Steve Mahon

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Steve Mahon Chief Investment Officer An
investors manifesto for the deceleration of
climate change
Investing in Climate Change
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Does climate change present interesting
investment opportunities?
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500 billion Value of low carbon energy markets
by 2050 (Stern) 100 billion Demand for projects
generating GHG emission credits by 2030 (UN) 100
billion Worldwide investment in clean energy by
2009 (New Energy Finance) 84 billion Cumulative
savings from energy efficiency products in the US
(The Climate Group) 20 billion Estimated value
of solar industry revenues by 2010 (Solar Buzz)
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Increasing investment and returns in this sector
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• Independent analysis of the investment
  portfolios of 37 venture investors, comprising
  129 companies in the EU
• On track for gross annualised returns gt50
• IRR on exits in 2006 was gt50

Note VC/PE Investment in Clean Energy
Companies Includes buyouts excludes projects
Source New Energy Finance

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Value is being created in this sector in public
markets
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Source New Energy Finance
Note Other deals includes All public sector
transactions

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LOW CARBON ACCELERATOR
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• AIM-listed, closed-end investment fund building a
  diverse portfolio of privately-owned,
  fast-growing, low carbon businesses to deliver an
  IRRgt30.
• Focus on Seed through to Growth capital, in four
  key sectors
• Clean Energy, Energy Efficiency, Cleaner Fuels,
  Buildings
• Raised 44.5m at launch in October 2006.
• To date, committed gt 30m into16 firms.
• Range of pipeline investments across EU and North
  America.
• Managed by one of Europes leading specialist
  investment teams in the clean technology sector.

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Most Active European Low Carbon Investor
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Note VC Investment in Clean Energy Companies by
European Lead Investor since Oct 2004. Top 15
firms.
Source New Energy Finance, 30 October 2007
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LCA Investments provide exposure across a range
of sectors and stages

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Worldwide investments in low carbon (2005 07)

• Total 11.5bn
• Solar 26
• Biofuels 22
• Wind 21
• Rest 31

Source New Energy Finance

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Investments in low carbon sectors in UK (2007)
Source New Energy Finance
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Technologies and business models to accelerate
the low carbon economy
Resource
Technology
Water Agriculture Waste Biodiversity
Biotech and GM Water purification Desalination Flo
od protection Recycling
Adaption
Waste (e.g. landfill gas) Power
Generation Biomass Iron Ore, Coal Carbon Real
estate
Lighting Insulation Smart Grid Photovoltaics Clean
coal Biofuels
Mitigation
Adaption learning to live with climate change
by adjusting human behaviour Mitigation
reduction in, or the enhanced capture of, GHG
emissions NB the resource sectors and
technologies listed are illustrative and not
exhaustive
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Where we are heading Agriculture
Easterling and Apps, 2005
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Low Carbon FuelsBiofuel Market Overview
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• Revenues reached 20.5 billion in 2006
• Projected to reach 80.9 billion in 2016
• Grain prices at historic highs
• Food versus fuel debate
• Challenges securing low cost feedstock

Source Clean Edge Trends 2007
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Technology Analysis for Biofuels
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Biomass Resource
Process Technologies
Oil plants/Animal fats
Extraction
Transesterification
Biodiesel
Catalysis Synthesis
Ligno-cellulosic
FT diesel
Gasification
Syngas
Pre-treatment
Milling/ Hydrolysis
Fermentation/ Distillation
Sugar
Sugar/ Starch plants
Ethanol
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LCA Investee Company VAPERMA Biofuel technology
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• Vaperma based in QC
• gt40 reduction in process costs
• Independent of feedstock selection
• Applicable to future fuels (e.g. DME, butinol)
• Significant impact on
• Cellulosic ethanol
• Gas dehydration
• CO2 separation
• Air separation

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Low Carbon Energy Generation

• Wind power projected to expand from 17.9 billion
  in 2006 to 60.8 billion in 2016
• Solar photovoltaics will grow from a 15.6
  billion industry in 2006 to 69.3 billion in 2016
• Oil prices at historic highs
• Demand for energy increasing fueled by population
  and economic growth
• Energy security driving governments to seek
  localised energy sources

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LCA Investee QuantaSol
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Big challenge lack of panacea mean

• We need a portfolio of approaches
• Not just one or two, but many.
• But not necessarily everything on the menu
  developing the better options to their full
  potential may allow foregoing costlier and
  riskier ones.
• For Universities we need increased research
  development on all of the options to try to
• understand their potential limitations
• improve their performance,
• lower their costs, and
• reduce their adverse side effects,
• so future menu can be better than todays

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Summary
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• The fast-growing low carbon sector can deliver
  premium investment returns
• Building a balance portfolio is possible but
  needs scale
• Need to gain exposure to both resource and
  technology
• Long-term legislative economic factors driving
  sector growth
• We see growth opportunities in private early
  stage to expansion capital investments
• Beware of following the latest fashion

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The LCA Portfolio
Steve Mahon steve_at_lowcarbon.gg