Clean Economy, Living Planet

for a living planet Clean Economy, Living Planet Building the Dutch clean energy technology industry

This report was commissioned by: WWF-Netherlands (Wereld Natuur Fonds) PO Box 7 3700 AA Zeist This report was prepared by: Roland Berger Strategy Consultants World Trade Center Strawinskylaan 581 1077 XX Amsterdam The Netherlands Authors: Ward van den Berg Senior Research Associate Arnoud van der Slot Partner Editor: Donald Pols Programme Leader Climate Programme dpols@wwf.nl Copyright: Wereld Natuur Fonds, November 2009 Disclaimer: While every effort has been made to ensure that this document and the sources of information used here are free of error, we are not responsible or liable for the accuracy, currency and reliability of any information provided in this publication.

1 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry Clean Economy, Living Planet Building the Dutch Clean Energy Technology Industry

2 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry Executive Summary This report investigates the potential and challenges for a strong Dutch Clean Energy Technology industry with a focus on renewable energy and energy saving products, processes and technologies. For the first time countries are ranked by their Clean Energy Technology sales. To enable this comparison we have made an inventory of Clean Energy Technology companies in the Netherlands. On the basis of lessons from leading countries, an analysis of the situation in the Netherlands and interviews with experts we make recommendations for building a strong Clean Energy Technology industry in the Netherlands and quantify the potential contribution of this sector to CO 2 reduction, jobs and future sales. The study has been overseen by an expert group consisting of representatives of Rabobank, Energy Research Centre of the Netherlands (ECN), Delft University of Technology, FME-CWM (technological-industrial sector association) and WWF NL. The market for Clean Energy Technology (CET) is booming and was larger than the pharmaceutical industry in 2007. By 2020, at EUR 1,600 bn, it will be the third industrial sector in the world. The worldwide market for Clean Energy Technology is growing fast. Between 2000 and 2008 wind energy grew by 24% a year, biodiesel by 31% and solar by 53%. With a total volume of EUR 630 bn a year in 2007 the Clean Energy Technology market is already larger than the global pharmaceutical industry. Sales from energy efficiency products totaled EUR 540 bn and renewable energy technologies contributed EUR 91 bn. Despite the crisis growth is expected to continue at an annual rate of 5% for efficiency and 15% for renewables (in a scenario where CO 2 -emissions are reduced by 80% in 2050). This will result in a total market volume of EUR 1,600 bn in 2020, making it one of the largest industries in the world. WWF-NL ranked countries by Clean Energy Technology sales for the first time. The Netherlands is lagging behind in 17 th place. If you look at relative income from sales (weighted by GDP), Denmark, Brazil and Germany rank highest. The Netherlands is at position 17. The Danes are global market leaders in wind turbines and insulation and number one overall. Brazil is number two because of its large scale production of bio-ethanol. Germany has a long tradition in building machinery and equipment that made a good basis for its clean technology industry. Germany excels in several technologies, particularly in wind- and solar energy. The Netherlands has a top 10 position only in insulation and solar energy.

3 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry The Netherlands are missing out for three reasons: 1) Subsidies do not contribute sufficiently to a stronger economic position The Dutch government invests relatively high amounts in research and development, but this does not result in higher international sales. The most important reason for this is that individual technologies are not supported consistently over the product life cycle. For example: solar energy receives a considerable amount of R&D support, but a lot less support in the demonstration and market development phase. Another reason is that innovation in knowledge centers is not well connected to commercial companies. Furthermore, Clean Energy technologies hardly play a role in public private partnerships. 2) There is not enough capital, especially in the seed phase In the Netherlands there is a shortage of capita for Clean Energy Technology. In 2008 investments in clean technology decreased substantially in the Netherlands, by 34%. Meanwhile, in the rest of Europe they increased by 55%. In the seed phase especially, the Netherlands are far below the European average. Furthermore, Dutch Banks invest much more in fossil energy than in clean energy (<6%). 3) The Dutch home market for Clean Energy Technology is underdeveloped A well developed home market is a precondition for the development of Clean Energy Technology companies. It enables the experience and reference projects that businesses need to compete internationally. There is a clear correlation between a high share of wind energy in total electricity demand and international sales from wind energy products. The Netherlands has the potential as well as the responsibility to reach a global top 10 position in the clean tech market. Dutch CO 2 emissions per capita are among the highest in the world (seventh place). The Netherlands emits three times the global average. This contrasts sharply with its 17 th position in the Clean Energy Technology country rankings. However, the Netherlands has the knowledge (third place in basic science), wealth (sixth economy in GDP per capita) and capacity (> 260 companies active in Clean Energy Technology) to be a leader in the world market for

