The Green Economy & Rural North Carolina Presented at the Annual Meeting of the Rural Economic Development Organization October 2, 2008 John Hardin, Ph.D. * Acting Executive Director North Carolina Board of Science & Technology www.ncscitech.com *with considerable assistance from RV Rikard, Grants Administrator, NCBST

Presentation Outline: Board of Science and Technology Economic Context in NC Green Economy in the US Green Economy in NC NC Green Business Fund

Board of Science and Technology

Economic Context in NC

Green Economy in the US

Green Economy in NC

NC Green Business Fund

NC Board of Science and Technology

Board Mission: In 1963, NC General Assembly established the Board to encourage, promote, and support scientific, engineering, and industrial research applications in NC Investigates new areas of emerging science and technology and conducts studies on the competitiveness of state in these fields Works with State officials to establish the infrastructure that keeps NC on the cutting edge of science, technology, and economic development

In 1963, NC General Assembly established the Board to encourage, promote, and support scientific, engineering, and industrial research applications in NC

Investigates new areas of emerging science and technology and conducts studies on the competitiveness of state in these fields

Works with State officials to establish the infrastructure that keeps NC on the cutting edge of science, technology, and economic development

Board Structure: Administered by the NC Department of Commerce 19 Board members (all from NC): 17 appointed by governor; 2 appointed by legislature From academia, business, non-profits & government 4 full-time staff; periodic interns

Administered by the NC Department of Commerce

19 Board members (all from NC):

17 appointed by governor; 2 appointed by legislature

From academia, business, non-profits & government

4 full-time staff; periodic interns

Sample Board Achievements: NC Biotechnology Center NC School of Science and Mathematics MCNC Tracking Innovation Index (2003) One NC Small Business Program (2005) NC Nanotechnology Roadmap (2006) NC Green Business Fund (2007)

NC Biotechnology Center

NC School of Science and Mathematics

MCNC

Tracking Innovation Index (2003)

One NC Small Business Program (2005)

NC Nanotechnology Roadmap (2006)

NC Green Business Fund (2007)

Economic Context in NC

Economy: A system for allocating scarce resources A given economy is the result of a process reflecting its: geography resource endowment history technological evolution social and political organization ecology etc.

A system for allocating scarce resources

A given economy is the result of a process reflecting its:

geography

resource endowment

history

technological evolution

social and political organization

ecology

etc.

Past Economic Conditions 1950s NC: High concentration in agriculture/manufacturing industries Tobacco, Cotton Furniture Textiles Low-wage Jobs 49th in per capita income in the US “ Brain Drain” Need to diversify & expand economy

1950s NC:

High concentration in agriculture/manufacturing industries

Tobacco, Cotton

Furniture

Textiles

Low-wage Jobs

49th in per capita income in the US

“ Brain Drain”

Need to diversify & expand economy

36th in per capita income in the US Population of nearly 8.9 million –11 th largest in US Share of NC’s workforce in manufacturing (~14%) is higher than the US average (~9%) and 11 th in US Economy is in rapid transition High rate of plant closings in NC’s traditional industries (textiles, apparel, tobacco, furniture) Service industries is now largest sector (80% of all employment and 42 nd in US) Current Economic Conditions

36th in per capita income in the US

Population of nearly 8.9 million –11 th largest in US

Share of NC’s workforce in manufacturing (~14%) is higher than the US average (~9%) and 11 th in US

Economy is in rapid transition

High rate of plant closings in NC’s traditional industries (textiles, apparel, tobacco, furniture)

Service industries is now largest sector (80% of all employment and 42 nd in US)

NC was among first states to recognize that technology-based economic development creates high-growth companies and well-paying jobs Over fifty years ago we began making long-term investments in our universities, science, and technology as drivers of economic growth Most notable investment is the Research Triangle Park (RTP) Today, NC is recognized around the world for its strategic policy initiatives (e.g., biotechnology) Current Economic Conditions

NC was among first states to recognize that technology-based economic development creates high-growth companies and well-paying jobs

Over fifty years ago we began making long-term investments in our universities, science, and technology as drivers of economic growth

Most notable investment is the Research Triangle Park (RTP)

Today, NC is recognized around the world for its strategic policy initiatives (e.g., biotechnology)

