Building Competitive Green Industries

Photo: © Simone D. McCourtie / World Bank.The Global Clean TechnologyMarketThe global clean technology market was valued atapproximately $5.5 trillion 7 in 2012 (U.K. BIS, 2013),comparable to the global construction industry,which had a global turnover in 2013 of $7.0 trillion. 8Clean technology is also a fast growing sectorwhose growth is not only accelerating, but whoseprojected growth is regularly revised upwards; 9a 2012 German government study (DE BMU,2012) predicted the market would double by themid-2020s. The global clean technology marketis forecast to grow at around 4.1 percent annuallyuntil 2015/2016 according to U.K. BIS (2013), whichsignificantly outstrips global average economicgrowth projections of 2.2 percent to 3.3 percentover the same period by the World Bank (2013b). 10By contrast, the global automotive industry isforecast to grow at 3.8 percent per year over thesame time period (McKinsey, 2013a).FIGURE 2.1. Growth in global clean technologysales 2007-2012 (in $ trillion)Sales (US$ trillion)$5.6$5.5$5.4$5.3$5.2$5.1$5.0$5.22007/2008Source: U.K. BIS (2013).$5.32008/20092009/2010$5.4 $5.4Year2010/2011$5.52011/20127 According to a U.K. Department for Business, Innovationand Skills (BIS) 2013 report, the total sales for the LowCarbon Environmental Goods and Services (LCEGS)sector in 2011/2012 was £3.4 trillion. This was convertedto $5.5 trillion using an average exchange rate of $1.00/£1.5847 for the year 2012 and uplifted to 2013 price fromassumed 2012 price levels using an average inflation rateof 1.5 percent. Historical exchange rate was obtainedfrom www.oanda.com, and the U.S. annual inflation rateswere obtained from U.S. Department of Labor, Bureau ofLabor Statistics.8 According to the Confederation of InternationalContractors’ Associations website: http://www.cicanet.com/9 The upward revision was documented in U.K. BIS reportsin 2011, 2012, and 2013.10 The Climate Group also conducted a market sizingexercise and estimated the global clean technologymarket to be worth more than $2.56 trillion a year, andis expected to be valued at more than $5.13 trillion bythe mid-2020s. They found the market to be growing at12 percent a year since 2007. The overall size and growthrate is different from the U.K. BIS estimate because thesubsectors included in each report differ.Breaking down the clean technology market intoits constituent subsectors shows which areas aredriving this performance. The top six subsectors interms of global market size are alternative fuels, 11building technologies, wind power, alternativefuel vehicles, 12 geothermal, and water supplyand wastewater treatment. Across the board,low carbon and renewable energy, water andsanitation, waste management solutions, andcleaner mobility make up the bulk of the market(see Figure 2.2).11 Alternative fuels include the manufacture, production,supply, and distribution of: batteries, biodiesel, butanol,ethanol, vegetable oils, biomass, methane, peanut oil,vegetable oil, wood and woodgas, and hydrogen.12 Alternative fuel vehicles includes production, supplyand distribution of natural gas, synthetic fuel and autogas, RD&D for hydrogen fuel cells and hydrogen internalcombustion, electric, hybrid electric, steam powered,organic waste fuel, wood gas, solar powered and air,spring and wind powered vehicles.Chapter 2: Sizing Climate and Clean Technology Markets19