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California: Model of American low-carbon economy

With robust renewable energy targets and strong policies in place, California’s clean technology sector is now both diversifying and advancing, found a new report by nonprofit group Next 10 and consultancy firm Collaborative Economics.

According to the 2013 California Green Innovation Index, which tracks economic indicators associated with the state’s low carbon strategies and implementation, the clean technology sector continues to grow with increased patent registrations even as the state’s energy productivity increases.

Energy productivity and patent registrations
Figures revealed that energy productivity rose by about two percent from 2009 to 2010, even as the same measure fell by around one percent for the rest of the U.S.

Electricity generated from renewable energy grew 28 percent between 2007 and 2011, exceeding 41,000 gigawatt hours in 2011. Most of this generating capacity is attributed to wind energy, which doubled over the same time period.

Meanwhile, registered clean technology patents between 2010 and 2011 grew by 26 percent, surpassing the growth rate of clean patents across the U.S. and in the rest of the world.

California is touted as the leader in solar patents in the U.S., with threefold increases in solar patents between the two year periods of 2008 to 2009 and 2010 to 2011. It is also the top state for patent registrations in the water, batteries and energy infrastructure sectors.

Doug Henton, chairman and chief executive officer of Collaborative Economics, said patent registration information is an early indication of the direction markets are heading.

“Hybrid systems, fuel cells, wind energy and solar energy patent registrations each more than doubled over the examined time period. This data signals a strong potential for healthy economic activity in these sectors in California in the years to come,” he observed.

Emissions reduction and economic gains

The Next 10 report suggested that California’s clean technology sector is delivering significant reductions in carbon intensity as well as driving economic growth through additional green jobs as well as investments in some sectors despite decline in overall investments in clean companies.

“California has shown it can reduce emissions while innovating and expanding its economy,” said F. Noel Perry, businessman and founder of Next 10. “Emissions per capita in California continued their downward trend in 2010, and at the same time the state saw a rise in per capita G.D.P.”

In 2010, per capita carbon emissions continued to drop at 17 percent since 1990 and two percent from 2009 to 2010.

Key to California clean technology sector’s growth is the developments made by Silicon Valley. The area holds the highest share of California clean economy jobs as of 2011, accounting for 30 percent of the state's total, and had the highest concentration of jobs in the energy generation, energy infrastructure, green buildings and advanced materials segments.

It also owns the most clean technology venture capital in California, having 43 percent ($1.1 billion) of the total ($2.6 billion) last year.

As for the rest of the state, California as a whole saw green jobs increased at a 1.2 percent rate compared with the 2.2 percent overall generated jobs between 2010 and 2011. Jobs in the Core Clean Economy grew four times in California within 10 years, faster than the total state economy.

According to the report, overall public and private investment in clean technology fell by 42 percent to $3.75 billion last year, brought by factors such as market uncertainty, changes in national policy, and the maturation and consolidation of companies in the sector.

Nonetheless, some sectors like clean transportation, received large increases in funds resulting to investment growth of 44 percent from 2011 to 2012 – equivalent to about $1 billion.

“Market uncertainty and low natural gas prices caused some skittishness with investors last year,” said Dan Adler, advisor to Next 10 and President of CalCEF Ventures, a special purpose vehicle for accelerating investment in California’s clean technology sector.

“Despite one tough year, California's clean economy businesses are resilient. They are tapping new financing sources and will continue to be top national and international draws for investment,” he noted. – C. Domiguez

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