Funding Facilities & Equipment Industry-University Nexus Policies Culture & Goals of Commercialization Organizations Commercialization Funding K-16 Education System Industry Training Policies Culture & Goals of Education/Training Organizations Education & Workforce Environment Public Leadership Public Understanding Public Leadership Public Understanding Funding Facilities & Equipment Researchers Policies Culture & Goals of Research & Development Organizations Research & Development * * [Inputs] [Outputs] [1 st -Order Outcomes] Economic Development Technology Companies ( New & Enhanced) * [2 nd -Order Outcomes] Innovative Ideas Innovative Technologies Tech-Based Economic Development Framework End Goal

Funding

Facilities & Equipment

Industry-University Nexus

Policies

Culture & Goals of Commercialization Organizations

Funding

K-16 Education System

Industry Training

Policies

Culture & Goals of Education/Training Organizations

Funding

Facilities & Equipment

Researchers

Policies

Culture & Goals of Research & Development Organizations

We have built an enormous capacity for innovation in science and technology But even with NC’s successful investments in technology, the state ranks only: in the middle of US states in terms of the vigor and impact of its high-tech economy Current Economic Conditions

We have built an enormous capacity for innovation in science and technology

But even with NC’s successful investments in technology, the state ranks only:

in the middle of US states in terms of the vigor and impact of its high-tech economy

Summary of National Position NC ranks in the 2nd tier of innovative states Milken Institute: State Technology and Science Index: Enduring Lessons for the Intangible Economy (2008)

Other states are catching up quickly by spurring large-scale tech-based economic development NC’s R&D investments/strengths are heavily academic rather than applied NC is heavily dependent on a few geographically concentrated knowledge clusters such as RTP Thus, To continue to produce benefits from these investments, NC must do a better job of converting its innovation capacity – its research, ideas, and people – into companies and jobs throughout NC Current Economic Conditions

Other states are catching up quickly by spurring large-scale tech-based economic development

NC’s R&D investments/strengths are heavily academic rather than applied

NC is heavily dependent on a few geographically concentrated knowledge clusters such as RTP

Thus,

To continue to produce benefits from these investments, NC must do a better job of converting its innovation capacity – its research, ideas, and people – into companies and jobs throughout NC

Location of University R&D

Location of Patent Awards

Location of Venture Capital

Location of Businesses

Location of High-tech Businesses

Location of Master’s Degree Holders

Location of Bachelor’s Degree Holders

Location of Associate Degree Holders

Location of Secondary Ed Institutions

In conclusion . . .

Green Economy in the US

In its infancy

But it’s starting to wake up and make itself known

And it is sometimes politically sensitive

The Green Economy in the US General/contextual level: What is the green economy? Depends on who you ask… Includes any sector of the economy related to: renewable energy energy efficiency conservation of natural resources

General/contextual level:

What is the green economy?

Depends on who you ask…

Includes any sector of the

economy related to:

renewable energy

energy efficiency

conservation of natural resources

Notable Facts Bill Gates calls the green economy the “biggest economic opportunity in the country” Venture capital investment in energy technology start-ups increased to $2.4 billion in 2006, up 262% U.S. Department of Commerce’s Deputy Assistant Secretary for Economic Development advised that if he could give one piece of advice, it would for communities and states to develop their green economy

Bill Gates calls the green economy the “biggest economic opportunity in the country”

Venture capital investment in energy technology start-ups increased to $2.4 billion in 2006, up 262%

U.S. Department of Commerce’s Deputy Assistant Secretary for Economic Development advised that if he could give one piece of advice, it would for communities and states to develop their green economy

The Green Economy in the US Why is the Green Economy important? We face three interconnected realities: Weakened National Security Environmental Damage/Climate Change De-industrialization of U.S. Economy 20 th Century Energy Economy 21 st Century Green Economy “ Drill and Dig” Renewable Energy Technologies Fossil Fuel is Discovered Renewable/Sustainable Energy is conceived in basic science

Why is the Green Economy important?

