5 Cleantech Trends to Watch in 2011

For those betting folks out there, here’s five solid trends you can likely count on for the global clean energy industry, courtesy of a new report from Clean Edge: a boom in LEDs, a trend in biofuels for aviation, increased use of natural gas to back up wind and solar power, a surge in low-cost green buildings, and new ways to conserve and reuse the rare earth materials critical to many green technologies.

Of the five trends, I’d put the rare earth materials one right at the top of those being driven by cold, hard economic realities. China dominates the supply of rare earth materials with around 95 percent of global production, but it has been imposing increasingly stringent quotas on their export over the past year or so. That’s led to a surge in investor interest in rare earth mining outside China, with companies like U.S.-based Molycorp (s MPC) or Australia’s Lynas reaping the rewards.

Still, starting up new mining and manufacturing projects will take years. In the meantime, efforts are underway to both recycle more rare earths and find ways to build technologies that don’t need as much of them, as Clean Edge’s report highlights. Japan’s Hitachi provides an example of both trends — in December, it announced a new technology for extracting rare earths from disk drive motors and air conditioner compressors, and it’s also one of several companies designing electric motors that use ferrite magnets instead of rare earths, Clean Edge reports.

On the opposite end, I’d put Clean Edge’s prediction of an LED lighting renaissance in the “less likely to happen” category. That’s not because LEDs aren’t making great strides in lowering cost and improving light quality compared to both their cheaper, green compact fluorescent counterparts — they are — but because they’re under attack by anti-green political forces.

In the U.S., key regulations to phase out incandescent light bulbs in favor of CFLs and other more efficient options are now under threat of repeal by key Republican lawmakers. While incandescent phase-out plans aren’t under attack in Europe and Asia, the U.S. may well take a step backwards that harms the progress of LEDs.

Another problem with the LED market is that it relies not only on politicians, but also on consumers, to make the right decisions. Studies have shown that consumers don’t really understand which of their actions lead to real energy savings, and overestimate the impact of no-cost, feel-good techniques over those, like light bulb replacement, that require some significant up-front investment.

Clean Edge’s remaining three trends to watch fall somewhere in between these two extremes, and in different ways. Take the report’s prediction that the growth of new sources of natural gas will play an increasingly intertwined role with big solar and wind power projects. That is predicated on the continued low price of natural gas, driven largely in North America by the opening up of more new shale gas supplies. But intensifying concerns over environmental damage from the “fracking” techniques required to extract these supplies may strip the “green” label from natural gas soon.

An opposite issue faces the use of biofuels for the aviation industry, another Clean Edge prediction. That’s because commercial and military aviation players may be primarily interested in biofuels as a hedge against uncertain, but likely rising, fossil fuel costs. But the question is whether biofuels will meet the technical requirements for use in aviation — and whether they can be produced at competitive prices at the scale demanded.

Clean Edge’s final trend may well be the most universal: the growth of low-cost green building techniques for the developing world. The report cites examples like San Francisco-based Architecture for Humanity’s open-source, collaborative model for bringing green design principles to true greenfield building environments, as well as Idealab and its $2,500 WorldHaus green homebuilding kit set to be deployed in India, Kenya and South Africa this year.

Lastly, while we’re in the habit of trend-spotting, I’m going to make some not-so-bold predictions of my own: trends that rely on government regulation will sputter out in the coming years. However, trends guided by cold, hard economic realities, on the other hand, will be the ones to make a real difference in global markets.

Image courtesy of Denis Giles via Creative Commons license.