Location California 2009: California's Green Advantage
Jennifer LeClaire  (Apr/May 09)

California's housing market may be in crisis today, but the Golden State is poised to regain its losses when the nation emerges from the economic recession. Indeed, California's efforts toward energy-efficiency on all fronts - from architecture to construction to utilities and technology - is positioning California as the go-to state for companies that want to realize real operational cost savings while tapping into one of the strongest talent pools and consumer bases in the country.

Through its efforts to advance energy-efficient innovations and green technology, California is witnessing a powerful economic stimulus that promises to pay even greater dividends in the months and years to come as companies make decisions about where to locate and expand. In fact, Dian Grueneich, commissioner of the California Public Utilities Commission, has said that energy efficiency is one of California's most important economic development programs.

The numbers are telling. A report prepared by California-based Collaborative Economics reveals that green tech venture capital investment in California nearly doubled in one year, hitting an all-time high of $3.3 billion in 2008, capturing 57 percent of the national total. Los Angeles, San Francisco, and Sacramento together accounted for over 20 percent of the nation's hybrid vehicle registrations in 2007. And total Gross Domestic Product per unit of energy is 68 percent higher in California than in the rest of the nation, generating billions of dollars for the local economy.

"California's experience with energy efficiency and clean technology is instructive," says F. Noel Perry, venture capitalist and founder of the nonprofit Next 10. "If California had not moved as forcefully to decrease energy consumption over the last three decades, we would be in a much more precarious economic position right now. Imagine where the country could be if it were as efficient as California."

A Growing Green Economy

Although California's unemployment rate has climbed to over 10 percent, its advantages in the eco-friendly realm promise a faster recovery than some areas of the nation. The California Community College's Workforce and Economic Development Centers of Excellence (COE) found a pocket of economic hope in March with its report on "energy-efficiency occupations." The report suggests real opportunities for "green collar" workers in California. Since 2005, statewide green jobs have grown at a rate 10 times faster than total job growth.

Two largest growth occupations over the next 12 months are building performance or retrofitting specialists and energy auditors. The two largest growth occupations over the next three years are project managers for construction or design work and building performance or retrofitting specialists.

"These numbers show a real opportunity to train individuals into high growth occupations in the Bay Area," says Dan Geiger, executive director of the U.S. Green Building Council's Northern California chapter. "Knowing what occupations and skills are most important is a key factor in retraining displaced workers and getting them back to work, which ultimately will help re-energize our economy here in California."

Meanwhile, in March, Governor Arnold Schwarzenegger launched the California Green Corps. The program will place at least 1,000 at-risk young adults aged 16-24 in California's emerging green economy. The program will consist of a minimum of 10 regional Green Corps throughout the state, with at least one regional Green Corps located in each of California's nine economic regions. "In California, we will utilize federal economic stimulus funds and public-private partnerships to help stimulate our economy, while initiating actions to improve our environment," Schwarzenegger says. "Green jobs are exactly what our economy and environment need right now - and the California Green Corps targets that need while helping at-risk young adults realize a brighter future."

California's solar energy may also see a boost. According to the Solar Energy Industries Association (SEIA), solar manufacturing jobs in the United States are growing. A recently enacted manufacturing tax credit may encourage companies to invest in new U.S. operations, and California has one of the nations' largest solar manufacturing clusters. "Solar is an emerging economic engine, creating thousands of jobs, unleashing billions in investments, and building new factories nationwide," says SEIA President and CEO Rhone Resch. "With the right policies, solar deployment will continue growing and create thousands of new green-collar manufacturing jobs."

Despite the economic uncertainty, some companies are moving forward with green manufacturing facilities. Among these is Pyramid GPS, which launched into full production at its new 47,000-square-foot Santa Ana, Calif., facility. The new plant ushers in the next generation of technology to produce more efficient packaging supplies. Pyramid reports its futuristic model reduces the amount of energy and material used to produce and market products.