We face three interconnected realities:

Weakened National Security

Environmental Damage/Climate Change

De-industrialization of U.S. Economy

The Green Economy in the US New Technology and the Green Economy: New Technologies Enact policies and programs to drive commercialization Prepare green-collar workforce: -Training Partnerships Leverage success to build political support for new initiatives Driven by an Innovation Ecosystem

New Technology and the Green Economy:

The Green Economy in the US The future of the Green Economy Still VERY early to determine the impact Four estimates: By 2030: 40 million jobs in the U.S. ,with an estimated $4.5 trillion in revenue (American Solar Energy Society) Over the next decade: 3.3 million jobs (American Solar Energy Society) 2 million jobs (Economic Policy Institute) 2 million jobs (Center for American Progress)

The future of the Green Economy

Still VERY early to determine the impact

Four estimates:

By 2030:

40 million jobs in the U.S. ,with an estimated $4.5 trillion in revenue (American Solar Energy Society)

Over the next decade:

3.3 million jobs (American Solar Energy Society)

2 million jobs (Economic Policy Institute)

2 million jobs (Center for American Progress)

Examples of Green Economy Jobs

Green Economy in NC

The Green Economy in North Carolina NC has nearly 500 companies related to efficiency, renewables, and sustainability (NC Sustainable Energy Association) For example: ABB CAROLINA SOLAR ENERGY INI POWER SYSTEMS ITRON MICROCELL PIEDMONT BIOFUELS And many more…..

NC has nearly 500 companies related to efficiency, renewables, and sustainability (NC Sustainable Energy Association)

For example:

ABB

CAROLINA SOLAR ENERGY

INI POWER SYSTEMS

ITRON

MICROCELL

PIEDMONT BIOFUELS

And many more…..

The Green Economy in North Carolina The Economic Policy Institute (2008) highlights NC as one of the top 10 states for new Green Energy Investment: Over the next 10 years – 28,544 jobs $5.26 billion in investment The N.C. Sustainable Energy Association estimates that 6,470 jobs in the state are directly related to energy efficiency or renewable sources In NC, such jobs are increasingly related to manufacturing, construction, and building design

The Economic Policy Institute (2008) highlights NC as one of the top 10 states for new Green Energy Investment:

Over the next 10 years – 28,544 jobs

$5.26 billion in investment

The N.C. Sustainable Energy Association estimates that 6,470 jobs in the state are directly related to energy efficiency or renewable sources

In NC, such jobs are increasingly related to manufacturing, construction, and building design

The Green Economy in North Carolina Innovative Steps thus far: North Carolina is the first state in the Southeast to enact a mandatory Renewable Energy and Energy Efficiency Portfolio Standard (REPS) Colleges offering Green Economy workforce training programs include: Wake Technical Community College Central Carolina Community College Asheville-Buncombe Technical Community College Appalachian State University

Innovative Steps thus far:

North Carolina is the first state in the Southeast to enact a mandatory Renewable Energy and Energy Efficiency Portfolio Standard (REPS)

Colleges offering Green Economy workforce training programs include:

Wake Technical Community College

Central Carolina Community College

Asheville-Buncombe Technical Community College

Appalachian State University

The Green Economy in Rural North Carolina What does this mean for rural North Carolina? Economic Development Jobs Improved Environmental and Personal Quality of Life

What does this mean for rural North Carolina?

Economic Development

Jobs

Improved Environmental and Personal Quality of Life

NC Green Business Fund enacted in 2007; given $1 million

Purpose: The North Carolina Green Business Fund is designed to award funds (up to $100,000 per project) to North Carolina small for-profit and non-profit businesses, and State and local governmental entities, to encourage the development and commercialization of promising green technologies RV Rikard NCBST (c) 2008

Priority Areas: Development and commercialization of the biofuels industry Development and commercialization of the green building industry Attracting and leveraging private sector investment and entrepreneurial growth in environmentally conscious clean technologies and renewable energy products and businesses RV Rikard NCBST (c) 2008

Development and commercialization of the biofuels industry

Development and commercialization of the green building industry

Attracting and leveraging private sector investment and entrepreneurial growth in environmentally conscious clean technologies and renewable energy products and businesses

Examples of Projects: Across all three categories include but are not limited to: Biofuels and Renewable fuels Building design, control systems Alternative energy (e.g. hydrogen, solar, wind, wave, tidal, biomass, etc.) Fuel processing Fuel cells, batteries Power Generation Combustion processes New Power Generation technologies Hybrid vehicles Energy efficiency Industrial processes (e.g. chemical production, pulp and paper) Advanced materials Sequestration technologies Biomass processing systems Soil quality improvement technologies RV Rikard NCBST (c) 2008

Biofuels and Renewable fuels

Building design, control systems

Alternative energy (e.g. hydrogen, solar, wind, wave, tidal, biomass, etc.)

