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SAN FRANCISCO - The green economy continues to show almost remarkable signs of vitality, business leaders say, despite the near-total collapse of global talks, stalemate in Washington, D.C., and polls showing decreased urgency to tackle climate change.
Driving the industry, investors say, are consumer interest in the environmental and economic benefits of energy efficiency, corporate sustainability mandates and essentially a bet that at some point there will be a price on carbon emissions.
"Although there was definitely a loss of momentum for green business after Copenhagen, many sustainability initiatives are not in response to regulation," said Marc Gunther, editor of Greener World Media, publisher of GreenBiz.com and the annual State of Green Business report.
Two companies that track clean-tech investments see signs of robust growth on the horizon. Nick Parker, co-founder of the Cleantech Group, a San Francisco-based outfit that tracks and advises green investments, estimates the sector could be a $3 trillion economy within 10 years. Last year private investment in clean-tech totaled $5.8 billion, according to Cleantech.
While that was down a third from 2008, all forms of venture capital were down last year, the group noted. Meanwhile the share of venture money going to clean energy continues to increase, to 12.5 percent of total venture activity in the United States last year, reported CleanEdge, a company that researches and publishes on the sector.
Still, there are significant hurdles. U.S. industry overall "has not engaged the structural change required to materially impact critical issues like carbon intensity," said Joel Makower, Greener World Media's executive editor.
One example: U.S. companies are increasingly setting and reporting emissions targets through such programs as the Carbon Disclosure Project. But participating companies represent only a third of the Standard & Poor's index of the top 500 leading companies in the United States.
Another example: China, Japan and the European Union all threaten to eclipse U.S. gains in the sector. China alone has spent $200 billion - double the United States' investment - and could end up spending $440 billion to $660 billion over the next 10 years, according to CleanEdge.
Before industry can impact climate issues and cultivate an internationally competitive clean-tech sector, the investment has to be much broader and profound, said Salman Khan, development and strategy director for the environment division of Intertek, an international testing company that helps companies assess their green policies.
"The relative absence of policy more directly impacts businesses and regions that are energy intensive and highly regulated," Khan said. "It's a 'wait-and-see' game for most large utilities and big manufacturers."
Truman Seman, a principal with GreenOrder, a New York-based consulting firm specializing in sustainability, said the "tremendous investment and innovation" happening in the absence of coherent carbon policy is a sliver of the market's potential. "There would be much, much more if we had clear rules," he said. "The biggest barrier to significant economic advancement is securing clear climate policy in the US."
GreenOrder is helping business leaders to re-engage federal policy makers to get climate legislation in place. Seman said he has seen a rigorous resurgence of interest around a climate energy package in the wake of the tumultuous Copenhagen talks. Several consortiums of industry leaders across sectors - including Partnership for Renewable Energy (which includes Bank of America, Google, General Electric), U.S. Climate Action Partnership, or USCAP (Ford, Duke Energy, Pepsi, Shell, among others) and Climate Energy Network (a collection of small and mid-sized companies in every region of the United States) - are "terrifically energetic and committed to their work with U.S. policymakers," he said.
Despite the stalemate and setbacks in Congress, Seman detects an attitudinal shift in favor of stronger climate policy.
"There (are) enough data and real stories to support the need for investment in a green economy," he said. "Policymakers are waking up to the fact that the U.S. is losing competitive ground not only with Europe but, increasingly, with China.... Even some conservative Republicans recognize that we will put the U.S. in a bad competitive position if we do not adapt quickly around cleantech."
There are signs of change. Sectors such as information technology, packaging, green building all have momentum regardless of uncertainty in Copenhagen or Washington, experts say.
For Cisco Systems, the commitment to green is already a done deal. CEO John Chambers vowed in 2008 to reduce Cisco's carbon footprint by 25% by 2012 without invoking carbon offsets. Today, Cisco's focus extends beyond the company's own footprint: They launched a supply chain innovation program to pressure Cisco suppliers to adhere to similar environmental standards.
As Cisco pushes their customer base and supply chains to adopt new standards, it engenders change throughout information technology ecosystem. It's not the only big company transforming a broad swath of businesses.
Wal-Mart is also driving the green economy. The company now requires suppliers - numbering more than 100,000 companies - to submit data about their environmental footprints. That has created a business opportunity for London-based Intertek, which found 50 new clients in the past six months as a result. "Wal-Mart suppliers are scrambling not only to adhere to new rules, but to proactively use the environmental data to design new products and services," Khan said.
In many cases, he added, Intertek's new clients are not just looking to meet Wal-Mart's requirements. They want to reengineer their entire business for sustainability.
Even start-ups are finding growth opportunities in a sober economic environment. Energy efficiency was a boom industry in 2009, with more than $1 billion invested in energy efficiency start-ups, according to Cleanedge. The sector should eclipse solar this year in terms of investments and growth, the company said Kevin Surace, CEO of Serious Materials, is mining this hot market by selling cost savings of green building retrofits and a one- to five-year payback of his insulated windows.
"Climate policy matters to the planet," Surace said. But for Serious Materials' growth, policy is no matter.
"Good companies have already figured out that green is green," he said. "Saving energy and CO2 in the lifecycle pay back in the manufacturing process and/or for your customers."
That's a sentiment echoed by many gathered last month at the State of Green Business Forum in San Francisco. For those betting on the market and concerned about climate change, the mood is determined - and cautiously optimistic.
"Something will happen federally," said Sarah Skikne of The Climate Group, a nonprofit organization working internationally with business and government leaders to advance a low carbon future.
"It has to."
Heather King is a San Francisco-based writer and a board member of the Society of Environmental Journalists. DailyClimate.org is a nonprofit news service covering climate change.