4 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry Clean Energy Technology. We already rank 7th in solar PV and insulation and 11th in wind energy. That is a strong base to build on. A top-10 position in 2015 will bring large benefits:, 8,000 extra jobs, EUR 1.6 bn in additional sales, and 130 Mton less CO 2. WWF-NL believes the Netherlands should strive for at least a top-10 position in 2015. This would lead to a reduction in CO 2 emissions, both in the Netherlands and in the countries where Dutch products, processes and technologies are applied, of at least 130 Mton (more than six times the current Dutch Kyoto target of 20 Mton). Realizing a top-10 position would also lead to 8000 additional jobs and almost double employment in the Dutch Clean Energy Technology sector to 17,000 FTEs. Dutch sales will increase with EUR 1,6 bn to EUR 2,5 bn.

5 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry Contents 1 The urgency of Clean Energy Technology 8 1.1 CO 2 emissions must be reduced to limit global warming to 2 C and limit the harmful and irreversible impacts on ecosytems. 9 1.2 Clean Energy Technology reduces CO 2 emissions by increasing energy efficiency and enabling alternative sources like solar, wind and biomass 10 2 Clean Energy Technology and the position of the Netherlands 11 2.1 Clean Energy Technology is a growth market that is expected to reach EUR 1.6 trillion by 2020 and thus an attractive business opportunity 11 2.2 The Netherlands ranks 17 th in overall, GDP-weighted Clean Energy Technology sales and achieves a top-10 position only in insulation 13 3 The potential for Clean Energy Technology in the Netherlands 18 3.1 The Netherlands has an excellent knowledge base but fails to turn it into practical Clean Energy Technology solutions delivered on a commercial scale 18 3.2 The Netherlands has the capital and CO 2 emissions responsibility to contribute more to Clean Energy Technology 19 3.3 The Netherlands is home to more than 260 companies active in a broad range of Clean Energy technologies 20 4 Lessons from leading Clean Energy Technology countries 23 4.1 The leaders Denmark, Brazil, Germany and Spain achieve success through early and consistent government support, high investment and a strong home market 23 4.2 Dutch government spending on Clean Energy Technology R&D is relatively high but the same technologies are not consistently supported throughout the entire innovation cycle 25 4.3 Capital for Clean Energy Technology ventures in the Netherlands is scarce, especially in the seed phase 27 4.4 The Dutch home market is underdeveloped, with a low share of renewable energy sources in the primary supply and modest energy efficiency gains in recent years 29

6 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 5 Towards the worldwide top-10 30 5.1 The Netherlands should aspire to a top-10 position in 2015 and the 15% annual growth needed to achieve it 31 5.2 A top-10 position will reduce CO 2 emissions by 130 Mton in 2015 and add 8,000 jobs and EUR 1.6 billion in sales to the Dutch economy 31 5.3 After a careful selection process, WWF NL has identified six companies that could lead the industry s growth, and has nominated these for the WWF Cleantech Star 31 5.4 The six nominees demonstrate that a top-10 ambition is realistic. Such companies will take the Dutch Clean Energy Technology industry a long way towards achieving that ambition 33 6 Epilogue 35 Appendix 1 Sources 36 Appendix 2 Expert group and jury 42 Appendix 3 Profiles of WWF Cleantech Star nominees 43

