Clean energy group begins to define and measure industry's global economic clout

A new report from a business group promoting energy security and innovation estimates that "advanced energy" products and services generated $1.1 trillion in global economic activity in 2011, making it larger than the pharmaceutical industry.

The report, released yesterday by the Washington, D.C.-based Advanced Energy Economy (AEE), found that in the United States, companies working to build cleaner and more efficient energy systems drove a $132 billion marketplace in 2011, with an estimated 19 percent growth rate for 2012.

When factoring in direct, indirect and induced spending, the report prepared by Pike Research estimated that advanced energy added roughly $145 billion to the U.S. gross domestic product in 2011 and generated $20.6 billion in federal, state and local taxes.

Moreover, the report states that revenues for U.S. firms involved in advanced energy products and applications are expected to have jumped 19 percent in 2012 to $157 billion, riding a wave of high consumer interest combined with declining costs for technologies such as solar panels.

"Advanced energy is what happens when energy meets 21st-century technologies," Graham Richard, AEE's chief executive officer, told reporters yesterday during an online rollout of the report.


For the first time, he said, people tracking energy development trends can learn the precise "size, breadth and scope of the advanced energy industry."

But what exactly is "advanced energy," and what sectors does it include or, perhaps more importantly, exclude?

Coal- and oil-fired endeavors need not apply

According to the group, the advanced energy economy includes seven broad economic sectors -- electricity generation, electricity delivery and management, fuel production, fuel delivery, buildings, transportation, and industry -- that can be further divided into 41 distinct subsegments representing specific technologies, products or services.

Among the seven major segments, electricity generation accounted for the largest market, with $539.3 billion in revenues for 2011, according to the report, followed by transportation, with $325.9 billion.

Within each of those broad sectors, AEE limits its analysis to what it considers "the best available commercial technologies for meeting energy needs today and tomorrow." As such, it excludes traditional energy sources such as coal and oil that have been the dominant global energy sources of the last 100 years.

AEE's electricity generation subsegments, for example, include industries such as hydro, solar, wind, geothermal and biomass energy, along with nuclear power and natural gas turbines. Notably absent are all forms of coal-fired generation, including "clean coal" technologies that emit far less pollution than conventional boilers.

Fuels considered part of the advanced energy portfolio include compressed and liquefied natural gas, ethanol and butanol, biodiesel, biogas and bio-oil, and synthetic diesel and gasoline, according to the organization's website.

The AEE report draws on more than 60 previously published studies by Pike Research, one of the nation's leading energy sector consultants, and is informed by additional analysis from experts at Pike's parent firm, Navigant Consulting.

Attempt to 'define a new space'

Bob Gohn, Pike's senior director of research, said the findings present the first comprehensive picture of the emerging energy technologies and services sector, one that is poised to see significant growth both at home and abroad as energy supply and demand challenges become more acute.

In fact, officials said the $1.1 trillion global market estimate probably under-represents actual economic activity because many companies operating in the advanced energy sector have yet to establish production and revenue reporting standards. Also, the U.S. market figures do not account for revenue from export of advanced energy products, and some industry subsegments had no data to report.

Matt Stanberry, AEE's director of industry analysis, noted that all seven of the broad economic sectors included in the analysis experienced positive growth between 2011 and 2012, further demonstrating advanced energy's importance to global commerce in the 21st century.

One of AEE's missions, officials said, is to "define a new space" where companies committed to advancing a secure, clean and affordable energy sector can share ideas and foster collaboration based on a common set of principles. The new Pike Research report helps put real data around how far the advanced energy economy has come and what its prospects are for the future.

"It is time we moved beyond categories like 'clean' and 'dirty' and recognize that advanced energy represents the future of energy," Hemant Taneja, managing director of General Catalyst Partners and a founder and co-chairman of AEE, said in a statement. "This report shows that advanced energy has already established a substantial footprint on the world economy and the U.S. industry is a large and growing part of it."

Click here to download the report.

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