The following is an excerpt from Harnessing San Francisco's Clean-Tech Future. To read the full report, please download the PDF file by clicking on the link to the left.
San Francisco is uniquely positioned to capture an emerging market segment -- clean technology -- that already has risen to become the sixth-largest venture investment category in the U.S. and Canada, behind information technology, software, biotechnology, health care, and telecommunication.
"Clean technology" is an emerging sector that comprises a diverse range of products, services, and processes that harnesses renewable materials and energy sources, dramatically reduces the use of natural resources, and cuts or eliminates pollution and toxic wastes. These include such innovative and expanding technologies as solar photovoltaics (PV), wind power, hybrid electric vehicles, fuel cells, biobased materials, and advanced water filtration.
Much as it has over the past half century, California is once again at the forefront of a new wave of innovation. A recent survey of the top U.S. venture firms found that more than $339 million was invested in California clean-tech companies in 2003, more than any other state, representing 29% of all North American clean-technology investments. And momentum continues to build.
According to a new report by the Natural Resources Defense Council and Environmental Entrepreneurs, venture capital investments in California's clean-tech industry through 2010 could seed 52,000 to 114,000 new jobs statewide. Another recent study, by Calstart, concluded that California has key competitive advantages in clean-vehicle technologies, such as its leadership in advanced technologies, electronics and software, and engineering and design.
In short, California leads the country in clean technology, and San Francisco has the potential to lead California.
The ascension of clean technology comes amid a host of local, national, and global concerns, including record-setting oil prices, national and global security issues, a shaky electricity infrastructure, growing concern over global warming, and finite supplies of fossil fuels. Governments, industry, and citizens are now turning to clean technology to provide innovative solutions to and relief from these and other global problems.
This report, prepared by Clean Edge, Inc., and funded by the San Francisco Department of the Environment and the Mayor's Office of Economic and Workforce Development, examines two clean-tech segments -- energy and transportation -- and the potential each has for San Francisco's economic growth and future. Specifically, it looks at how these technologies can attract new jobs and businesses to the City, and describes the opportunities and challenges that face San Francisco as it looks to become a clean-tech magnet.
For San Francisco, clean tech holds great promise as a significant new source of innovation, business opportunity, and jobs, much like other technologies that have been incubated in the City over the past quarter century and experienced explosive growth. Along the way, San Francisco stands to benefit in a variety of ways from one of the fastest-growing technology sectors of recent years.
How the Competition is Pursuing Clean Technology
San Francisco is by no means alone in pursuing this clean and green Gold Rush. Recognizing the market opportunity, a number of cities and states are moving aggressively with dynamic public policy initiatives, actively promoting their story, and energetically courting today's, and tomorrow's, leading companies. Several cities -- including Austin, Chicago, Los Angeles, Portland, Ore., Sacramento, and Seattle -- have made considerable headway, increasing the urgency for San Francisco to act quickly if it is to capitalize on this growing market opportunity. Reviewing the initiatives of other cities and states provides insight to the range of initiatives, and a roadmap for San Francisco's political and business community.
Like many of these cities, San Francisco brings to the clean-tech marketplace a formidable list of core attributes, including progressive local leaders, a supportive business community, and a reputation for technological innovation. The City also has more than a few barriers and weaknesses that could stand in the way of it becoming a leader in clean technology. Leveraging the assets and addressing the liabilities will be critical for the City to gain world-class status in the clean-tech arena.
San Francisco's Competitive Position
San Francisco boasts international brand equity as an environmentally progressive and technology-focused city, from the solar roof installation atop the Moscone Center to the City's fleet of more than 700 clean-fuel vehicles to the nation-leading residential recycling rate. That leadership and identity has led the United Nations to select San Francisco as host city for World Environment Day 2005, the first time that the conference will be hosted in North America since the event was established in 1972.
San Francisco's innovative and progressive political leadership, led by its Mayor and Board of Supervisors, is another critical asset that can boost the City's standing in clean technology. Mayor Newsom, a committed environmentalist and successful businessman, is a particularly valuable resource in promoting San Francisco's clean-tech potential. The City's government has led a long-term initiative in clean transportation and has been rewarded with national recognition for the more than 700 clean-fuel vehicles in its municipal fleet, one of the largest in the nation.