7 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 0 Preface In this report the World Wild Fund for Nature Netherlands (WWF NL) investigates the rationale, potential and challenges of building a strong Dutch industry in Clean Energy Technology and recommends three courses of action. WWF NL turns to Clean Energy Technology because energy efficiency and renewables are the most important options to reduce energy related CO 2 emissions and prevent serious impacts of climate change. Recent studies indicate that an average global warming of 2 C will result in dangerous and irreversible effects to humans and nature, which rapidly worsen above 2 C warming. Ecosystems cannot adapt any longer and more than 30% of species may disappear. WWF NL wants to see fast and large-scale application of solutions that reduce CO 2 emissions. This report finds that this is best achieved by stimulating Clean Energy Technology business, and goes on to examine what is happening in the Netherlands today, how that compares to other countries and what should be done to build a strong Dutch Clean Energy Technology industry. This report is structured in five chapters and an epilogue. The first chapter explains the threat of global warming and the potential contribution of Clean Energy Technology to reducing CO 2 emissions. It also defines Clean Energy Technology for the purposes of this report. Chapter 2 looks at past and expected market growth based on two scenarios and ranks the Netherlands against other countries by (GDP-weighted) Clean Energy Technology sales. Chapter 3 is devoted to the potential of Clean Energy Technology in the Netherlands and assesses its knowledge position and current economic activity. In chapter 4 we analyze the success of the leading countries (Denmark, Brazil, Germany and Spain) and identify where the Netherlands can improve to build a strong domestic Clean Energy Technology industry. Chapter 5 quantifies the impact that a top-10 ambition will have on CO 2 emissions reduction, jobs and sales. It also presents the six WWF Cleantech Star nominees that could lead the way. The epilogue briefly summarizes the main findings. For its data and insights, the report draws on many sources. A complete list can be found in appendix 1. Appendix 2 introduces the expert group that supervised the report and the jury that selected the WWF Cleantech Star nominees and winner. Finally, appendix 3 contains the visions of the nominees themselves. November 2009, World Wide Fund for Nature The Netherlands

8 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 1 The urgency of Clean Energy Technology Clean Energy Technology is essential to limiting global warming and protecting ecosystems by reducing CO 2 emissions through energy efficiency and renewable energy Climate change comes at a cost to both our economy and our environment. As temperatures rise agricultural output will fall, damage from floods and storms will increase, (tropical) diseases will become more prevalent and access to water will become more of a problem for more people. The cost of inaction has been estimated between U-SD 20 and 26 trillion in 2100. The Stern report commissioned by the British government put the cost at a 5 to 20% reduction in GDP. But that is just the financial aspect. The cost to our environment is greater and irreversible. The Earth s flora and fauna will suffer both directly from higher temperatures and indirectly through the damage to their habitats. Ecosystems will disappear. Even small temperature increases will cause coral bleaching and threaten some amphibians (see figure 1). Temperature rises of 3 or 4 C and more will lead to major extinctions around the globe. Figure Examples 1 The of impact impact of rising of higher temperatures temperatures (examples) WATER ECOSYTEMS FOOD 0.4 to 1.7 bn 1.0 to 2.0 bn Increasing amphibian extinction Increased coral bleaching Crop productivity 1.1 to 3.2 bn additional people with increased water stress More than 30 % species at Major extinction increasingly high risk of extinction around the globe Most corals bleached Wide spread coral mortality low altitudes Decreases for some cereals All cereals decrease Increase for some cereals Decrease in some regions high altitudes COAST HEALTH Addition people at risk of coastal flooding at year Increased damage from floods and storms Changed distribution of some disease vectors 0 to 3 m 2 to 15 m Substantial burden on health services Increased burden from malnutrition and diarrheal, cardio respiratory and infectious disease 0 1 2 3 4 5 C Source: WWF NL, UN Intergovernmental Panel on Climate Change 1 Average annual costs, based on Kemfert 2005, Watkiss, 2005 and Ackermann, 2006

