Emerging Trends in Cleantech Financing

TBLI Europe 2008

November 13, 2008

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SDTC Mandate

• SDTC is a policy instrument of the Government of Canada to deliver environmental and economic benefits to Canadians.

• We protect all elements of our natural capital:

Clean AirClimate ChangeClean WaterClean Land

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SDTC Snapshot

SDTC operates two funds:

• $550 million SD Tech Fund™ launched on April 4, 2002.

• Aimed at development and demonstration of emerging clean technologies.

• $342 million allocated to 144 projects.

• $500 million NextGen Biofuels Fund™ was launched on September 12, 2007.

• Aimed at establishment of large demonstration-scale facilities for next-generation renewable fuels and co-products.

• First application currently in due diligence process.

The funds are complementary and address different gaps in the Innovation Chain

The funds are complementary and address different gaps in the Innovation Chain

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Defining Cleantech

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Clean Technology – Definition

Clean technologies are innovative products or services that simultaneously reduce financial and environmental costs while driving better performance.

1. Economy: Improved operational performance, productivity or efficiency; reduced input costs.

2. Environment: Reduced energy consumption, waste or pollution.

3. Society: Improved quality of air, water and land.

Clean technologies are one of the primary drivers behind the emerging carbon market.

Investing in clean technologies translates into greater sustainability.

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Clean Technology – Definition

Clean technology products are:

• Lighter, smaller and stronger. Advanced Lithium Power

• Less expensive to manufacture and operate.Vaperma

• Less carbon-intensive and more energy-efficient.Quantiam

• Higher in economic value per unit of material input.Plasco

• Ecologically sustainable, or at least less harmful.Synodon

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Cleantech Enables Change

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Social

Technology Is An Enabler

• Technology is only part of the solution

• Greater availability of technology enables behavioral change and eventually a culture shift in society’s values.

• With a tool box of products, society can choose what works for them and take action.

Social

Economic

Environmental

Environmental Economic

Cleantech brings the 3 elements of the Sustainable Development together.

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Case Study – Westport Innovations

Overview:Westport Innovation Inc.’s fuel injector technology proves the economic viability of operating heavy-duty (Class 8) trucks in a line-haul application using liquefied natural gas as the primary fuel instead of pure diesel.  By using LNG, truck operators will be able to meet the upcoming low-emissions standards without incurring significant post-treatment costs.

Tank-to-wheels reduction of – NOx: 40%; CO: 95%, and; PM: 85%.

Better air quality along key transportation corridors, with potential for reduced transportation costs for goods.

Significant operational savings realized by reduced fuel costs and reduced overall lifecycle costs.

Social

Economic

Westport Innovations Inc.

Environmental

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Case Study – Paradigm Environmental

Overview:Paradigm Enviromental Technologies Inc.’s novel MicroSludge technology has revolutionized wastewater treatment. By reducing the amount of sludge, it radically increases the volume of solids converted to biogas, reduces waste-transport costs, and minimizes GHG emissions from micro-organism decomposition.

50% reduction of solids shipped to landfill, with resulting GHG and CAC reductions.

Land use – reduced facility sizes, reduced use of landfills, greater ability to accomodate urban growth.

Immediate savings through reduced transportation and tipping fees, with major longterm operational savings.

Social

Economic

Paradigm Environmental Technologies Inc.

Environmental

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Case Study – Carmanah Technologies

Overview:Carmanah Technologies Inc. has successfully adapted solar-powered LED technology to edge-lit roadway and transit signage (bus stop, residential address and street signs), paving the way for use of solar lighting in mainstream applications. The breakthrough will reduce energy consumption by roughly 90 percent, eliminating the need for electrical infrastructure, while enhancing public safety and security.

Annual GHG reduction of 727t CO2e, with forecasted reductions of 2,600t CO2e by 2010.

Safer envrionments at night, providing light where there is no grid connection.

