Technology Watch:  As the CleanTech Blog brought to my attention, the McKinsey Global Institute has released a study suggesting that if the world invested $170BN a year in increasing "energy productivity" between now and 2020, the world could cut greenhouse emissions in half AND enjoy a 17% IRR on its investment, achieving savings of $900BN annually by the end of the period.  Interestingly, none of the investment needs to be in "alternative energy", but instead in energy efficiency, which it dubs "energy productivity" to cast it in a more positive, capitalist-appealing light.

Half of the capital ($80Bn / year) would go to global industrial sectors, a quarter ($40BN/yr) would go to residential and about an eighth would go to commercial and transportation.  Two-thirds of the investment would need to go to developing countries, with China alone requiring 16% of the total.  McKinsey points out the near-universal policy of providing fuel subsidies in developing markets is a particularly egregious market distortion that holds back efficiency gains.

This suggests that a good portion of the VC dollars being thrown at cleantech is barking up the wrong tree by focusing on alternative energy and that the real money (and earth-saving improvements) are to be made in the "energy productivity" sector.