9 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 1.1 CO 2 emissions must be reduced to limit global warming to 2 C and limit the harmful and irreversible impacts on ecosytems. In 2009, G8 leaders agreed to CO 2 emission cuts that would limit global warming to 2 C above pre-industrial levels. Any rise above that level risks the extinction of more than 30% of the Earth s wildlife. Global warming s threat to the natural habitats of at least 2,500 species has placed these species on the red list. 2 Examples include polar bears on melting ice caps, tigers competing with men for food and orang utans finding less and less fruit due to shifting rain patterns. If we assume no new government policies beyond those already adopted by mid-2008, the International Energy Agency (IEA) has calculated that global primary energy demand will expand by 45% percent between 2006 and 2030, putting us on a path towards a 6 C rise in global temperatures. To limit global warming to 2 C, the IEA proposes a 450 Policy scenario that aims to stabilize the amount of CO 2 -eq in the atmosphere at 450 ppm (parts per million), which requires at most 26.4 Gigatons of CO 2 emissions by 2030. 3 Figure 2 World energy-related CO 2 emissions abatement and 2008 investments required [Gt, USD bn] 42 40 Reference scenario 38 36 End-use energy efficiency 34 Power plants 32 energy efficiency Renewables 30 Biofuels 28 Nuclear 450 scenario CCS 26 2007 2010 2015 2020 2025 2030 Source: IEA 2009 Figure 2 shows that energy efficiency and renewables are the most important options to achieve the 450 scenario. It should be noted that even in the 450 policy scenario there is a 50% probability that temperature increases will exceed 2 C. More needs to be done. 4 However, it is encouraging that in July 2009, in L Aquila, G8 leaders committed themselves to the 2 C ceiling and to working towards an 80% reduction in their CO 2 emissions by 2050. However, there is no agreement yet on the financial support of developing countries climate policy. 5 2 Based on database retrieval from the International Union of Conservation of Nature s red list 3 From IEA World Energy Outlook 2009 excerpts 4 The 450 Policy scenario calls for significant mitigation measures to be taken immediately, achieving peak emissions as soon as possible (but no later than 2015) and reducing them by at least 3% annually thereafter. However, if we want to avoid additional irreversible consequences and (ecological and economic) costs, we need to cap emissions at 400 ppm CO 2 -eq or even reduce levels to 350 ppm CO 2 -eq (from today s estimated 396 ppm CO 2 -eq). 5 NRC Handelsblad

10 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 1.2 Clean Energy Technology reduces CO 2 emissions by increasing energy efficiency and enabling alternative sources like solar, wind and biomass It is not energy use per se that causes global warming. It is the emission of CO 2 that results from burning fossil fuels to generate energy. Solutions should therefore be sought not only in reducing primary energy demand but in alternative sources that do not emit CO 2. In the 450 Policy scenario energy efficiency must result in a 16% reduction in total energy use relative to the reference scenario and renewable energy supply must increase by 42% both by 2030 (see figure 3). Clean Energy Technology enables both. Energy efficiency is the most cost-effective way to reduce CO 2 emissions. Simply put, using less energy not only saves fossil fuel but money. Thus the investments needed are offset by lower energy bills that result from lesser volumes and lower prices (due to falling demand). Clean Energy Technology contributes to energy efficiency by enabling, for example, low-energy lighting, better insulation and more effective energy storage. Solar, wind and biomass sources do not cause CO 2 emissions. Solar and wind can be used to generate heat and electricity, and biomass has the additional advantage that it contains molecules that can be converted to liquid form to replace fossil-based transport fuels. Clean Energy Technology enables these solutions by developing solar cells and wind turbines, electric cars and biofuels. Clean Energy Technology therefore is defined as those technologies that contribute directly to reducing CO 2 emissions. There are other technologies that are equally necessary and valuable, such as the recycling of fossil-based materials, material efficiency and carbon capture and storage. These, however, affect CO 2 emissions only indirectly or in the case of CCS, only present a solution after CO 2 has been created (end of pipe). Clean Energy Technologies, thus defined, are urgently needed to cut CO 2 emissions, limit global warming and protect crucial ecosystems. The market is responding. The next chapter analyzes the size and growth of Clean Energy Technology markets and the position of the Netherlands therein.

