As a California resident for 25 years, I would find it easy to
categorize the past few years as among the most challenging for the
Golden State. The roots of our current economic woes can be traced
to the national housing and credit debacle that led to the stock
market crash. The nation's financial crisis hit California
particularly hard, both because we experienced a bigger housing
bubble and we have more than your average number of housing and
Recently Next 10, the nonpartisan organization I founded in
2003, published the 2010 California Green Innovation Index--a
yearly accounting that essentially takes the pulse of the state of
California from both an economic and an environmental standpoint.
Next 10 has identified some interesting trends in California that
have helped to protect our economy from even worse impacts than we
have already experienced during the current downturn. These trends
also give me reason to believe that our recovery, although
hard-earned, will be robust.
Trend 1: California continues to raise its energy
productivity levels, freeing up dollars for businesses and
households to spend in the economy, which creates new
California's energy productivity, measured as the ratio of energy
consumed (inputs) to GDP, is not only 68% higher than that of the
rest of the nation, it is also improving at a faster rate. When
translated into dollars and cents, California's high energy
productivity levels mean that in 2008, California produced $2.28 of
GDP for every 10,000 British Thermal Units (
) of energy consumed, while the rest of the nation produced only
$1.36 for every 10,000 BTU of energy consumed. Put in the simplest
terms, thanks to our high energy efficiency levels, California
businesses use less energy while producing more wealth for the
Trend 2: California is a global leader in green
By revenue, energy represents the largest industry in the world.
Energy technology (ET) is emerging as the next breakout technology
revolution. And like information technology (
), ET is an emerging trillion-dollar market. Economic powerhouse
China is already investing $12 million an hour in clean energy
technology development and $15 billion over the next ten years in
its clean car industry.
Like China, California is laying the groundwork from both a
policy perspective and a private enterprise perspective to lead
this trillion-dollar market. California has attracted $11.6 billion
in clean tech venture capital (
) since 2006, accounting for 24% of total global investment. In the
first half of 2010 alone, the state attracted 40% of global clean
tech VC, exceeding the first half of 2009 by two-and-a-half
This type of concentrated investment in California's clean tech
economy has been achieved by design--not by accident. California
has a long history of forward-looking energy and environmental
policies that have acted as catalysts to accelerate the development
of our state's growing core green economy. In 1977 and 1978,
California adopted the nation's first energy efficiency standards
for appliances and buildings respectively. These policies sparked
technology and construction innovations that were adopted across
the country. In 2002, California adopted a renewable portfolio
standard, spurring the growth of our state's renewable energy
sector. And in 2006, California adopted the nation's first cap on
greenhouse gas pollution, further solidifying our role as a policy
and technology innovator.
Considering California's long history of policy and technology
innovation, is it any wonder that our state is number one in the
nation in green technology patent registrations? In this area,
California outpaced second-ranked New York by 150 patents between
2007 and 2009.
Trend 3: California's business climate is much friendlier
than people think.
It would surprise many people to learn that California's average
electricity bills are actually LOWER than the average electricity
bills in most other states. California businesses benefit mightily
from these lower costs. Our bills are cheaper, not because
electricity costs less in our state, but because we use it much
more efficiently. Compared with the rest of the nation, California
ranks fourth for the lowest electricity bill as a fraction of GDP.
This means that in 2008 due to our lower electricity bills,
Californians had $29 billion more than Texans and Floridians to
spend on goods and services in our economy.
It may also come as a surprise to learn that, despite what some
say about our business climate, California is not experiencing a
mass exodus of businesses. On the contrary, California is gaining
substantially more businesses every year (+58,500 businesses) than
are closing or leaving.
These three key trends, based on Next 10's nonpartisan research,
give me solid evidence that we have many reasons to be optimistic
about California's future. I am also encouraged by both the rate of
growth of green jobs in our state and their resiliency in the midst
of a recession. Since the beginning, California--home of the
Internet boom, motion pictures, and now the leading clean tech
center of the nation--has been most comfortable at the head of the
pack. I believe we will continue to hold that leadership position
as the nation recovers from its current economic challenges.
F. Noel Perry, CFA, is a businessman, philanthropist and
founder of Next 10, an independent, nonpartisan organization that
educates, engages and empowers Californians to improve the
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