Friday, December 10, 2010

Clean tech California flexes muscle under Schwarzenegger but Michigan pumps ion after Granholm

Arnold Schwarzenegger is about to step down as governor and has vowed to continue his "green activism". Although Schwarzenegger is a Republican, any criticism of his push for climate change action in the state probably came from his own party, rather than the Democrats. At his last Governors' Global Climate Summit, he talked so much about flexing muscle against big oil special interests and used metaphors that normally belong in the gym I felt like I'd had a work out myself after his 30-odd minutes on the podium.

Californians will be sad to see him go, but only when they're not talking about the $25bn budget deficit he's left behind. But who will flex the climate muscle and take his place as "climate action hero" among America's governors?

Incoming governor Jerry Brown is expected to continue Schwarzenegger's policies in California, but will most likely be distracted by the budget deficit. And clean tech success in other states has been perhaps overshadowed by the news from the Golden State led by a former Hollywood star - until now.

Clean Edge is a private company, but its market data is viewed as reliable by companies, investors, government agencies and non-profits. Its first  annual US Clean Energy Leadership Index, announced this week, ranks all 50 states and how they are performing in  clean tech, policy and investment.

California, Oregon and Massachusetts take the top three slots in its index. No surprises there. And Californian companies received 60% of all clean tech venture capital investments last year.  No change there, then.

The top 10 table also includes Washington, Colorado, New York, Illinois, Connecticut, Minnesota and New Jersey.

But perhaps more striking is the appearance of Michigan - scene of the rise and fall of the American automotive empire - in the number one slot in the patent category.

This shouldn't be too surprising given Detroit's position as the centre of the US auto industry and the blue chip companies in other sectors based in Michigan, according to Forbes. But it is certainly no coincidence - this is a policy-driven success.

Michigan's outgoing Governor Jennifer Granholm is a Democrat but she will be replaced after the recent mid-terms by Republican Rick Snyder. Granholm doesn't have the Hollywood profile of Schwarzenegger to automatically generate global coverage, but deserves her moment in the sun none the less.

Granholm is credited with attracting wind investments into the state thanks to Michigan's Renewable Portfolio Standard, which commits the state's utilities to provide 10% of renewable sources of energy by 2015, and 25 percent by 2025. It is less ambitious than California's RPS, but Mariah Power, Global Wind Systems, Cascade Swift Turbin and Great Lakes Turbine (which has controversial plans to install turbines in the Great Lakes themselves) have all been attracted to Michigan since 2008.

Last month Granholm joined the climate conference and gave a passionate speech about the importance of using clean tech to create a new sector for the economy in the state where the unemployment rate is 12.8%, a clear 3 percentage points above the national average. Battery technology for electric cars and the supply chain manufacturing to support it were the targets for Michigan, she said. Around 97% of lithium ion batteries were made in Asia and that had to change if the automotive industry has any chance of making the transition to electric, she said.

"I know California often thinks it's challenged, but come to Michigan. We're the state with the largest rate of loss of jobs largely related to the automotive industry and this global shift in manufacturing jobs.

"We have got to add new sectors. Our economy has been balanced for 100 years on one leg of an economic table. I appreciate all the comments about climate change but to me it's all about jobs. How do we replace those jobs being lost in America? As a nation we have to decide: are we going to be nation that manufactures stuff, or not? If we decide as a nation that it is important to be making that stuff and it's important to have a manufacturing backbone to protect our nation then we want to be, in Michigan, the place where that happens because we have the capacity and the infrastructure in the town.

"Because other countries are putting significant incentives on the table for these jobs we've got to put incentives on the table for them to occur in Michigan we adopted the nation's most impressive tax credits for the electric vehicle battery industry  and the supply chain to it. It's all about jobs."

The result, she said was the creation or re-location of 17 companies in Michigan in a little over a year which are projected to create 63,000 jobs in the state.

Schwarzenegger's tenure will be remembered for the budget deficit - but also as a time when California strengthened its position as a clean tech hub even during a recession and while other countries are feeding investments and incentives into their clean energy industries from national coffers.

Confidence in America's position as the continuing global leader in clean tech is not shared by everyone.  Last month, the US energy secretary, Stephen Chu, warned that China's clean tech successes marked a new 'Sputnik moment' for America. And a report out yesterday from Bloomberg New Energy Finance and Pew Charitable Trusts predicts that spending on clean tech investment will increase phenomenally in Asian countries and the UK, which according to the report is predicted to increasing its spending by 260% over the next decade.

But without huge strides on the federal level and the threat of the exclusion of renewable projects from the extension of the Treasury Grant Program  subnational governments will continue to fill the void.

Granholm won't have the chance to be the Governator's successor on the world's "green economy" stage, but her policies could mean that the EV automotive industry in the US will be located in Detroit, not Silicon Valley.

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