11 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 2 Clean Energy Technology and the position of the Netherlands The market is responding to climate change by developing Clean Energy Technologies but the Netherlands has yet to contribute. In the 450 policy scenario, energy effi ciency and renewable energy solutions must be applied on a large scale. Clearly that implies signifi cant business opportunities for any technology that enables these solutions. Clean Energy Technology is set to become the next economic boom, similar to the internet in the 1990s. This chapter analyzes that market, its expected growth and the relative position of the Netherlands compared to other countries. 2.1 Clean Energy Technology is a growth market that is expected to reach EUR 1.6 trillion by 2020 and thus an attractive business opportunity Clean Energy Technology is already a large and growing market today. With total sales of EUR 630 billion in 2007, it is bigger than the global pharmaceutical industry. The Clean Energy Technology market consists of two segments. Energy effi ciency sales in 2007 totaled EUR 540 billion, renewable energy added EUR 90 billion (see fi gure 3). By 2020, Clean Energy Technology will be one of the world s main industries. In a business-as-usual scenario, the energy effi ciency and renewable energy segments will grow by 2.5% and 9% per year to EUR 790 billion and 275 billion respectively in 2020. This is not surprising. Between 2000 and 2008, worldwide annual growth averaged 24% for wind energy (from 4 to 27 GW annual installed capacity), 53% for solar (0.3 to 5.6 GW annual installed capacity), 31% for biodiesel (2 to 11 Mton output) and 29% for energy-saving light bulbs (from 528 million to 2.4 billion units sold). 6 Figure 3 Market development energy efficiency and renewable energy Global energy efficiency 1) Global renewable energy 2) market [EUR bn] grows by 5 % market [EUR bn] grows by 15 % +5% p.a. Global market volume 2007 [EUR bn] 1,025 Electr. industry 2,400 +15% p.a. Automotive 2,000 CET in 2020 1,600 Engineering 1,350 CET in 2007 630 Pharmaceutical 520 2007 2010 2020 2007 2010 2020 1) Energy efficiency includes insulation, electric engines, heating and cooling, household appliances and measurement and steering equipment 2) Renewable energy includes wind, solar, geothermal energy, hydropower, solar heating, biogas installations 2007-2020 [EUR bn] Source: GreenTech made in Germany 2.0, Roland Berger Strategy Consultants 6 Based on fi gures from GWEC, EPIA, Emerging Markets and World Watch Institute, energy-saving light bulbs includes fi gures from 2000 to 2006.

