By Joe Paluska
Joe Paluska wrote this while Global Technology Practice Leader for H&K.
He has recently become CMO of Project Better Place which creates electric cars and supporting infrastructure - http://www.projectbetterplace.com/.

Whether looking for business opportunities, marketing trends, or for signposts of where the future lies – California’s Bay Area has been an icon for capitalists for more than 20 years. Silicon Valley’s legacy is about disruption and re-invention. But how disruptive can you really be at growth rates of 3X GDP? Some research indicates that for every $10 per barrel increase in oil prices, there’s a 50 basis point drop in worldwide GDP. Where’s the incentive to innovate?

Today – innovation looks Green. Big oil, after all, is posting record profits at the expense of the technology industry, among others. Suddenly, Silicon Valley is awash in new ideas involving energy.

In my view, we’re beyond the inflection point of a Green Industrial Revolution. It’s no longer a tipping point; it’s quickly moving into a “topple.”

With oil north of $100 per barrel, Silicon Valley is re-tooling itself to do what it does best – attack massive profit pools with technology and innovation.

First, follow the money:

• VantagePoint Venture Partners sees clean tech as a three times bigger opportunity than the traditional IT market itself;
• Three of the Valley’s biggest VCs – Kleiner Perkins Caufield & Byers, Draper Fisher Jurvetson, and VantagePoint – are expected to close another round of clean tech funds in 2Q08;
• Dow Jones VentureSource pegged 2007 total worldwide investment in clean tech at $3 billion, up 43% from the prior year; and
• New Energy Finance's latest numbers show that total new investment in clean energy reached an astounding $148.4bn in 2007, up 60% year-over-year.

One of the largest debates within the VC community is biofuel versus “free” energy delivered by the sun, wind, wave and earth. What many VCs argue is that we need to re-engineer and build out the technologies that collect, store and transport these alternative energies. Doing so will result in a “democratization of energy” and effectively rebalance wealth around the world as all nations have access to this “new” energy.

Second, the deal flow is occurring after two years of increasing media saturation around climate change. The media has influenced public opinion, which in turn has brought the debate front and center in the political arena.

While the US lacks a comprehensive strategy for dealing with climate change, the rest of the world led by the Europeans press on.

In February, for example, Danish Prime Minister Anders Fogh Rasmussen pressed President Bush on reaching a new climate agreement before the Kyoto Protocol expires in 2012. Copenhagen has significant skin in the game as it plays host to the next material round of negotiations for reducing greenhouse gases and a global trading system for carbon emissions in 2009.

Rasmussen told The Washington Post: "A clear signal from the United States that the U.S. will engage itself in the climate change process would be valuable in a European context. It might be much more important…than decisions about the number of troops in Iraq."

Similarly, when Israel declared last January that it would move off of oil within ten years, Israeli President Shimon Peres told The Financial Times: "The two greatest problems today are oil and terror. Oil is the greatest polluter, and the great financer of terror. [Oil-producing nations] make a mockery of democracy." Solar, on the other hand, “is permanent, democratic, friendly, and it does not pollute," he said.

In Silicon Valley today, we’re witnessing yet another rebirth. One which can be regarded as the 21st Century version of President Franklin D. Roosevelt’s New Deal program of the 1930s, which some argue helped to pull the US out of the Great Depression.

Today’s “new” New Deal appears to be different in that it represents a form of social capitalism where the private sector is incented to help fight climate change – for profit. And while it’s increasingly a global phenomenon, it’s also clear that it’s being led out of the heart of Silicon Valley, which brought us the last revolution and worldwide growth – and that’s exciting.

No doubt, there will be mega winners and losers in this emerging Green Industrial Revolution, much like they’re been in all other revolutions. This generation of investors, inventors and entrepreneurs of all sizes will seize the day to exploit the significant delta between profit and economic policy. They will engineer the technologies and create the for-profit business models to exploit that delta.As with all new technologies, early buzz starts online, and the smart money will be monitoring these conversations. If you’re in the technology sector in any form – these are exciting opportunities. And if you’re a communicator or involved in regulatory issues – these are unavoidable trends to be watched, applied to your own business sector, reflected in how you speak to your stakeholders. It’s these for-profit models that will help rejuvenate the lackluster tech growth rates we’re seeing worldwide to help pull us out of slowing economic growth much like Roosevelt’s New Deal sparked a recovery in the 1940s.