Fuel processing

Fuel cells, batteries

Power Generation

Combustion processes

New Power Generation technologies

Hybrid vehicles

Energy efficiency

Industrial processes (e.g. chemical production, pulp and paper)

Advanced materials

Sequestration technologies

Biomass processing systems

Soil quality improvement technologies

Be technically sound Be collaborative in nature Commercialize any newly developed technologies Ensure broad benefits for all North Carolinians The Proposed Project Must: RV Rikard NCBST (c) 2008

Be technically sound

Be collaborative in nature

Commercialize any newly developed technologies

Ensure broad benefits for all North Carolinians

Four-Stage Review Process: In spring 2008, received 85 proposals, for a total request of nearly $7 million; each was reviewed in four stages: Stage I – Compliance Review by Grant Administrator Stage II – Compliance Review by Executive Director Stage III – Merit Review by Advisory Committee Members Stage IV – Final Decision Executive Director

In spring 2008, received 85 proposals, for a total request of nearly $7 million; each was reviewed in four stages:

Stage I – Compliance Review by Grant Administrator

Stage II – Compliance Review by Executive Director

Stage III – Merit Review by Advisory Committee Members

Stage IV – Final Decision Executive Director

Where did proposals come from?

Advisory Committee A 25-member Advisory Committee—composed of scientists, engineers, and qualified experts from across NC—reviews all proposals to determine their merits Quantitative Evaluation Criteria: Technical Merit and Feasibility – 40% of final score Experience /qualifications of key personnel /facilities – 20% of final score Effectiveness of the Proposed Work Plan – 20% of final score Budget Realism – 20% of final score Qualitative Evaluation Criteria: Commercial Merit and Market Opportunity Economic Development Merit RV Rikard NCBST (c) 2008

A 25-member Advisory Committee—composed of scientists, engineers, and qualified experts from across NC—reviews all proposals to determine their merits

Quantitative Evaluation Criteria:

Technical Merit and Feasibility – 40% of final score

Experience /qualifications of key personnel /facilities – 20% of final score

Effectiveness of the Proposed Work Plan – 20% of final score

Budget Realism – 20% of final score

Qualitative Evaluation Criteria:

Commercial Merit and Market Opportunity

Economic Development Merit

Where were grants awarded?

2008 Awardees

Evans Environmental of Wilson -- $75,000 to remove residual water in the final stage of biodiesel production. This innovative process will facilitate increased production to commercial-grade biodiesel by 300%. Alganomics of Southport --$60,000 to produce reliable, environmentally responsible, natural and renewable bioproducts from algal sources. The primary bioproduct is extracted oil/fatty acids for use as a biodiesel fuel feedstock. Piedmont Biofuels of Pittsboro -- $75,000 to develop a cavitation reactor to produce biodiesel fuel. The process uses less energy than traditional methods, has a much smaller physical footprint and causes a more complete reaction with higher fuel yields. Nanotech Labs of Yadkinville -- $70,000 to develop and commercialize an energy storage device that has extremely high volume capacity but small overall dimensions. Rural Awardees

Evans Environmental of Wilson -- $75,000 to remove residual water in the final stage of biodiesel production. This innovative process will facilitate increased production to commercial-grade biodiesel by 300%.

Alganomics of Southport --$60,000 to produce reliable, environmentally responsible, natural and renewable bioproducts from algal sources. The primary bioproduct is extracted oil/fatty acids for use as a biodiesel fuel feedstock.

Piedmont Biofuels of Pittsboro -- $75,000 to develop a cavitation reactor to produce biodiesel fuel. The process uses less energy than traditional methods, has a much smaller physical footprint and causes a more complete reaction with higher fuel yields.

Nanotech Labs of Yadkinville -- $70,000 to develop and commercialize an energy storage device that has extremely high volume capacity but small overall dimensions.

The Green Economy in North Carolina Immediate Needs: Enhance and integrate technology innovation and commercialization programs to support world-class domestic manufacturing and labor productivity Provide the engine for Clean/Green Re-Industrialization!

Immediate Needs:

Enhance and integrate technology innovation and commercialization programs to support world-class domestic manufacturing and labor productivity

Provide the engine for Clean/Green Re-Industrialization!