12 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry In the 450 policy scenario, average annual growth is expected to be even higher: 5% for energy effi ciency and 15% for renewable energy. 7 That will result in a EUR 1,600 billion total market for Clean Energy Technology in 2020, making it one of the world s biggest industries after automotive and electronics. Government targets will drive this market. The EU objectives of 20% renewable energy supply in 2020 alone translate into an annual additional market demand for more than 47 Gtoe in 2020, which shows an annual growth of 27% between 2012 and 2020. The US has no targets at the federal level, but 19 states have set targets for energy effi ciency and 29 for renewable energy (of which 17 aim for 20% or more). China wants to see a 15% share of renewable sources in primary energy demand by 2020, but already has plans to increase it to 20 % and has included a reduction in energy consumption per unit GDP of20% per 2010. 8 The fi nancial and economic crisis will have limited impact on forecasted growth. (Private) investments may be delayed, but most public stimulus packages contain (incentives for) sustainable investments. Wind is one example (see box insert). In short, we can expect robust growth in demand for Clean Energy Technology and attractive business opportunities for companies that can make it work. BOX: Pre and post crisis forecasts for wind energy Before the crisis, wind energy was expected to add 17% of capacity (in gigawatts) each year between 2008 and 2012. In 2009 this growth is now expected to slow to about 10 11%, due to financing conditions (15 30% equity now required), low oil prices (less urgency, longer paybacks) and general economic uncertainty. The bottleneck to the large-scale application of Clean Energy Technology will clearly not be a lack of demand. True, wind parks will have to be built, solar cells installed, houses insulated and electronic and biodiesel fueled cars bought all in large volumes. However, this will pick up. In 2012, worldwide capacity is still expected to reach 50 GW (see graph). Both incidental and structural drivers remain. Wind is especially supported in most economic stimulus packages, growth will be strong in countries less dependent on financial markets (most notably China), governments have set ambitious targets in the US, Europe, China and India, and Europe s Emissions Trading Scheme (ETS) carries cost penalties for fossil energies. The business cases for such investments depend in part on macro-trends such as energy security (becoming less dependent on oil and gas from unreliable or politically undesirable sources), oil prices, CO 2 pricing schemes and consumer and electoral appetites for sustainable products and policies. These level the playing fi eld between Clean Energy Technology and 7 BMU Greentech 2.0 and Roland Berger analysis 8 Based on Laura Fulley, American Council for an Energy-Effi cient Economy, Directive 2009/28/EC of the European Parliament and of the Council and The Guardian (2009), Martinot (2007)

13 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry fossil-based alternatives. However, these macro-trends are hard to influence and already increasingly favor cleaner solutions. The challenges are more on the supply side. To reach the targets, new technologies must be developed, technologies that exist today in the lab must be made to work and demonstrated under real-life conditions, and working applications must be made cost-competitive with existing alternatives. In other words, Clean Energy Technology businesses are needed to develop and deliver turbines, solar cells, cars, batteries, insulation materials and low-energy products to name but a few examples. If and when Clean Energy Technologies become commercially available, they will be used. Contrary to the macro-trends that impact demand, the development of this supply side can be influenced. That makes stimulating these businesses, encouraging start-ups and helping ventures develop and grow, the best lever for accelerating the large-scale application of Clean Energy Technology. 2.2 The Netherlands ranks 17 th in overall, GDP-weighted Clean Energy Technology sales and achieves a top-10 position only in solar and insulation The need and potential for Clean Energy Technology, both ecological and economic, have clearly been established. Unfortunately, the Netherlands does not seem to be succeeding in capturing (and contributing) its fair share. A ranking of countries sales in Clean Energy Technology does not exist anywhere. Yet there is no better way to assess both the technical and commercial viability of a country s technologies and their success in finding large-scale application. If Clean Energy Technology products and services are actually supplied to and bought by customers, those customers must find them both useful and valuable. In this report we have therefore compiled the first such ranking. It includes the 27 EU member states and all G7 and BRIC countries and the major renewable energy and energy efficiency segments (see appendix 1 for a full list of countries and segments analyzed). Renewable energy consists of five major technologies to create heat, electricity and transportation fuels. The energy efficiency technologies are those that are only dedicated to increasing efficiency or replacing less efficient technologies. For example, insulation is only used to retain heat or cold in buildings. Heat pumps replace the older central-heating boilers. We have not included products in which incremental advances have or can be made, such as household appliances. Although the contribution of such products can be high, they are not solely dedicated to reducing CO 2 emissions.

