October, where more than 100,000 people came to see 20 student-built houses that are powered entirely by the sun.

But for all the activity and excitement of how technology can help address environmental problems, the year is finishing with a tinge of trepidation in the green-tech sector, at least for some. The details of a much-fought-over energy bill, which could have a substantial impact on many industries, remain in flux as the year comes to an end.

And like all investment cycles, many new green-tech companies will fail. That may not be just because they don't "execute" their business plans. The technology has to work, too, and that may take a few years to sort out.