Top Trends 2009 #2: Green Innovation

Women from around the world are trained to become solar engineers at Barefoot College in India.

Number two on the list of the trends that will shape social entrepreneurship in 2009 is green innovation.

2008 has seen an explosion of everything “green,” with everything from carbon neutral websites to low energy Christmas lights becoming a part of every day life. In 2009, I think that green innovation will play an incredible role in shaping our economy, not to mention the field of social entrepreneurship.

I think the greening of 2008 was the product of a few factors. The election season had a significant impact on the cultural discourse, not only because the news media talked about climate change in the context of the election, but because the candidates were relating investments in green technology to the declining economy. In fact, it seems to me that the narrative that Obama was pushing throughout the election season – that a “green future” was a future less dependent on foreign oil and more likely to reassert America’s technological and manufacturing leadership – might be the narrative that is helping “green” hit home.

Importantly for this blog, 2008 saw lots of activity around green entrepreneurship and innovation. This was exemplified in some ways by the October New York Times Magazine story “Capitalism to the Resue - Green Tech Rising,” which focused on how leading venture firms like Kleiner Perkins were making big bets on clean and green technology. On this blog, we wrote about funding rounds for groups making green products for the developing world like D. Light Design, which cheap solar lights for consumers otherwise reliant on kerosene.

In 2009, I think that green innovation will be a touchstone for social entrepreneurship and social enterprise in a way that microfinance has been for the last few years. I think a few things are likely to shape the field

Government investment - The Obama Administration is promising a serious investment in green technology and updated sustainable infrastructure. How they implement (or don’t) some of those proposals will have a significant impact on the sector.

Venture capital’s “recession proof” industry – A recent study suggested that venture capitalists think that green technology is the one sector where venture investments won’t decline in 2009. That could become a self-fulfilling prophecy is enough VC firms decide that’s where to make their bets.

Bottom-of-the-Pyramid design – While a lot of the Obama and VC money looks to be aimed a big infrastructure projects and major new technology plays, projects like D. Light Design mentioned are demonstrating the market potential of simple but effective green products for the bottom of the pyramid.

No matter what, I think green innovation is perhaps the thing to watch for in social entrepreneurship in 2009. Here are a few predictions:

• There will be lots of creativity not only around the “end game” of the green revolution, but around making the transition work better. For example, MicroEnergy Credits sells carbon offsets to fund new technologies in Africa
• Rating systems for green products (such as Good Guide) will rise as people try to avoid green-washing
• Green technology investments will stay strong, in part because of the self-fulfilling prophecy effect of venture firms. Much of this money, however, will go to proven entrepreneurs
• Social VCs will reap the benefit of smaller scale, bottom-of-the-pyramid focused-entrepreneurs with great business models but less experience
• The Obama Administration will have an impact on the “green” sector, mostly in the form of new regulations (particularly in areas like automotive production), and in sustainable infrastructure development