Cleantech Remains an Economic Engine in California

Cleantech Remains an Economic Engine in California

Image CC licensed by Flickr user Carlos Madrigal

Despite the troubled economy, more businesses are being launched in California than are shutting down or leaving the state. Among the bright spots is cleantech, which is generating significant venture capital investment and patent registration.

Additionally, a long-term commitment to energy efficiency means the nation's most populous state produces 68 percent more GDP per unit of energy than the rest of the country, according to the latest research from the nonprofit Next 10.

The group released Thursday the third edition of its California Green Innovation Index (PDF), an exhaustive report that tracks the growth of cleantech in the state, along with a slew of other green business indicators, such as renewable energy, green manufacturing, energy efficiency, and low-carbon transportation. [Disclosure: Executive Editor Joel Makower was one of 14 expert advisors offering guidance on the report.]

The research shows that cleantech and green business represent some of the few growing areas in an otherwise down economy, and the state is already seeing the rewards of reducing its greenhouse gas emissions.

"California is clearly benefiting economically from its position as a cleantech innovator and early adopter of energy efficiency and carbon emission reduction measures," F. Noel Perry, Next 10 founder, said in a statement Thursday. "Our data shows that California continues to improve its energy productivity, which not only means we're using less energy per person, but also that cash is freed up for businesses and households to spend in the economy, which creates new jobs."

Among the most impressive figures are statistics related to cleantech venture capital (VC). California has collected 24 percent of global cleantech VC dollars, which translates to roughly $11.6 billion since 2006. In a promising sign, the state received 40 percent of worldwide cleantech VC in the first half of 2010, a 246 percent jump over the same period a year before.

Although manufacturing jobs shrank 9 percent in the state between 1995 and 2008, green manufacturing employment grew 19 percent during the same time frame. Manufacturers in California also produced some $44 in GDP for every dollar spent on electricity, which is a $13 improvement relative to the rest of the U.S.

In fact, manufacturers in California contribute a smaller percentage of their total operating costs to electricity. The state's electricity productivity outperforms the rest of the country, according to a new feature in the report that explores the myths of California's business climate.

A second new feature takes a deeper dive into the green manufacturing outlook, which found that energy technology (ET) could be the "next breakout technology revolution," Perry said. "And like information technology, ET is an emerging trillion-dollar market. California is on course to dominate this market." 

Image CC licensed by Flickr user Carlos Madrigal.