March 1, 2012 1 Comment
Cleantech Group LLC and WWF have just released a joint report, Coming Clean: The Global Cleantech Innovation Index 2012, that investigated 38 countries. This analysis focuses on a specific category of actors: cleantech start-up companies. In the authors’ own words:
“We are currently faced with a range of climate, energy and economic challenges. Technology start-ups provide one of the most important vehicles for developing and commercializing innovation to meet these challenges, while generating value for investors” (Report, 3).
The given assumption here is that the main drive for innovation in our current economy is not found within mega-corporations but in young entrepreneurs working all around the clock to develop the next breakthrough in solar or wind energy.
Unsurprisingly, they found out that four of the five countries at the top of that list are small-sized industrialized countries, with Denmark surpassing with flying colors its fellow competitors. Israel, Sweden and Finland are right behind and the US shows up at the fifth place. Denmark does it right in all criteria used by the authors, with
“an unique combination of a supportive environment for innovative cleantech start-ups, evidence of those start-ups emerging as well as a strong track-record of companies commercialising their cleantech innovations and scaling them up to widespread market adoption” (Report, 3).
South Korea is in 8th position, India and China at the 12th and 13th place respectively.
And where is Japan ? At the 20th, just behind France and before Spain (that could end up much more below in the future given the recent drastic public cuts in cleantech support).
As the authors explain, this relatively low position for Japan is not caused by a lack of innovative capacity: in 2008, the country ranked first in term of filling environmental technology patents. It is rather the lack of entrepreneurial start-up culture that is the culprit:
“informality, vigour, and risk-taking required to build a strong, Silicon Valley-esque start-up culture”
are simply not found in Japan. This is not to say that Japan does not matter on the global cleantech innovation scale, only that it could matter even more if not only mega-corps could play that game. Japan’s leaders should be highly concerned that according to the report, the country “scored below average on all factors except emerging cleantech innovation” (Report 36).
The lack of start-up culture and venture capitalism is not something new nor surprising to anyone who knows Japan. However, the country today is in a dire need to find new micro and macro-economic solutions not only to restart its aging economy that relies too much on exports, but also to quickly find an alternative to nuclear energy in order to reduce its renewed dependency for imported energy resources. In 2011, the government had already set forth a target where 20% of energy should come from alternative sources by the 2020s.
However, beyond the issue of financial resources and investment, Japan does not have the regulatory and economic framework that would actually bring positive results for its domestic economy. With very few cleantech focused investors, there is simply no private funding available for supporting early-stage, cleantech start-ups (Report, 23 and 36). The fact that Japan is seen as an “extreme example” of a country “too risk averse for a strong culture of making financial gambles on start-ups with radical ideas” (Report, 27) is not good news in view of its challenges in its post-3/11 economy.
Cleantech Group and WFF point out a direct relation between economic productivity and the existence of a strong start-up-friendly environment.
Overall the index shows countries that put significant resources into supporting cleantech innovation are rewarded with more emerging and commercialised cleantech companies, validating the approach many governments have taken to actively promote cleantech innovation nationally.
While mega-corps like Mitsubishi invest in breakthrough R&D in flexible Organic Photovoltaic Cells that should be commercialized in 2013 already, analysis show that this is not enough to give a whole industry the strength and ability to make a strong and general impact on domestic growth.
The fact that Japan is at the very end of the chart ranking countries based on “Evidence of Commercialised Cleantech Innovation”, just after Slovenia and before Greece, Russia and Saudi Arabia (Report, 24) should be forwarded to political and economical leaders right away.
The networks and actors that have built Japan in the 20th Century may not be the options for finding the necessary solutions to give its domestic economy the radical transformations that it needs.