In Utah, the subject of global warming spurs heated debate. Our differing views, however, should not prevent us from uniting behind an important objective for Utah’s economic future.

Utah can and should be a leader in the new energy economy. We should leverage our natural resources and home-grown talent to take full advantage of exploding markets in renewable energy, clean technology, and next-generation fossil fuel technology.

No matter how the climate change debate turns out, the need for new energy sources isn’t going away.  The Energy Information Administration forecasts the worldwide demand for energy will increase by 44% by 2030. And the real driver of future energy demand is just starting to kick in. Almost six billion people reside in developing nations that are on a trajectory to increase their standard of living significantly, which means more cars, TVs, and computers.

Utah’s population and energy demand are also growing at a nation-leading rate. In recent regulatory filings, Utah utilities are projecting electricity demand will grow by over 1750 megawatts by 2016.

All this growth will strain the earth’s fossil fuel resources and lead to increasingly volatile energy prices. Clean technology, on the other hand, represents a trillion dollar economic opportunity to diversify our energy portfolio and ensure prosperity into the next century.  Nations from China to Germany have already begun aggressively investing in clean technology as a chance to improve their economies.

A recent Merrill Lynch Research Report highlighted the coming opportunity:

“History shows that technology revolutions occur about every 50 years.  We believe clean tech is at the beginning of a high-growth period much like computing was in the early 1970s.”

The flow of investment into clean technology has already started. Federal funding for renewable energy research has quadrupled since 2008.  And US venture capital investment in clean tech reached $6 billion in 2008.  That year, for example, Colorado benefited from $458 million in venture capital investment for clean tech.  Utah, by contrast, received only $20 million.

So far, Utah has had a modest role in the clean energy transformation.  One of the largest wind farms in the West recently started generating electricity in Milford. Provo’s Raser Technologies is one of the nation’s most active geo-thermal energy developers. Last year, the Utah legislature passed an aggressive Renewable Energy Development Incentive. Dozens of researchers, lead by the USTAR program, are innovating to solve future energy problems.

While these early success stories are encouraging, we cannot afford to be complacent or assume Utah will automatically benefit from new energy markets.

Utah’s economy has benefited in the past by embracing tech revolutions. Software, networking, digital imaging, medical devices, biotech, genetic diagnostics and e-commerce companies have created quality jobs and a powerful economic engine for our state.  It didn’t happen by accident.  The Utah Technology Council and many forward thinking elected leaders worked hard to post a big “welcome sign” on Utah for high tech and life science innovators.

A similar welcome sign, with tangible investment behind it, is needed to support the hundreds of Utah clean tech entrepreneurs now innovating technologies in solar, wind, biomass, energy efficiency, clean coal, geo thermal, and even hydrogen-based transportation fuels. Recently, the Utah Technology Council formed a new Clean Tech sector to represent this burgeoning industry.

The legislature can also help by passing legislation to even the playing field with neighboring states and take advantage of federal energy incentives and tax credits. Specifically, the legislature is considering two bills (HB 145 and SB 194) to support renewable energy and energy efficiency projects in Utah.  These bills would allow businesses, homeowners, non-profits, and government agencies to benefit from federal tax incentives.  They allow for innovative financing mechanisms that will bring valuable investment to Utah, without any money from Utah government. All of this would create valuable jobs in an important new industry, with little or no effort from government.

So although the topic of global warming has become a hot political issue, investment and development of clean technology should not be.  Utah simply can’t afford to opt out of the renewable energy and clean technology wave sweeping the globe. If we put aside our disagreements about climate change and support renewable energy and clean technology, the taxpayers and the economy of Utah will reap the benefits for generations to come.

Professor Nathan Furr teaches entrepreneurship at Brigham Young University. Todd Stevens manages Renewable Tech Ventures and is a co-chair of the Utah Technology Council’s new Clean Tech industry group. Josh Ewing is the editor of www.utahcleantech.org.

Submitted for publication in the Deseret News

This frustration shouldn’t stop clean tech industry from getting involved in the legislative process. There are many worthwhile policies being considered that will benefit our industry and out state. These policies have a real chance for success, especially with your support. Legislators listen to business.  So please get involved, and thank the sponsors for their foresight and leadership.

Utah Clean Energy, a non-profit advocacy group, has put together a watch list web page of legislation being considered this year.  This is a very valuable tool highlighting 15 different pieces of legislation you’ll probably be curious about.  In this post, however, I’ll highlight 2 issues that I think should be priorities for the clean tech industry this session.

SB194 – Voluntary financing for clean energy improvements

The number one barrier to small-scale renewable energy and energy efficiency projects are the up-front costs of purchase and installation. Many businesses and residents would love to install solar panels or energy-efficient windows. They just don’t have the cash on hand to pay the upfront investment. This kind of financing solution provides another option (in addition to private loans and Energy Efficient Mortgages) to homeowners and businesses when considering how to finance their projects.  SB194 would allow cities and counties to issue bonds to create a financing mechanism that would help residents and businesses finance clean energy and energy efficiency projects. Participation would be completely voluntary, allowing interested home owners and businesses to pay for energy/efficiency projects over time via taxes.  And, because municipal governments get far better rates than individuals, cost savings could be significant.  This type of financing is already being done around the nation, and has been shown to have dramatic affects on encouraging small-scale projects.

H.B. 145 - Encouraging innovative financing for renewable energy projects

Renewable energy financing can be complicated. But the bottom line is that Utah is missing out on big projects, particularly in the solar industry, because Utah law doesn’t accommodate creative financing being used around the country.  Specifically, third-party financing arrangements common elsewhere are problematic to impossible right now in Utah due to current requirements of being reviewed by the Utah Public Service Commission.  This bill would allow businesses, schools, local government and others to take advantage of tax incentives and innovative financing for renewable energy projects.  It’s a no-brainer, which needs industry support.

