California's Green Economy Defies Economic Downturn

Manufacturing employment in California’s green economy expanded by 19% from 1995 to 2008, while there was a 9% drop in total manufacturing employment over the same period. That’s just one of the impressive statistics released last week in the 2010 California Green Innovation Index.

The report highlights California’s increasing global leadership in green innovation, cleantech venture capital investment, and energy productivity, despite the economic downturn. New data also show that more businesses are opening in California than are closing or leaving.

"California is clearly benefiting economically from its position as a cleantech innovator and early adopter of energy efficiency and carbon emission reduction measures," said F. Noel Perry, a businessman and founder of the nonpartisan, nonprofit Next 10, which released the Index. "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."

This third edition of the California Green Innovation Index, compiled by Collaborative Economics, tracks California’s history of policy and technology innovation, and resulting economic and environmental gains or losses.

Highlights from the index include:

  • Global venture capital (VC) investment in clean technology is becoming more concentrated in California. Accounting for 24% of total global investment, the state has attracted $11.6 billion in cleantech VC since 2006.
  • California is the top state in patent registrations in green technology outpacing second-ranked New York by more than 150 patents between 2007 and 2009.
  • California dominates the country in solar energy production, representing over 90% of the total U.S. net solar electricity generation in 2007.
  • Green manufacturing is taking place in every region–with growth since 1995 in the Bay Area (55%), Orange County (54%), and San Joaquin Valley (38%).

According to Next 10, California’s economy has profited from efforts to improve energy efficiency and reduce its dependence on carbon. These gains improve the competitive advantage of the state’s companies and improve the state’s resiliency to external economic shocks.

  • For every dollar of GDP generated in 2008, the state’s economy requires 32% less carbon than it did in 1990, saving California residents money and giving California businesses the competitive edge.
  • Overall GDP produced per unit of energy continues to be 68% higher than the rest of the nation and has been rising at a faster rate at least since the 1990s, freeing up billions of dollars to produce goods and services that would otherwise have been spent on energy.
  • From 1992 to 2007, California GDP relative to total electricity expenditures in manufacturing increased 21%, compared to 3% in the rest of the country.
  • Between 2002 and 2007, electricity productivity of manufacturers improved by 13% in California and dropped by 10% in the rest of the nation.

In Addition, Californians are getting out of their cars more to use public transportation, or using more alternative fuels when driving. Next 10 said public transit ridership is on the rise in California even as transit availability shrinks. The total number of annual passengers riding public transit was 16% higher in 2008 than 2004. Between 2007 and 2008, total revenue miles (a measure of transit availability) decreased 15%.

Alternative fuel use is on the rise, jumping 9% from 2006-2007, while conventional fuel use dropped 0.4%. Over the longer term (2003-2007) alternative fuel use increased 55%, while conventional fuel use increased 4%.
This year’s Index includes two special features. The first, "The Changing Business Climate in California: Impacts & New Opportunities" examines myths about California’s business climate and found contrary to conventional wisdom:

  • Electricity bills are lower in California.
  • California manufacturers spend a smaller percentage of total operating costs on electricity.
  • California’s electricity productivity in manufacturing is outpacing the rest of the nation. 
  • More businesses are starting up in California than are leaving or closing.

"There is much talk about the poor business climate in California, but we’re finding that the data tells a different story," said Doug Henton of Collaborative Economics, a Silicon Valley-based firm that prepared the Index for Next 10.

"Californians actually pay less overall for electricity due to our state’s energy efficiency standards. We also find that despite the talk of businesses fleeing California, the state is in fact gaining substantially more businesses every year than are closing or leaving."

"By revenue, energy represents the largest industry in the world, " commented Perry. "Energy technology is emerging as the next breakout technology revolution. And like information technology, ET is an emerging trillion-dollar market. California is on course to dominate this market."

The full Index report is available at the link below.


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