Clean Tech is Better for Economic Growth Than Fossil Fuels


November 12, 2014


: Tree Hugger l Michael Graham Richard


Good for Innovation, Good for the Economy

Solar and Wind Power

Anti-greens often try to make economic arguments against the big spring-cleaning that our civilization is going through. How dare we invest in clean technology? Don't we know that it's bad for the economy! That all these green things will always be expensive, etc, etc...

Sorry, did I spill some knowledge?

Well, it turns out that investments in clean tech can actually be quite good for the economy. Not every bet can be a winner, but on average, clean technologies are good for economic growth thanks to an effect called "knowledge spillover", says a recent study coming out of the Business School of the Imperial College in London, UK. The general idea is that clean technology as a whole is a lot less mature than the old dirty industries that it aims to replace, and so there's more innovation low hanging fruits to be harvested, and advances by one lab or company can more easily spillover to others. One way to see this in action is with patents; the authors of the study found that clean tech patents were being cited 43% more than 'dirty' patents, and that knowledge spillovers from clean technologies are "comparable in scale to those observed in the IT sector."

This means that a new technical breakthrough or a new business model makes much bigger waves in this young industry. Coal power plants might be getting incrementally better over time, but they are pretty mature. On the other hand, if you look at electric cars or solar power, the past decade has brought dozens of breakthroughs and game-changing change (in price, performance, quality, availability). For example, batteries developed for electric cars can have a big impact on grid storage, one company's solar breakthrough can be rapidly adopted by the rest of the industry, etc. All of this snowballs and ends up being good for the economy, according to the study.

Above: Electric cars, as far as the eye can see. Just a few years ago, none of these even existed.

Good for innovation, good for the economy

Dr Ralf Martin, the lead researcher from Imperial College Business School, said: “Our research paper shows that clean technologies are not only environmentally friendly but they have the potential to make businesses more innovative , which can lead to economic benefits, especially if support is targeted at radical clean technologies that avoid fossil fuels altogether. Clean technologies are a relatively untapped source of wealth for countries all over the world. They could have a transformative impact on the global economy in a similar way that Information and Communications technologies did.”

The researchers also look at what I'll call the Silicon Valley effect: "clean industries that are clustered in the same region benefit more from knowledge spillovers. The researchers speculate that being physically close one another enables these industries to exchange information, which may stimulate spillovers. The researchers suggest that climate policies that encourage clean technology clusters may stimulate knowledge spillovers, which could lead to greater economic growth, instead of the previously predicted exodus of companies to countries with fewer climate regulations."

NY State Gov/Promo image

Some good examples of positive impacts from clean tech innovation are the planned Tesla and SolarCity 'Gigafactories', to be erected in Nevada and New York State. They will employ thousands directly, and tens of thousands indirectly, as well as making electric cars, electricity storage, and solar panels cheaper for all of us. Because what they will be making (batteries and solar panels) last for a long time, their outputs will be cumulative and help make the world progressively cleaner (unlike a coal mine or oil well that produces fuel that gets burned, so the fuel needs to be constantly be replaced despite the fact that the pollution is cumulative...).

Hopefully these will have spillover effects and other companies will follow these innovations and get us moving faster toward a much cleaner world.

© Tesla

Via Imperial College (PDF), GCR