States vie to attract clean-tech industries

California and Massachusetts have the edge, but at least half of US states have entered the race.

On the road to becoming governor of Massachusetts, Deval Patrick visited Evergreen Solar in Marlborough, a campaign stop that at the time seemed more of a nod to environmental stewardship than part of a greater economic policy. But more than two years later, the solar-cell manufacturer has demonstrated the explosive potential of ecoindustry, announcing plans this week to triple its Massachusetts workforce to 1,000 by 2009. The move will bring $44.5 million a year in salaries and benefits to the Bay State.

The "clean tech" industry may not be big enough to stave off a recession this year, but states increasingly see such companies as economic drivers of the future – and are beginning to compete among themselves to attract them. So far, Massachusetts and California have taken the lead, but less obvious competitors, such as Iowa and Minnesota, are also vying for a share of the clean-tech market.

"This is a serious economic opportunity," says Daniel Esty, director of the Center for Business and the Environment at Yale University in New Haven, Conn. "You already see some states that have established this as part of their play to the world and a number of others that are going to be stepping up into this marketplace in the coming years."

Global investment in clean-tech research and enterprises approached $100 billion in 2007, and much of that money was invested in the United States. Of about $3 billion in "green" venture capital worldwide, half went to enterprises in California, and Massachusetts got about 10 percent. Opportunities for clean tech will only multiply, say analysts, citing mounting pressure to find commercially viable alternatives to fossil fuels.

"Energy transformation represents one of the biggest technology opportunities we will ever witness," says Nick d'Arbeloff, executive director of the New England Clean Energy Council in Cambridge, Mass., a lobbying group for the industry. "We're going to see lots of different technologies come of age, be applied, and generate large companies, many jobs, and lots of wealth.… You can literally leave the green argument at home and argue solely on the basis of economic benefit."

At least half the states have launched initiatives to foster clean-tech industries within their borders. Iowa Gov. Chet Culver (D) last year created the $100 million Iowa Power Fund to give grants for research and development of renewable-energy technologies. Wisconsin earmarked $150 million beginning this spring for a renewable-energy grant and loan program, and Minnesota's government in 2005 allocated $20 million to the University of Minnesota for renewable-energy research.

While California's clean-tech industries take the lion's share of overall investment, their impact on the state's huge economy is not as big as that of clean-tech sectors in smaller states.

Clean-energy firms in Massachusetts, for example, currently account for more than 14,500 jobs. That makes clean tech the 10th largest sector in the state, and it's growing at a rate of 20 percent a year.

Aside from Governor Patrick's support of ecofirms, Massachusetts' House Speaker Salvatore DiMasi last month proposed allocating $50 million in taxpayer dollars to stimulate the creation of green jobs in the state.

"[Green industry] is a major part of the state economy, and it's likely only to grow," says Ian Bowles, secretary of energy and environmental affairs.

In addition to government support, a strong university system and local natural resources are keys to determining which states will prevail as green-industry hubs.

Easy access to a wealth of graduates from top Massachusetts universities and other colleges in New England was a big help to Mitch Tyson, chief executive officer of Advanced Electron Beams in Wilmington, Mass., which specializes in industrial energy-efficiency technologies. "It was so easy to hire really good, smart engineers," says Mr. Tyson, whose firm regularly hosts interns from Boston-area schools such as the Massachusetts Institute of Technology and Northeastern University.

For states with a lesser concentration of intellectual capital, an abundance of raw materials can help to attract ecobusiness.

"If you're in Iowa or Tennessee, what you're saying is, 'Gee, we don't have a lot of intellectual assets, but we've got agricultural crops [that can be used to make biofuels], and we can attract the entrepreneurial businesses to come here by giving them money and hopefully that will attract the talent and create a workforce and some economic development,' " says Hemant Taneja, managing director at General Catalyst Partners, a Cambridge-based venture capital firm with an interest in clean industry.

California's move to the forefront of the ecoindustry stems from a mix of supportive government policy and a preexisting culture of innovation, says Dan Adler, president of the San Francisco-based California Clean Energy Fund, a nonprofit environmental investment group.

"We have an incredible entrepreneurial economy here. The presence of Silicon Valley is adding an increasing amount of intellectual heft to the energy challenge. Silicon Valley is not something one can just sort of wave a wand and recreate," says Mr. Adler. "It's a mysterious mix that leads to an entrepreneurial culture with risk capital and world-class research institutions behind it."