“Salvation and Profit”: Deconstructing the Clean-Tech Bubble

28 Pages Posted: 26 May 2021

See all articles by Vincent Giorgis

Vincent Giorgis

ETH Zürich

Tobias Huber

ETH Zürich

Didier Sornette

Risks-X, Southern University of Science and Technology (SUSTech); Swiss Finance Institute; ETH Zürich - Department of Management, Technology, and Economics (D-MTEC); Tokyo Institute of Technology

Date Written: May 23, 2021

Abstract

From 2004 to 2008, a bubble formed in clean technologies, such as solar, biofuels, batteries, and other renewable energy sources. In this paper, we analyze this clean-tech bubble through the lens of the Social Bubble Hypothesis, which holds that strong social interactions between enthusiastic supporters weave a network of reinforcing feedbacks that lead to widespread endorsement and extraordinary commitment by those involved. We present a detailed synthesis of the development of the clean-tech bubble, its history, and the role of venture capital and government funding in catalyzing it. In particular, we dissect the underlying narrative that was fueling the bubble. As bubbles can be essential in the process of accelerating the development of emerging technologies and diffusion of technological innovations, we present evidence that the clean-tech bubble constituted an example of an innovation-accelerating process.

Keywords: Financial Bubbles, Narrative Economics, Technological Innovation, Clean Tech, Energy, Venture Capital

JEL Classification: C54, D61, D70, F64, G01, O25

Suggested Citation

Giorgis, Vincent and Huber, Tobias and Sornette, Didier, “Salvation and Profit”: Deconstructing the Clean-Tech Bubble (May 23, 2021). Swiss Finance Institute Research Paper No. 21-36, Available at SSRN: https://ssrn.com/abstract=3852673 or http://dx.doi.org/10.2139/ssrn.3852673

Vincent Giorgis

ETH Zürich ( email )

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Tobias Huber

ETH Zürich ( email )

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Didier Sornette (Contact Author)

Risks-X, Southern University of Science and Technology (SUSTech) ( email )

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