The National Governor’s Association recently released a profile on each state’s green economy. While these profiles were by no means exhaustive (each profile really only has two meaningful pages of data), the Utah profile does provide some insights into where Utah enjoys competitive advantages and where it needs to get to work.

The first analysis in the profile consists of a breakdown of Utah’s green workforce by segment.  The report shows the rough number of jobs in each segment, as well as the per-capita concentration of jobs compared to national averages.

Workforce analysis from the National Governor's Association profile of Utah's Green Economy

The most obvious take away from this analysis is that Utah’s greatest strength is in the concentration of people and companies working on green projects in the Advance Materials arena.  This may come as a surprise to some; however, Utah’s overall advance materials/composites industry is quite strong.  Although much advance materials work isn’t directly intended to be “green,” many environmental applications of the technology are offshoots.  For example, strong, lightweight materials for wind turbine blades are very much in demand with the current boom in wind farm development.

The segments with the largest number of jobs are the “water and wastewater” segments and the “recycling and waste” segments.  However, one might note that the concentrations in these industries are not significantly greater than the national average.

Perhaps the most glaring weakness is the low concentration of “energy generation” jobs.  With Utah’s alternative energy resources (geothermal, wind, solar, etc), Utah should be well above the national average in concentration of these jobs. With focus and investment, Utah’s existing 450 jobs in this area should grow exponentially.

Further evidence Utah should focus on improving its weakness in energy generation comes from another component of the report profiling venture capital investment in clean tech business.  The report highlights that 59% of all VC investment in green technology came in the energy generation sector.  In 2008, the report shows $20 million in VC investment in green business in Utah.  This is a significant improvement over previous years, almost three times the 2007 number. However, this $20 million represents only three tenths of one percent of the total US VC investment.  Utah can and should attract much larger amounts of VC investment in its clean tech industry.  For example, Colorado received $458 million in VC investment in green companies and California received a whopping $3.5 billion in 2008.

Another area of concern gleaned from the report comes from a moderate decline in the number of environmentally related patents filed by Utah inventors.  The report shows a downward trend in patent filings from 1994-2008.  Between 1994 and 1996, 18 patents were filed.  Between 2006 and 2008, only 12 patent were recorded for green technologies.

These top line “take aways” from the report should be just a start for analyzing Utah’s green economy opportunities and challenges. In the next few months, we’ll explore more clean tech segments and data from this report.  And, we encourage Utah economic leaders to invest in further study of Utah’s green economy.

Wyoming wind farm that sells "renewable energy certificates" to Rocky Mountain Power

Being a relatively astute consumer, I’ve always known that my Blue Sky dollars aren’t really sending clean wind power to my home.  That’s not how the system works.  There’s no way for the power company to direct the small percentage of clean energy in the system to particular homes or businesses.  Not everyone gets this point, as was made evident in an interesting story on NPR last week as part of it’s “How Green Is It?” series.

What I did learn from the NPR story, which rocked my boat a bit, was that my Blue Sky dollars aren’t going to purchase wind power directly or even at all.  Rocky Mountain Power uses Blue Sky funds to buy “renewable energy certificates on your behalf.”  Renewable energy certificates are sold by wind power (and other renewable operators) in addition to selling their power.  Essentially, certificates are a way for operators to make more money to offset the additional cost of production, without having to sell their power at rates that disallow power companies from buying. (Many states mandate power companies buy from the cheapest sources, without regard to the environmental costs of production).

So, even though Rocky Mountain Power says it’s buying certificates from Wyoming wind farms, that doesn’t mean the company is buying power from those farms.  Now Rocky Mountain Power appears to have an aggressive approach to actually buying and developing renewables as part of their portfolio, so they are probably buying the power too, but not necessarily.  In fact, many programs around the country, like Blue Sky, don’t purchase the renewable power. It’s too far away or to logistically challenging to get the power to their grid. So, they just purchase the certificates.

Blue Sky works because some customers want to support renewable energy, and they are not too concerned with the details. It’s a voluntary program, so nobody is forced into participating.  But that’s also the program’s biggest downfall.  Only a relatively few people will voluntarily pay more for their electricity.  These folks realize that the “retail” price of electricity doesn’t really include all the costs of the environmental impacts of our electricity production.

Rocky Mountain Power and other electric companies, tout renewable energy programs, like Blue Sky, as evidence that they really want to support alternative energy development. But the true test of their commitment to clean energy is coming with a system that attempts to include the environmental costs of production, like the Waxman/Markey legislation that recently passed the US House of Representatives. Will Rocky Mountain Power embrace the challenge of producing 20% of its power from renewables by 2020?  Or will in resist the change?  I personally hope the company will not take the easy route and blame the feds for raising energy prices. Why not take a positive approach and help people understand that the increases in theeir power bill are serving to help fight climate change and ensure future generations enjoy the land we enjoy.

Unfortunately, the early signs are not good for Rocky Mountain Power’s messaging strategy.  Last week, the company’s CEO, Richard Walje, told a Utah legislative committee, “The legislation that has currently been passed in the (U.S.) House of Representatives is going to impose large costs on our customers that we do not have any near-term way to avoid.”  Now I know he was talking to the conservative Utah legislature, but I’m hopeful in the future the language will be tinged with cooperation and laced with language supporting the advance of clean tech.