The City also boasts abundant natural capital that uniquely positions San Francisco to establish a leadership position in clean energy and transportation. For example, strong tides, high winds, constant waves, and abundant sunshine provide a ready supply of renewable energy resources to be tapped by clean-energy technologies. The City's tidal power potential alone is enormous, with more than 400 million gallons of water moving through the Golden Gate each day.
Complementing all that natural capital is a diverse and talented pool of human capital. The region's highly educated workforce and access to academic research and resources at leading universities comprise a valuable asset for technology companies seeking to locate or expand here. The Bay Area accounts for 36% of all the venture capital invested in the U.S., and is home to one of the premier funds focusing on renewable and distributed energy companies. And the City's voters demonstrated its support for clean-tech investments in 2002 when it overwhelmingly approved the first solar bond initiative in the country.
San Francisco also has weaknesses that must be addressed if it is to become a clean-tech capital. Not the least of these is the difficulty that many businesses have in navigating and overcoming the City's bureaucracy and red tape. According to our survey of leading business, investment, and community leaders, the City's government can be a complex and forbidding obstacle to companies seeking to establish a presence, or initiate a project, within the City's borders. Excessive delays and approvals, combined with burdensome contracting requirements, further frustrate the City's current or would-be business partners.
Strategy and Recommendations
These weaknesses can be overcome -- and the strengths leveraged -- through ten recommended initiatives:
- Establish, communicate, and coordinate the vision. It is imperative to have the Mayor, Board of Supervisors, the chambers of commerce, and various City departments promoting and supporting clean-tech businesses in a unified, coordinated approach.
- Remove regulatory barriers. To better serve business in all sectors, the City should consider hiring one or more legislative analysts to identify specific obstacles to deploying clean-energy and other clean-tech projects in the City, and recommend solutions that would make the city more clean-tech-friendly.
- Appoint a clean-tech manager for the City. The role of the manager, residing within the Office of Economic and Workforce Development, is to market and execute the city's clean-tech business attraction strategy. This position will also lead San Francisco's efforts in establishing public-private partnerships, and shepherd companies and projects through the red tape of municipal and public agencies.
- Align the City's procurement goals. Committing the City government to purchase clean-energy and clean-transportation products and services -- and leveraging San Francisco's strong commitment to environmental purchasing as expressed by the Precautionary Principle enacted in 2002 -- can send a strong signal of the City's commitment to clean technology, and can draw companies to locate here.
- Create a magnet clean-tech institution. The City should consider developing a center dedicated to the advancement of clean energy and transportation, which could serve as an incubator for early-stage companies, a showcase for the technologies themselves, and a learning and training facility that would help provide workforce development for future clean technology workers.
- Create a high-profile project. San Francisco could help to establish itself as a clean-tech hub by announcing and implementing a project of major importance and magnitude.
- Leverage San Francisco's financial strengths. The City should consider leveraging its strong investment community base, by promoting San Francisco as a center for clean-tech finance. The City also could more actively participate by creating its own version of the state's Green Wave environmental technology initiative.
- Launch a clean-energy incentives fund. San Francisco should consider implementing a grants program to support architects, designers, and businesses, and others that offer unique and cutting-edge clean-energy or clean-transportation ideas for their businesses or homes to fully cover or help offset their project's costs.
- Attract the flagship conferences. San Francisco already has made headway in attracting leading conferences on clean technology and sustainable business, being the host city for several conferences focusing on clean energy and other clean technologies. The City also could support the tourism industry by leveraging the City's commitment to clean technology as a means of drawing environmentally minded conferences and events.
- Partner with other regional players. Berkeley, Oakland, and the Silicon Valley area all have visions and programs to lure companies and institutions -- and each has its own strengths and weaknesses. A coordinated effort could be synergistic -- and San Francisco could benefit by being the crown jewel among the area's cities.