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Location California 2009: California's Green Advantage

Apr/May 09
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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 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.