14 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry It is important to note that we have excluded hydro power in this ranking. The environmental damage that hydro power and hydro dams may cause also contributes to global warming. Also, hydro power has been used for more than a century and so does not represent a new or innovative application of (Clean Energy) technology. We acknowledge that this is an important industry sector in countries like Austria, Germany, France and China. Country market shares and overall volumes are listed by technology, with each step in an individual technology s value chain analyzed separately. For example, in solar we look into silicon, cells and modules. All segments sales are added to yield the world s first aggregate country ranking by sales. A country s position in the ranking reflects its ability to produce and sell products and services that reduce CO 2 emissions. High ranking countries also generate high economic value and employment for a skilled workforce. Many have strong domestic demand and so the spin-off employment to install Clean Energy Technologies locally is also high. These so-called green collar jobs are local, not threatened by outsourcing and available to relatively low skilled workers. A broad range of sources was used to obtain and validate the necessary data (see appendix 1 for complete details): Industry trade organizations e.g. the Global Wind Energy Council, European Photovoltaic Industry Association, European Biodiesel Board; Broker and industry reports e.g. from Sarasin, HSBC, Douglas-Westwood, Frost & Sullivan, Global Data, Jefferies; Company sources e.g. annual reports, company websites, investor presentations, press releases; Other sources e.g. IEA working group documents, Eurostat, data and insights available from expert group members (see appendix 2). Based on this comprehensive study, figure 6 presents the first Global Clean Energy Technology rankings by aggregate product sales over 2008 in absolute (EUR billion) and relative terms (as a % of GDP). In absolute terms the Netherlands ranks 12th with sales of some EUR 900 million, its GDP-weighted ranking is 17 th.

21 15 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry Figure 4 Clean Energy Technology sales by country 2008 in absolute and relative terms [EUR bn, % GDP] Absolute global Clean Energy Technology product sales 2008 [EUR bn] 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 DE US JP CN DK BR ES FR UK KR IN NL BE AT FI TW IT TR SE IL GR IE CA AU PL NO 0 5 10 15 20 Relative global Clean Energy Technology product sales weighted by GDP 2008 [% EUR] 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 DK BR DE ES FI CN AT BE KR IL JP FR IN IE TW SK NL GR US UK SE TR KG HU PL NO 0 1 2 3 4 Denmark, Brazil and Germany top the GDP-weighted rankings. The Netherlands would have to increase its sales by a factor of four to challenge Germany for third place. Denmark has been able to capture a large share of the global wind market. Danish wind turbine manufacturer Vestas has a 20% market share, but component manufacturers like LM Glasfi ber and offshore installation contractors such as A2Sea have also made Denmark their home. In energy effi ciency, Danish Rockwool is a leader in global insulation markets.

16 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry Brazil owes its second place almost exclusively to the large-scale production of bioethanol. Brazilian sugar cane provides its most efficient feedstock. The switch to bioethanol domestically has also made Brazil much less dependent on foreign oil. Germany has a long tradition in building machinery and equipment and this is the basis for its leading Clean Energy Technology industry. Germany excels in a broad range of technologies. Repower, Siemens and Enercon have strong positions in wind. Qcells is the world s largest manufacturer of photovoltaic solar cells. Knauf is a European leader in insulation. Next to biodiesel, Germany is home to most of the world s biogas installations. Wind energy and biofuels are the most important markets in Clean Energy Technology worldwide (with 29% and 27% of total sales respectively). The rapid expansion of wind power capacity in Europe, the US and China in recent years has created a 27 GW (capacity) market in 2008. The relatively low cost of wind and biomass favors their use over solar (12% of the overall market). The largest energy efficiency market is insulation with 13% of total Clean Energy Technology sales in 2008. Figure 5 shows the position of the Netherlands in each of these four main segments. Only in insulation and PV solar do the Netherlands achieve a top-10 position. Figure 5 Dutch market position in major Clean Energy Technology segments 2008 weighted by GDP [%] Wind turbines 0,00 0,01 0,02 0,03 Biofuels 0,00 0,01 0,02 0,03 1 DK 1 BR 2 ES 2 DE 3 DE World market segments 3 US 4 IN 4 AT 5 BE 5 FR Wind Biofuels 11 NL 29% 27% 16 NL PV Solar Insulation 0,00 0,01 0,02 0,03 12% 13% 0,00 0,01 0,02 0,03 1 TW Solar 20% DK NO Insulation 1 2 2 FI 3 CN Other 3 IE 4 DE 4 FR 5 JP 5 UK 7 NL 7 NL In wind, three of the four leaders (Denmark, Spain and Germany) hold sway; the fourth (Brazil) leads the field in biofuels (followed by Germany). Many lower ranked countries, however, show up in the top-5 in individual segments. Belgium owes its top-10 position overall to its strong position in wind (#5). Hansen transmission employs more than 1,300 people in Belgium.

