Tech honchos fret Silicon Valley will miss the Green Revolution

Among its many claims to fame, Silicon Valley is the birthplace of the Tesla, one of the world's fastest all-electric cars. But could the innovation hub's efforts to become a leader in clean technology be running out of juice? Some of the region's leaders think so, saying that other countries are swiftly developing the financing mechanisms and local markets that will give them an edge in the field, according to a recent Reuters report.

Blame, perhaps, America's love affair with the internal combustion engine. Or the country's undying commitment to keeping existing jobs intact. We're falling behind in the clean technology race. China, for instance, long known for its unfriendly attitude toward the environment, has actually emerged as a force in this sector, Reuters says.

Meantime, many European countries have begun to not just develop the technology but implement it in peoples' everyday lives. While visiting the Hammarby Sjöstad community of apartments in Stockholm last year, I saw showers that mixed air with water to lower water usage. Environmentally friendly technology has also been built into architecture and waste collection, as I write in my blog post on Gadling.

More than $570 million in venture capital money was committed to cleantech investments in the second quarter of 2009, according to a study by Ernst & Young, with the number of transactions completed growing by 100 percent quarter over quarter. Undoubtedly, America's innovation center has its eye on these numbers, but for a change, it's in the position of playing catch up. Other regions -- including India, the Middle East and China -- are already committing heavily to the sector with their investment dollars, Reuters notes.

VantagePoint Venture Partners managing director Stephan Dolezalek tells the wire service that these competitors don't want to miss the next big wave. Meanwhile, financial conditions in the United States have made it difficult for local companies to secure funding. Many are waiting for legislative moves that would boost the clean energy space. Likewise, Google's (GOOG) Green Energy Czar Bill Weihl tells Reuters he sees a substantial risk that the United States won't lead the world in this sector.

All is not lost for the Valley, however. There are some areas in the cleantech industry where the California crowd has a natural advantage, particularly in regards to the development and use of semiconductors, Reuters notes. But, this will not be enough to drive the United States into a front-runner position, especially with innovation hubs arising in financial powerhouses around the world. Denmark, for example, has made great strides with wind power, Reuters adds.

Weihl suggests to Reuters that at least $10 billion a year in federal money for research and development is a minimum, with $30 billion as a more sufficient budget, he says.

Missing along with the big bucks is a needed change in behavior. Green technology will not become a priority in the United States as long as we have easy access to other less clean options. Relatively inexpensive petroleum products (even when it's expensive here, it isn't compared to many other countries), increasingly long commutes and a commitment to preserving existing industries will hamper U.S. cleantech growth.

For businesses, there must be a compelling cost reason to go green, as shareholder value always trumps matters of conscience (which isn't all that unreasonable). Without a clear, direct and near-term upside to investing in, developing and implementing cleantech energy, there is little reason to discuss the matter.

Meanwhile, the rest of the world is acting either from a sense of social responsibility or an assumption that the benefits will come. Whatever the motivation, this approach is propelling other countries into a position that will translate to early entry and ownership of the market. For the Silicon Valley to regain its mantle as the world's thought center, green dreams need to become a reality.


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