Cutting Through the Hype, Searching for Cleantech’s Trillion-Dollar Potential
If we look at the history of any emerging industry, such as the Internet or biotech, it’s plain to see that there is always as much hype as promise. What we’re all calling “clean tech” is no different. But the promise of clean tech is compelling.
We have viable energy production through solar, wind and biomass. Smart-grid technology can more efficiently allocate existing energy output. And building design advances have made remarkable progress in boosting energy efficiency and decreasing pollution. Clean technology innovators are on the move. That’s why so many smart people believe clean tech has trillion-dollar potential.
As CEO of the Washington Clean Technology Alliance, I believe we can cut through the clean tech hype and find some remarkable business potential, especially for Washington state.
Two reasons: First, the U.S. has the basic economic and technological resources in place; second, Washington state has impressive comparative advantages to leverage. But sustained, concerted action between the private sector and government is vital. The risks are real, but so are the economic and environmental dividends, and they’re within reach.
Clean tech is finally achieving economies of scale, which have been so critical in establishing all major industries. Technology and best practices become standardized, expertise develops and costs go down. And clean tech is experiencing some growth spurts. For example, Washington is now the fourth-ranked state in wind capacity. Nationally, wind-energy capacity has quadrupled since 2005.
Along with economies of scale, American federal and private capital spending is impressive. According to Clean Edge, an industry research firm, about $100 billion of the $787 billion stimulus package will go to clean tech investment, according to Clean Edge, an industry research firm. And the United States has the lion’s share of global clean tech venture capital. According to the Cleantech Venture Network, North America got $10 billion of the $17 billion total in global clean tech venture capital in 2009—$5 billion went to Europe and $2 billion went to the rest of the world.
Technology improves as economies of scale are achieved and serious public and private capital is invested. So it’s no surprise that clean tech is more useful and cost-effective than ever before. Solar, smart grid output and green-building practices are examples of clean tech that are becoming cheaper, more recognized and desirable among consumers, utilities and industry. Consequently, commoditization is coming. Industry analysts Ron Pernick and Clint Wilder predict that solar, smart meters, energy storage devices, wind turbines and other clean technologies will hit this key milestone before 2020.
There are several sectors where Washington could achieve comparative advantages in clean tech. The Northwest has deep commercial resources and human capital in software to apply to smart grid development. Smart grids overlay the electrical network with information systems composed of software and energy savings devices, improving the efficiency of our power system. By activating the most efficient power sources at optimal times, smart grids can save consumers money by providing power when and where costs are lowest.
Our state was an early innovator in biomass and biofuels. With Washington’s aerospace heritage, sustainable aviation biofuels are a natural fit. Through the development of the Sustainable Aviation Fuels Northwest project, Boeing, Targeted Growth, the Pacific Northwest National Laboratory, Alaska Airlines and Washington State University are working together to find ways to make our region a leader in the commercialization of new forms of aviation fuel.
The Pacific Northwest is recognized as a leading global innovator in green construction and building science. Local building companies like McKinstry and Mithun have developed under the rigorous green-building codes of our state and local governments. Can we build upon this competitive edge? A proposal by the Puget Sound Regional Council to build a green-building testing facility might be a big step in the right direction.
What steps must be taken to keep moving in the right direction? As an emerging industry, clean tech will grow best with consistent financing and clear, predictable regulation. Washington state and local governments play an important role in both of these issues. Legislators must shape regulation and taxation with consideration to the perspective and interests of those who finance and run clean tech businesses. Entrepreneurs must see Washington as a place that is fair and conducive to innovation.
Washington state has a good thing going with clean tech. This is a diverse and growing industry and this state has the opportunity to grow with it. The technology keeps improving, financing is becoming available and Washington businesses are poised to capitalize on the work they do best. Achieving real leadership in clean tech will be a decades-long process for Washington. But if we do it right, we can locally produce products and services with global demand. That will create prosperity that is as sustainable as our environment.