17 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry The US is 19th overall, but third in biofuels thanks to its extensive, mainly first generation ethanol production in the Midwest. The UK (20th overall) has a strong domestic insulation market with the company Kingspan, which takes it into the fifth position in that segment, behind France (8th overall), Ireland (14th), Finland (5th) and the leader Denmark. In PV solar, the ranks are led by Taiwan (15th overall) and Norway (26th overall). Norway is a dominant supplier of silicon for solar cells; Taiwan has become the major producer of PV solar cells. The Netherlands has no leading positions in any of the major segments. It has a few start-up companies in wind energy that are mainly focusing on developing prototypes for offshore wind turbines. The few suppliers to this industry are smaller still. A new initiative (FLOW, Far and Large Offshore Wind) may give these companies, like Darwind and 2-B Energy a much needed boost after earlier initiatives were denied the necessary permits. Offshore wind is yet to grow into a substantial industry and the Netherlands could still emerge as a major player. In biomass, the Netherlands still plays a modest role despite the Port of Rotterdam that is a major point of entry for biomass into Europe and a strong petrochemical cluster that could pioneer biobased chemicals and materials. Although biomass co-firing in power plants is relatively common, the equipment can also be used to burn coal and is mostly supplied by foreign manufacturers. Biodiesel production is limited (certainly compared to the large fossil fuel refinery capacity in Pernis). Plans to increase capacity fivefold are yet to be realized. (First generation) biofuels have not found favor with government, although the biobased economy is now becoming a policy priority. For a gas country, biogas installations are few. In insulation, the Netherlands does have a strong company in Synbra. It would seem, therefore, that the Netherlands neither profits nor contributes as much as it should. Of the countries included in our ranking, the Netherlands is the 14th economy by GDP. In GDP per capita it even ranks sixth. It is an open, trading nation with a long tradition of science, (civil) engineering, even wind mills. Surely, then, the Netherlands could do much better. The next chapter examines the potential for Clean Energy Technology in the Netherlands.

18 Clean Economy, Living Planet - Building the Dutch Clean Energy Technology Industry 3 The potential for Clean Energy Technology in the Netherlands The Netherlands has the knowledge, capital, responsibility and (emerging) industry to play a much larger role in Clean Energy Technology The Netherlands may play a relatively minor role in this growing and attractive industry, but it has the potential to do much better. The Clean Energy Technology industry, for the most part, is relatively young. Countries that have the knowledge, capital, ambition and entrepreneurial drive can catch up quickly. This chapter examines the potential for Clean Energy Technology in the Netherlands. 3.1 The Netherlands has an excellent knowledge base but fails to turn it into practical Clean Energy Technology solutions delivered on a commercial scale The Netherlands historically has a strong tradition of R&D in areas related to Clean Energy Technology. Only five countries in our ranking spent more on renewable energy R&D in 2006 (latest available figures) and all but one rank higher in generating sales. 9 Whereas Dutch expenditures saw a steady decline this decade (from 0.03% in 2000 to 0.02% in 2006), Denmark has raised its R&D investments almost sixfold since 2002. It is now first in our country rankings. Finland, long and by far the biggest spender, ranks fifth. Korea and Japan both outspend and outrank the Netherlands, too. Until the early 2000s, however, the Netherlands was the second or third largest spender on Clean Energy Technology related R&D. It has consistently managed to turn these investments into world-class (academic) knowledge. Citation scores for scientific disciplines related to Clean Energy Technology place the Netherlands squarely in the global top-3 (see figure 6). 9 Based on the IEA energy R&D expenditures database