August 17, 2009 by Shawn Lesser
The beautiful thing about the U.S. is that we have abundant renewable resources—both in our environment and in our brain power.
So be it capturing the amazing wind resources in Texas, tapping into the great brain cluster in Boston with MIT and Harvard, or transitioning auto workers in Michigan and Ohio to produce wind turbines, every state has its own special mix of renewable resources that are just being waiting to be tapped.
But some states are doing a better job than others at bringing together all the parts of the economy with natural resources and manufacturing know-how.
A huge piece of the puzzle is political will. Public policies on a federal, state and local level are and will continue to be an important driver and indicator for the future of the cleantech economy. Whatever inherent advantages a region or state may have, it requires the firm commitment and backing of political leaders for any initiative to gain traction.
Obviously it’s been a challenging time for industries across the board, but cleantech has a bright future. As my friend Nick Parker, executive chairman of the Cleantech Group, said in January 2009: "In 2008, there was a quantum leap in talent, resources and institutional appetite for clean technologies. Now, more than ever, clean technologies represent the biggest opportunities for job and wealth creation."
So which states are the leaders in the space? The good news is every state in the union is involved in cleantech in some way, so in a sense we can’t say there are any losers. But we can say there are some bigger winners.
I started by looking at data points that were are available on cleantech jobs and job growth, cleantech companies, and VC dollars invested. From there, I tried to look at more intangible aspects of each state's initiatives, especially government policies.
In the end I tried to come up with a fair rating, but I am well aware that certain people will disagree. That's fine; the main reason for this rating is to open up the conversation.
So here are my rankings for the top cleantech states of 2009:
California is the 800-pound gorilla of cleantech, with half of all cleantech-related venture capital going to the Golden State, a total of $6.5 billion from 2006 to 2008. Backed by the leadership of Governor Arnold Schwarzenegger, they also have the most aggressive greenhouse-gas reduction targets in the country.
Texas boasts the world’s largest wind farm, and generates more electricity from wind than any other state. Moreover, Texas attracted more than $716 million in cleantech-related venture capital funds between 2006 and 2008.
Massachusetts can lay claim to the best university cluster in the world, with MIT, Harvard University, Boston University, Tufts University and Northeastern University helping attract from 2006 to 2008 $1.2 billion in venture capital funds—second only to California.
Colorado is cultivating a true cleantech culture, with roughly 200 cleantech firms dotting the area stretching from Colorado Springs to Fort Collins. The state has attracted more than 17,000 cleantech jobs from 2006 to 2008. Colorado was also able to attract Vestas Wind Systems, the world's leading supplier of wind turbines, to open four new plants—an investment of more than $600 million.
New Jersey is aiming to become the new Sunshine State, thanks to its strong public-private partnership. Back by Gov. Jon Corzine, New Jersey is the best place to do solar in the country. Very early in. Gov. Corzine’s administration established the Solar Renewable Energy Certificate (SREC) Program, which shifts the solar market away from a dependence on rebates to drive solar growth.
Tennessee is the billion dollar baby, thanks to strong political foresight of Gov. Phil Bredesen. That has helped the Volunteer State land two of the biggest cleantech deals in the last several years: Hemlock Semiconductor’s announced plans for a $1.2 billion polysilicon plant and German chemical firm Wacker Chemie’s announced plans for a $1 billion polysilicon factory in Tennessee (see Cleantech industry in the U.S. South emerging from stealth).
Pennsylvania, meanwhile, is itself trying to kick the fossil fuel habit, with strong leadership from Gov. Ed Rendell in attracting cleantech startups and the establishment of a $650 million energy fund to support the sector. Gov. Rendell was pushing "green" before it was a buzz word, back when he was mayor of Philadelphia (see Pennsylvania invests $23M to quadruple solar capacity).
New York aims to replace the Big Apple with the Green Apple, thanks to initiatives designed to lower the state’s carbon footprint and the establishment of several education-related and startup cluster initiatives around the cleantech sector.
Ohio is retooling for a green energy transition, moving away from heavy industry such as auto manufacturing in favor of green initiatives, such as seeking to establish itself as the second biggest wind turbine parts producer in the country. In fact, Ohio ranked among the top five states with the most jobs in clean energy, energy efficiency and environmentally friendly production in 2007.
Oregon, and specifically the Portland metro area, has established itself as a thought-leader in progressive environmental policies for the past 30 years. The area’s highly attractive living standards make it a powerhouse in terms of continuing to attract the intellectual capital that will drive the cleantech revolution. Oregon has had explosive growth rates in cleantech jobs around 50 percent!
Three additional states that deserved honorable mention even though they did not make our top 10: Michigan, Washington and North Carolina. All three have made strong strides in the area of cleantech: Michigan specifically in next generation battery productions (see Stealthy Khosla-backed battery startup driving economic makeover?), Washington in the area of hydro electric power, and North Carolina with great innovations coming out of the Research Triangle.
I had a conversation with Doug Cameron, managing director and chief science adviser at Piper Jaffrey, one of the most active investment banks in the cleantech/renewable space. Doug was previously the chief scientific officer for Khosla Ventures. I think he stated it best: "My hope is the clean and green get so integrated into everything we do that most businesses and industries become green, and it is the ones that are not that we highlight and count." I think that says it the best, and I am 100-percent of the same mindset!
Shawn Lesser is the president and founder of Atlanta-based Sustainable World Capital, which is focused on fund-raising for private equity cleantech/sustainable funds, as well as private cleantech companies. For information, visit his Web site.
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