"This is a great story for this economy," says Linda Summers, economic development manager for the City of Santa Ana. "Pyramid's new business model is a win-win. They have addressed the customer, the environment, and are providing new local employment growth for the state of California."


Clean Tech Capital of the World
California bills itself as the high-tech capital of the world, the innovation capital of the world, and the biotechnology capital of the world. Now, California is vying to become the nanotech and clean tech capital of the world as well. Clean technology is an emerging sector of a range of products, services, and processes that harness renewable materials and energy sources, reducing the depletion of natural resources, and reducing or eliminating pollution and waste.

"A lot of Silicon Valley chip producers are moving into renewable energy products," says Matthew Szuhaj, regional leader of Deloitte Consulting's Global Expansion Optimization practice in San Francisco. "Clean tech is a natural addition to their business. The talent is here to do the research and development. Nanotechnology fits into the life sciences sector. It could make drug delivery more efficient through personalized medicine. Outside of California, not many places have these ingredients to make clean tech and nanotech clusters."

On the clean technology front, the Clean Tech Open (an organization of entrepreneurs, academics, and investors created to accelerate the development of clean tech) has organized the Clean Tech Open's 100K Jobs Challenge to create 100,000 clean tech jobs in America over the next five years. California is home to one of the largest clean tech clusters in the United States. "While home foreclosures, economic instability, and the year-end spike in job losses have wracked Silicon Valley.jobs in the [clean tech] sector rose 23 percent since 2005, raising hopes for economic recovery through innovation in green technology and new, related business models," according to the 2009 Silicon Valley Index.

In fact, investment in Silicon Valley's clean tech sector jumped 94 percent from 2007 - reaching almost $1.9 billion in 2008, according to the Index. That same year, Silicon Valley accounted for 55 percent of clean tech investment in California and 31 percent in the entire nation. Most of that investment was in energy generation, but energy infrastructure also saw heavy investments. The green building sector is the fastest-growing, followed by transportation and advanced materials.

"Our economic challenges are greater than they have been in years," admits Russell Hancock, president and CEO of Joint Venture: Silicon Valley Network. "At the same time, we have become a magnet for green innovation and a new epicenter for solar technology. New technologies and employment in the green sector may help offset the Valley's economic woes," he says.

In addition to its impacts on life sciences, defense, telecommunications, and semiconductors, nanotechnology is one of those new technologies Hancock mentions that enables the green sector. Nanotechnology allows scientists to see, measure, predict, create and manipulate matter on a molecular scale. The potential is huge: The National Science Foundation (NSF) and Lux Research estimate the worldwide market for nanotechnology-enabled products will exceed $1 trillion by 2015.

According to the "Green Nanotechnology: It's Easier Than You Think" report from the Project on Emerging Nanotechnology, nanotech has the power to reduce pollution, conserve resources, and produce a "clean" economy. Specifically, nanotech can be used in the automotive industry for chip-resistant paint, better tires on cars, and advanced coatings and paints. Nanotech also enables green chemistry, which uses fewer materials for more eco-friendly results. Nanotech also cuts waste from the manufacturing process.

The Northern California Nanotechnology Initiative, the Bay Area Nanotechnology Forum, and nanoSIG are just a few organizations plowing through the state's fertile nano ground. San Diego is looking to leverage its strengths in biotech to compete with Boston and New York on the nanotech front, while Silicon Valley leverages its strengths in computer science to develop its own cluster. California has the critical mass to attract researchers, companies, and VC cash and is poised to lead the nanotech race stateside.

Green technologies of all kinds - from clean tech to nanotech - might help offset California's woes. Indeed, as the United States works its way through what may go down in history as the worst recession in this generation, California may appear to be taking a massive hit on job losses, foreclosures, and other economic indicators. But the future is truly bright. California has proven in the past that it's an ideal location for the technology sector, as well as many other aspects of manufacturing, and promises to emerge from the recession with a sustainable future and the business advantages that go along with its long-term green investments.

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