The recently released 2014 U.S. Clean Tech Leadership Index from Clean Edge, the research and advisory firm where I am senior editor, finds the U.S. clean-tech market making impressive strides in many areas, while still hampered by inaction and inertia in others. As has been the case in recent years — even with encouraging national-level initiatives from the Obama administration — states and cities continue to be where most of the action is.
Over the past year, supportive policies and aggressive technology deployments from Connecticut to California have made climate and clean-energy related technologies, in particular residential and commercial solar PV, an increasingly popular choice for mainstream America. According to this year’s Index, eleven states generated more than 10 percent of their electricity from clean-energy sources (not including hydro) in 2013, with two, Iowa and South Dakota, exceeding 25 percent. At least eight states now have more than 50 percent smart-meter market penetration, with California topping 70 percent. Registrations for all-electric vehicles, led by the Nissan LEAF and Chevy Volt, more than doubled between the 2013 and 2014 indexes, to nearly 220,000 cumulative registrations nationwide. And 14 states — among them Georgia, North Carolina, and Pennsylvania – are each now home to more than 500 LEED-certified commercial green building projects.
On the policy front, leading states and metro areas continue to make climate action and clean-energy expansion a priority. Nearly 30 states offer some form of property assessed clean energy (PACE) legislation, 19 have specific greenhouse gas reduction targets, and 10 operate or are members of active cap-and-trade carbon markets. Net-zero or near-zero energy mandates for buildings, green banks and other effective financing mechanisms, and the nation’s first energy-storage mandate in California are just a few policies implemented in the last 12 months that will drive the future clean-tech growth tracked by the Leadership Index.
California continues to dominate clean-tech leadership in both the State and Metro Index. The Golden State leads our state rankings for the fifth consecutive year, and also claims the top three metro areas (San Francisco, San Jose, and San Diego), with Sacramento and Los Angeles giving it five of the top seven metros. Massachusetts and Oregon repeated their respective #2 and #3 State Index rankings from the previous year, each placing their largest cities, #6 Boston and #4 Portland, in the Metro Index top 10. Fourth-place Colorado is the best-performing non-coastal state — continuing to show that a region with substantial fossil-fuel resources can also lead in clean tech – with Denver also ranking #10 in the Metro Index. Two New England states, Vermont and Connecticut, jumped into the State Index top 10 this year, while Hawaii and Minnesota dropped out.
On the less positive side, clean tech in the U.S. has unquestionably turned political, with partisan attacks by certain lobbyists, legislators, and utilities in several states resulting in minor setbacks (for now) of clean tech-friendly policies like net metering and renewable portfolio standards. For the most part, the clean-tech industry and its allies have successfully fought off efforts by the conservative American Legislative Exchange Council (ALEC) and other groups to repeal RPS mandates in at least a dozen states – but the battle is far from over.
In June, Ohio Governor John Kasich signed into law SB 310, which freezes Ohio’s RPS mandate (25 percent renewables by 2025) for two years for further study, which depending on the political winds in that state could lead to its reduction or outright repeal. SB 310 is a worrisome sign of the political times, as the original RPS was passed by Ohio’s legislature in 2008 with nearly unanimous bipartisan support. In Arizona and elsewhere, utility regulators have imposed fees on ratepayers who install grid-connected solar PV arrays, but generally much lower tariffs than had been sought by investor-owned utilities. So far, such actions have not slowed the unprecedented expansion of solar PV deployment in the U.S., which grew 41 percent in 2013 to 4.75 gigawatts.
The role of the clean-tech industry as a job creator in the U.S. has also been the topic of much political debate, but two developments in recent months could significantly boost that role, and do so in the hard-hit but recovering American manufacturing sector. Texas, California, and three other states are competing furiously to lure Tesla Motors’ planned battery “gigafactory”, while SolarCity’s recently-announced acquisition of solar panel maker Silevo could lead to a significant number of manufacturing jobs in the unlikely locale of Buffalo, New York. Showing the critical importance of public-private partnerships in developing clean-tech hubs at the state and metro level, Silevo and LED lighting maker Soraa have agreed to invest a combined $1.5 billion to locate manufacturing in Buffalo’s new RiverBend Innovation Hub while New York State provided $225 million.
The federal government level, however, continues to be a (mostly) different story. Although the Washington, D.C. metro area ranks eighth in the nation in our Metro Index, partisan gridlock remains the rule on Capitol Hill, where even the broadly supported Shaheen-Portman bill on energy efficiency failed to reach a floor vote in the Senate in May. Congress has also failed to pass tax-credit extensions for the wind and solar power industries, while doing nothing about ending decades-long tax support for the oil and gas industries.
Last month, however, President Obama took perhaps the boldest step of his administration to advance clean energy, announcing new Environmental Protection Agency regulations to cut greenhouse gas emissions by 30 percent from 2005 levels by 2030. The new rules already face significant political and legal challenges, but they could dramatically accelerate the ongoing shift from coal-fired power generation to a future of renewables, energy efficiency, and limited natural gas. Notably, and perhaps not surprisingly, implementation of the carbon rules would be left up to the states. That will provide regional players a significant role in setting policies and programs, making the tracking of state and metro progress in the U.S. Clean Tech Leadership Index all the more critical.
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