Popp Study on Role of Venture Capital, Governments in Clean Energy Published by CEPR

Sep 12, 2022

The role of venture capital and governments in clean energy: Lessons from the first cleantech bubble

David Popp, Matthias van den Heuvel

CEPR, July 2022

David Popp

Public Administration & International Affairs Department

Center for Environmental Policy and Administration

Center for Policy Research

Climate Change

Energy

CEPR

David Popp

Large investments in low-carbon technologies are needed to limit global warming. This column uses data on U..S start-ups over the past 20 years to analyze how venture capital in clean technologies can address the funding gap. It argues that unsuccessful nationwide US climate policy has dampened demand for clean energy technologies in the past.

Moving forward, governments need to implement persistent demand-side policies, such as a carbon tax, to improve the expected performance of early-stage investors in clean energy, before using targeted public investments to fund the cleantech start-ups with limited potential for outsized returns.