Published on May 23rd, 2012 | by Amy Brown0
Nordic countries top first cleantech innovation index.
Denmark, followed by Israel, Sweden, Finland and the US, provide the best conditions today for clean technology start-up creation, when it comes to commercial success, the first Global Cleantech Innovation Index 2012 shows.
The index is a first-of-its kind endeavor, from wwf International and the Cleantech Group, to investigate the global state of cleantech innovation in entrepreneurial start-up companies. Tech start-ups will provide some of the most important vehicles for developing and commercializing innovation to meet a range of climate, energy and economic challenges, according to the report.
The index looks at where these innovative cleantech companies will spring up over the next decade and which countries are ahead and which are below the curve for cleantech innovation. It analyzed this by looking at a set of inputs and outputs to innovation. General innovation drivers, such as the entrepreneurial culture, were part of the inputs, along with specific drivers such as government policies, public R&D spending, access to private finance, infrastructure for renewables, and cleantech industry organizations.
Outputs included both evidence of emerging cleantech innovation (early-stage private investment, high-impact companies, environmental patents) and evidence of commercialized cleantech innovation (company revenues, renewable energy consumption, employees, late-stage investments and exits, and listed cleantech companies).
“We found that the countries which invested in the most inputs also had good outputs – which was quite gratifying. It would have been discouraging had the efforts to stimulate cleantech innovation not had the desired effect. But this was not the case – particularly in the Nordic countries,” says Stefan Henningsson, Senior Advisor Climate Innovation, WWF International.
As home to three of the four top countries, Scandinavia emerges as a clear regional winner. Its small, innovative countries are followed by the larger economies of the usa and Germany. Norway ranked in 11th place.
Henningson says he was not surprised by Denmark’s top ranking, with its commitment to renewable energy but “I was more surprised that Sweden and Finland ranked so high, since their governments don’t have the same level of ambition as Denmark.”
Each country shows different strengths. Israel excels in the factor “evidence of emerging cleantech innovation”, while Denmark leads in “cleantech-specific innovation drivers” and “evidence of commercialised cleantech innovation”. Denmark also scores second for fostering emerging cleantech companies. Finland takes fourth place overall by coming second in both “inputs to innovation” factors, as well as scoring well for emerging cleantech companies. Sweden and the USA show a common pattern, scoring well on “evidence of emerging cleantech companies” and “general innovation drivers”. Sweden edged out the USA by scoring stronger (on a relative basis) on the “ evidence of commercialized cleantech innovation” factor mainly due to its relatively strong deployment of renewable energy.
The biggest challenge for the Nordic countries, says Henningson, is that they have fairly small domestic markets. “When we look at archetypes in the index, the Nordic countries end up as ‘start’up generators.’ In other words, they score very well for emerging innovation, but in terms of commercializing innovation, only Denmark is doing well – primarily because of its early investment in wind energy.”
In the future, the Nordic region will have to look out for competition from Asia. China and India did not top the index in 2011, but they stand out as having a strong potential to rise through the ranks in the coming years. They are already strong centers for the production of cleantech products and have increasingly supportive governments, large sums of private money ready to be invested, and massive domestic markets. Signs suggest that in the near future these countries have many of the favorable ingredients to be not only manufacturing cleantech products, but founding, and being home to, more and more of the next generation of innovative cleantech companies.
As Henningson points out, the manufacturing rate for cleantech in Denmark is 3 percent, compared to 77 percent for China and 28 percent for the US. Even if the Nordics are well positioned for cleantech innovation, and score well as start-up generators, they need to generate more revenues in order to maintain leadership. An opportunity they should not overlook is collaboration: to share their learning to gain access to these much bigger markets.
“China may be good at scaling up quickly but they are not as good as the Nordics at early innovation, and that is where the region can leverage its strengths to the rest of the world,” he says.