The green-tech industry is caught between two gale forces.

Pushing it toward success are powerful efforts, notably government policies to regulate greenhouse gases and reduce oil imports.

Working against it are the challenges inherent in cracking into the energy business.

Unlike software or Internet start-ups, most clean-tech businesses–be they automotive start-ups or renewable-energy manufacturers–need a lot of capital to succeed. They also need long-term, supportive policies, which are often victim to politics and economic swings.

 

Chevy Volt

Credit: General Motors

GM plans to roll out its plug-in hybrid, the Chevy
Volt, in 2010.

 

And so it went in 2008. Driven by high oil prices and climate concerns, the beginning of the year was marked by a surge in green investment, with venture capital expected to top $3 billion this year. By the end of the year, there were troubling signs, linked directly to falling oil prices and the financial crisis that took hold in the autumn.

Tesla Motors, the high-profile electric luxury carmaker, provided perhaps the most drama among start-ups. After hitting delays, it finally began shipping the $109,000 Tesla Roadster. But Chairman Elon Musk took over the CEO position, laid off staff amid cash-flow problems, was forced to scrap plans for going public, and delayed its second car.

Detroit’s Big Three–under unaccustomed pressure from start-ups–pleaded with Washington for “bridge loans” (also known as a bailout) and promised to accelerate delivery of electric and other fuel-efficient cars.

Due in two years, General Motors’ Chevy Volt had high expectations heaped upon it when it was officially unveiled at GM’s 100th anniversary, although there are many other electric cars under development.

Oddly, Washington’s bailout of the financial sector also aided the renewable energy industry, most favorably, solar. After multiple failed attempts, tax credits for wind, solar, and geothermal energy were extended.

On the technology front, utility-scale solar thermal plants that use heat to make electricity will reappear in the U.S. Southwest after a long hiatus.

 

PetroAlgae

Credit: PetroAlgae

Bioreactors are used to grow algae for use as
fuel and animal feed.

 

Companies developing alternative solar-cell materials–such as First Solar’s cadmium telluride or CIGS (a combination of copper, indium, gallium, and selenide)–are challenging the incumbent silicon, promising lower panel prices and a shakeout among suppliers.

Computing heavyweights Google, IBM, and Intel each upped their clean-technology activities, while dozens of smart grid companies set out to equip the creaky electricity grid with a Net-savvy communications network.

In biofuels, lowly algae has become the darling of scientists–and even Bill Gates–as a source of biodiesel. The race to make ethanol from wood chips, trash, and other non-food feedstock sped up, with a handful of pilot plants now nearing reality.

In a world increasingly focused on energy and environment, there was no shortage of grand plans. Google, former Vice President Al Gore, investor Vinod Khosla, and billionaire oilman T. Boone Pickens all got into the act. President-elect Barack Obama and his retinue continue to show their clean-tech savvy, a bright spot for the industry.

But as Pickens found out when trying to finance what he hopes to be the world’s largest wind farm, the financial crisis has dampened many ambitious plans.