In an editorial, the Salt Lake Tribune praised the effort but faulted Herbert for failing to mention climate change. But there’s no fault to be found for framing energy, especially renewable and alternative technologies, as an economic issue.Why waste energy on a contentious issue in Utah when we can all agree that Utah can benefit dramatically from investments in clean energy.

As Herbert pointed out, “few other states have the energy resources with which we, in Utah, have been blessed.”  Utah can be a leader in the new energy economy. And to do that means being a leader in renewable energy.  It also means truly investing in clean alternative technologies, such as carbon capture and storage, to utilize fossil fuels in a responsible manner. Even President Obama mentioned clean coal in his State of the Union speech.

The Governor said he is assembling the “best minds in the state and charging them with creating a 10-year strategic energy plan.”  Here are a few reccomendations for people the Governor might consider to be part of the effort.

• BYU Proffessor Nathan Furr – a thought leader in renewable energy economics, particularly in the solar industry.
• Todd Stevens – Managing partner of Renewable Tech Ventures, a long-time leader in venture capital investing who is now focused in the renewable space
• UofU Professor Brian McPherson – an internationally recognized leader in carbon sequestration  and how it merges with other potential clean coal technologies.
• Tracy Livingston – CEO for Wasatch Wind and perhaps Utah’s most experienced wind developer
• Jeff Muhs – Leader of USU’s commercialization efforts in renewable energy, especially biomass from algae.

Of course there are dozens of other highly intelligent, involved leaders in the clean energy industry.  But  Governor Herbert would do well to give the above some thought as he puts together his team.

Here’s to a successful, cooperative effort to bolster Utah’s energy economy!

Technology and green energy incubators have proven to be successful in other “rural” areas around the nation.  In fact, recent research suggests that businesses involved in an incubator are successful 87% of the time, compared to the less than 60% success rate for non-incubated companies.

The concept for the incubator was first explored as part of a SEED Dixie planning process in 2005, but the idea was something of a pipedream at the time.

“We thought it would be a long time coming due to the expensive office space market in Southern Utah,” said Jill Elliss, the ITRE Director. “Because of the change in the real estate market, we’ve been able to launch this center much earlier than expected.”

“We’ve seen in the last year the perils of our local economy being too focused on the real estate and construction industries,” continued Elliss. “This incubator is part of our effort to diversity the economic base and create quality, new jobs.”

Enjoying the new Office: True Scale Technologies' CTO Matt Excell, right and Software Engineer Zac Beatty

The incubator’s first tenant is an information technology company called Truescale Technologies, a cloud computing start-up with 4 pending patents. The company started with two employees and is already adding three more.

Elliss reports significant interest from a handful of renewable energy start-ups, with the most promising being a potential methane gas recovery company.

The center intends to be quite selective in choosing its tenants, requiring that companies agree to an aggressive mentoring program, which includes regular progress updates.

“For the most part, these will be companies with promising technologies and business plans that are just at the state of leaving the garage for a more professional setting,” said Elliss. “But they’ll already be hiring employees and be excited to participate in the incubation process.”

Tenants will rent space at approximately market rates, but get many free perks:

• Business mentoring from successful business executives
• Use of conference rooms and classrooms.
• Free high-speed internet courtesy of InfoWest.

Elliss already has plans for creating a satellite incubator of ITRE at Southern Utah Univeristy’s Business Reource Center in Cedar City, near Utah’s clean energy headquarters in Milford (home to Utah’s largest windfarm and a geothermal plant). But for now, she’s focused on making the ITRE’s first location a success.

“This incubator is just in its infancy,” said Elliss. “But we have great tools to get it if off the ground and help grow Southern Utah’s technology and green economic sectors.”

The ITRE is a collaborative effort of USTAR, the Dixie Business Alliance, the Small Business Development Center, Seed Dixie, Dixie State College, and Dixie Applied Technology College.

As of yet, Utah doesn’t have the big-time political support for the clean tech industry evidenced by Ritter’s focus in the area. But that doesn’t mean Utah’s highly diverse and energized industry can’t get organized. In fact, the Utah Technology Council (UTC) has just launched an effort to explore the creation of a new sector under its umbrella.

Already, the UTC represents two key components of Utah’s innovation economy – life sciences and high tech. More than 5500 companies are members of the Council, which is fairly unique in the nation combining more than one technology sector under its umbrella.

Last week, at a round table event hosted by Durham Jones & Pinegar, UTC CEO Rich Nelson explained some of the benefits of hosting multiple sectors under one larger organization. For one, UTC already has infrastructure, staff, and a system in place. UTC knows how to organize, listen to industry, and effectively advocate for tech businesses. In addition, the more than 5500 companies already in the game add legitimacy in policy making efforts and lobbying. This is particularly important in Utah, where it seems some politicians still need to be convinced that clean tech really is good economic development.

A new clean tech wing of UTC would certainly be the smallest of three sectors, so one might legitimately worry about clean tech getting the attention and resources it needs to really get off the ground and succeed. But those worries are dwarfed by the challenges of starting a new organization from scratch. Heck, it can take a year just for the IRS to officially grant C4 status. Worries about playing third fiddle will also be dramatically reduced if some major, vocal players from Utah’s leading clean tech companies get involved in the effort.

For now, UTC has not committed to starting a new industry group in clean tech. But with the obvious growth coming to this sector and Utah’s already diverse clean tech community, good money is on UTC moving forward.

Companies that get in on the ground floor will have the greatest opportunity to influence how the clean tech industry evolves. The process is just getting started, so all clean tech companies are encouraged to get involved and help shape the future of green technology in Utah.

If you’d like to get involved, just drop me a line!

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.