Eliminates reliance on high-cost electricity, while increasing commercial opportunities (ie bus shelter advertising).

Social

Economic

Carmanah Technologies Inc.

Environmental

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The Financing of Cleantech

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Global Trends in Sustainable Energy Investment

• Total new investment of $148.4 billion in 2007.

• Asset finance accounted for 57% of new investment in 2007.

• Public market investment doubled in 2007 to $23.4 billion.

• Wind attracted the most investment $50.2 billion, with solar attracting $28.6 billion.

Global New Investment by Asset Class, 2004-2007

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Global VCPE investment: clean technology (million US dollars)

Source: New Energy Finance, 2008PIPE = Private Investment in Public Equity; OTC = Over The Counter; PE = Private Equity ; VC= Venture Capital.

$0.2bn

$1.2bn

$0.4bn$0.6bn

$1.5bn$1.2bn

$1.6bn

$2.1bn

$1.5bn

$3.6bn

$2.4bn

$1.8bn

$3.7bn$3.5bn

$2.9bn

$3.4bn

$2.6bn

$5.8bn

0

1000

2000

3000

4000

5000

6000

7000

Q1'04

Q2'04

Q3'04

Q4'04

Q1'05

Q2'05

Q3'05

Q4'05

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

Q3'07

Q4'07

Q1'08

Q2'08

PIPE/OTC

PE Buy-out

PE Expansion Capital

VC Late Stage

VC Early Stage

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VC Cleantech Investment in Europe and North America

Europe

• Leading sectors in Q1/Q2 2008 are Energy Generation (35.4%) and Energy Efficiency (20.8%)

North America

• 71.2% of investments in Q1/Q2 2008 were made in the Energy Generation sector.

The number of deals in Europe increased in 2008, but the US far outpaces all jurisdictions in number of deals and amount investedThe number of deals in Europe increased in 2008, but the US far

outpaces all jurisdictions in number of deals and amount invested

Cleantech Venture Capital Investment by Region

$0

$1,000

$2,000

$3,000

$4,000

2005 2006 2007 2008

Mil

lio

ns

US

Europe

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SDTC Investment Portfolio – 2004

In 2004, SDTC had a portfolio of 46 projects at an overall value of $343 million, including a direct SDTC investment of $89 million.

In 2004, SDTC had a portfolio of 46 projects at an overall value of $343 million, including a direct SDTC investment of $89 million.

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SDTC Investment Portfolio – 2008

In 2008, SDTC has a portfolio of 144 projects at an overall value of $1.1 billion, including a direct SDTC investment of $342 million.In 2008, SDTC has a portfolio of 144 projects at an overall value

of $1.1 billion, including a direct SDTC investment of $342 million.

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The Future of Cleantech

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Can Cleantech Survive the Market Meltdown?

Study: Cleantech funding hit record $1.6B in Q3

Record venture capital flow to clean tech

Investor: Clean Tech Is Only Hope for the Collapsing Economy

Against a backdrop of global economic turmoil, cleantech has posted some remarkable results.

Against a backdrop of global economic turmoil, cleantech has posted some remarkable results.

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Cleantech Is On Solid Ground

“The structural market drivers of the cleantech sector remain intact, suggesting that the prospect for long-term market development is positive."

Ernst & Young

The fundamentals of the cleantech sector are strong:

• Value propositions based on process efficiencies

• Global concensus that climate change must be addressed

• Long-term trend of high energy costs

• Emerging economies will be driving energy development and use

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Cleantech and TBLI

• Integrating technology and finance into business fundamentals is the way forward.

• Cleantech is creating tangible results for corporations working in this arena.

• Adoption of cleantech determines whether you are a seller or a taker of technology, whether you succeed or don’t in the marketplace.

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For more Information:

Sustainable Development Technology Canada

45 O’Connor Street, Suite 1850

Ottawa, Ontario K1P 1A4

www.sdtc.ca