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California's Green Economy Remains a National and Global Leader, According to New Report

August 20, 2010

California's green economy remains strong through the Great Recession, according to a new report — the 2010 California Green Innovation Index. The yearly report published by Next 10 provides dashboard of indicators that track changes over time. This year's report indicates that California's clean tech companies continue to attract venture capital (VC) investments, the state leads the nation in clean tech patents and green manufacturing has grown. In many parts of the green economy, the state leads the nation (e.g., energy productivity, energy efficiency, renewable energy generation, clean tech patents) and the globe (e.g., venture capital).

Clean tech VC investments, especially in California, fared better during the global financial crisis than the overall venture capital industry. According to the report, overall venture capital levels reset to 2003 investment levels since the end of 2008. However, the clean tech industry only reset to 2007 investment levels globally. The report suggests that these findings indicate that investors were feeling confident about growing opportunities in clean technologies. California was hit particularly hard by the crisis. The state saw a 36% decline in overall venture capital investments from 2008 to 2009. Once again, however, California's clean tech companies saw growth in VC investments even though the state VC investments plummeted. In 2009, clean tech investments were 14% higher than 2007. At the end of 2009, clean tech represented 25% of overall VC investments in California — up from 13% in 2007. In California, energy generation (42%) is the strongest attracter of VC investments. Energy efficiency, however, has grown almost 101% since 2007.

California's ability to attract VC investments has positioned it as a leader in innovation. Since 2006, California's clean tech firms have attracted over $11 billion in venture capital (VC) investments. Those investments equate to approximately 24% of global VC investments in clean tech during that time. According to the report, over 40% of global clean tech VC investments have been attracted by the state. These investments have resulted in California being a national leader in clean tech development. Between 2007 and 2009, California's clean tech companies registered over 458 patents. This makes California, by far, the national leader in clean tech patents. New York, second most among states, has 151 less registered patents (307) during that time. Michigan (295), Texas (135) and Massachusetts (110) are among the leaders in clean tech development.

Green manufacturing also continues to grow and create jobs in a state where the overall manufacturing base has been shrinking for decades. From 1995 to 2008, employment in green manufacturing has grown 19%. In comparison, the overall manufacturing base declined by 9% during the same time. Currently, manufacturing accounts for 21% of all green employment. In comparison, only 11% of all jobs in California are manufacturing. Unlike the traditional manufacturing base that remains centralized, green manufacturing jobs have grown statewide. The report indicates that clusters of specific green manufacturing activities have started to develop. For instance, San Diego has developed a cluster in water & watershed manufacturing.