In many academic, policy and business circles, the term “clean tech” is synonymous with renewable energy. While renewable energy technologies such as solar, wind and biofuel are a critical component of a more sustainable world, the race to lead in their development has the U.S. pulling up lame. Political games and malign neglect continue to stall comprehensive clean energy policy in the U.S., and the rest of the world is seizing the opportunity to shift the balance of green power.
A recently released Ernst & Young (E&Y) report on the attractiveness of renewable energy investment has China trumping the U.S. By almost doubling the U.S. in spending on clean energy projects, China took the reins as the world’s #1 country for investing in renewables. Other top-1o countries included European renewable energy stalwarts such as Germany and Spain, and India notably securing the 4th leading spot on the E&Y Index. With the ascent of China and India and a steadfast commitment to renewables throughout much of Europe, the U.S. may soon be left wondering what happened to its lunch.
Now the U.S. needs to wake up and smell the silicon: its once seemingly inevitable lead in alternative energy technologies is rapidly going the way of cars, textiles and consumer electronics. Still, there is reason to be optimistic on a global scale.
The economic principle of comparative advantage suggests that countries are best suited to producing what they can most efficiently in terms of resources such as labor and capital. With the world’s top solar company (Suntech) and no shortage of followers firmly positioned in China, U.S. companies face great difficulty in designing smarter, producing greater and selling more than Chinese counterparts in technologies like photovoltaics (PV). In fact, growth in American PV companies without corresponding policy and consumer support signals an industry shakeout, where only the strongest will survive. This is not to suggest that U.S. companies will not have a role to play in the domestic PV market. However, attractive opportunities may lie with support services and cottage industries, such as system installation, management and financing. Many of these “green-collar” jobs also cannot be outsourced.
While countries such as China and Denmark research, develop and manufacture the best solar panels and wind turbines, there is still a vast opportunity for U.S. clean tech: green information technology (IT).
Historically, America has unparalleled performance in software and hardware engineering. Greening Silicon Valley presents the next frontier of innovation for the U.S. to secure its dominant position in the 21st century and beyond. Emerging niche markets illustrate the exciting possibilities.
When Walmart made the announcement in 2009 that it would soon require suppliers to report statistics on resource consumption, many vendors were nervously sent back to the lab to figure out how to adhere to the largest retailer’s forthcoming Sustainability Index. Regardless of a company’s size, calculating the carbon footprint of your toothpaste, video game console or sofa bed is an intimidating challenge. Marketing fish sticks is much different from measuring CO2 emissions.
Yet one company’s nightmare is another firm’s dream. Entrepreneurial ventures such as Hara, which is based in Redwood City, CA, are marketing a new class of software called Enterprise Carbon Accounting (ECA). These tools are designed to help businesses manage, analyze and report on their carbon footprints. Despite the generally frigid financial markets in 2009, a study by Groom Energy found that over $46 million in venture capital was invested in ECA start-ups. Another industry report projects that the global carbon accounting and consulting market will reach $7 – $9 billion by 2012. The big dogs have taken notice. Software giants such as SAP and Microsoft have been making acquisitions to bolster their suite of carbon management products.
From counting carbon to managing smart grids to processing consumer waste, applications for Green IT abound. RecycleBank uses RFID technology to weigh recycled materials and reward customers for collecting garbage. According to the company, its incentive programs have increased recycling rates over 400% in some participating communities. Greenopolis, which is a subsidiary of Waste Management, offers yet another innovative example of Green IT in action. The newly launched social gaming platform, Oceanopolis, rewards online players for physical recycling by distributing points that can be redeemed for rewards. These are just some of the ways that Green IT can revolutionize everything from pollution control to recycling.
China may have eaten America’s lunch when it comes to renewable energy, but desert is on the table and the U.S. can still take the biggest slice of the Green IT pie.
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