Energizing the Future
How Our Region Can Expand Our Clean Energy
Sector to Fuel a Job Growing Economy
By Michael Luis
Michael Luis & Associates
and Charles Knutson
Chamber of Commerce
ENERGIZING THE FUTURE
How our Region can Expand its Clean Energy Sector
to Fuel a Job Growing Economy
For businesses of all sizes, energy is key
to economic success, and clean energy
is essential for a sustainable future.
Energy is the engine of all industry. It powers our trucks, ships and airplanes, heats and
cools our buildings and factories, and transmits our information at lightning speed.
Clean energy initiatives will reduce transportation and facility costs and create new
opportunities for sustained economic growth. Indeed, creating an energy strategy that
saves money for businesses and customers, creates jobs, reduces carbon emissions and
helps end dependence on foreign oil is one of the most important economic and
scientific challenges facing society today.
That's why over 250 of our region's top
business, government and civic leaders
assembled for three days at the sold‐out 21st
anniversary Regional Leadership Conference
at Suncadia Resort in Cle Elum, Washington.
This year’s conference focused on how our
region can play to our strengths and become
a world leader in renewable energy (like jet
Conference Co‐Chairs Tayloe Washburn and David Allen
biofuels), alternative energy (like wind and
solar), energy efficiency in buildings and smart grid technology. This conference was not
just about saving the earth. It was about jumpstarting an economic engine that can
drive our prosperity and ensure our quality of life during this economic cycle and for
decades to come.
Governor Chris Gregoire laid out
the challenge succinctly:
“We have two options:
have a seat at the table
or be on the menu.”
‐‐Chris Gregoire, Governor, Washington state
Major Findings and Outcomes
Participants heard from some of the foremost
experts in clean energy on our region’s unique
opportunity to be at the forefront of this emerging
sector. We explored how clean energy has
became a major industry in our region, how the
Puget Sound and state economy benefits from the
sector, and how we can support clean energy to
help drive our long‐term prosperity.
We discussed how we as regional leaders can
successfully develop a competitive clean energy
sector strategy, and we committed to putting our ideas into action.
For the full list of specific action items see page 15.
So where do we go from here, and how to we sustain the momentum generated by this
conference? There are several ways to stay involved. First and foremost, stay involved in
the Seattle Chamber and join the Washington Clean Technology Alliance. If there is an
action item that you believe you or your company or your organization can help
advance, please step up. We need your talent, time and financial support to make these
goals a reality.
Unlike any other event, this conference assembles some of the most important
business, government and civic leaders in our region. Ideas are exchanged,
partnerships are formed and business gets done. We now have a solid understanding of
the importance of this sector in our community. By continuing to work together we can
implement a regional leadership approach that will truly make us a center for
Greater Seattle Chamber of Commerce Marc Cummings, Battelle/PNNL Greater Seattle Chamber of Commerce
President and CEO Phil Bussey Chair Kirk Nelson
Benefits to Our Regional and State Economy
Over the next three decades, the world will shift from near‐exclusive dependence on
fossil fuels toward utilization of a wide range of renewable energy sources. This shift
will, in turn, give rise to entirely new industries that will produce and transport clean
energy and manufacture the machines, vehicles, appliances and fixtures that use it. This
process is just beginning, but before long we will begin to see which regions of the world
emerge as leaders in these dynamic new industries. Will Washington be among them?
Conference co‐chair Tayloe Washburn, of Foster Pepper, opened the conference by
noting that this is exactly the sort of long‐term, big picture question that the Leadership
Conference is designed for.
“The economy of Washington shines
when there is great transition
because we get technological
advance better than any other state.”
This is a race, and we need to
approach it like a race‐‐ in a race,
you get going.
‐‐Congressman Jay Inslee
The movement of the global economy from fossil fuels to clean energy promises to be
one of the greatest industrial transformations in history, and Washington State has the
potential to be a leader in it. Businesses and institutions in the state have long histories
of innovation, and as Congressman Jay Inslee said, “the economy of Washington
shines when there is great transition . . . We get technological advance better than
any other state.”
Furthermore, the state has been a leader in many of the key building blocks of the new
energy economy, such as software, materials and life sciences. And as conference co‐
chair David Allen of McKinstry noted, Washington’s brand position is already strong.
But with trillions of dollars and decades of industrial dominance at stake, every region in
the world is trying to carve out its own position in the new clean energy economy.
for leadership, The Employment Potential of Clean Energy
Clint Wilder, of Clean Edge, presented the results of a projection of
potential job growth in clean energy for Washington and Oregon
investment is through 2025. The study projects that the “big five” opportunities –
intense and will solar PV manufacturing, green building design services, wind power
only get more so. development, sustainable bioenergy and smart grid technologies – have
The problem of the potential to create 63,000 jobs in the Northwest by 2025. Specific
projections were presented for three of these sectors:
fuels is almost 2025 jobs projection
unfathomably Jobs today Low projection High projection
huge, and the
Green building 3,826 12,937 16,834
business models Sustainable bioenergy 3,207 6,946 10,419
to do so simply Smart grid 1,280 2,669 7,212
do not exist, so
no region can yet
claim any preeminent position in the new clean energy era. In the coming decade,
however, winners will emerge, and Washington, while well positioned, has no
guarantee of being one.
Because of its market size and location, Washington cannot
expect to be at the very center of the new energy economy,
but it has the potential to hold a prominent position and to
own key niches of the clean energy industries that will
emerge. The challenge before the 250 conference attendees,
then, was how to build on the state’s many strengths and to
stay ahead of the unpredictable and rapidly evolving
Puget Sound Energy’s energy transformation.
Wild Horse wind farm
“Everyone talks about being a clean
tech leader. We need to aggressively
compete for the companies and jobs
that can just as easily go to Austin,
Boston, or China.
‐‐Clint Wilder, Clean Edge and conference keynote speaker
A Different Kind of Transformation
Dr. Rick LeFaivre of OVP Venture Partners put clean energy in the context of other
major technological transformations of our time, such as information technologies and
genomics. In the pattern he described, new technologies operate in parallel with
incumbent technologies for a period of time, until a key inflection point, at which time
the disruptive new technologies begin to take over. Dr. LeFaivre and other speakers
noted several ways in which the energy transformation will be quite different from past
transformations, especially the two in which Washington has played a dominant role:
aerospace and software.
“We’ve never quite seen this
confluence of forces.
Societal needs are driving us to a
clean energy future.”
‐‐ Dr. Rick LeFaivre, OVP Venture Partners
No slow ramp up
The size of the market for clean energy is enormous right from the beginning. Whereas
jets and software slowly built up markets as their technology and industry capacity
evolved, the demand for clean energy is nearly limitless.
Dr. David Ginger, from the University of Washington,
put the challenge in context, illustrating that replacing
just one third of the country’s energy use would
require 1000 nuclear plants or biomass farms covering
one‐fourth of the land area of the United States.
Dr. David Ginger
University of Washington
Examples of possibly breakthrough nanophotonics
Not driven by technology
Previous transformations have been driven by new technologies,
with the pace of demand dictated by the pace of technological
progress. In contrast, a societal demand for solutions to climate
change is driving the clean energy industry. As Dr. Mark
Emmert, of the University of Washington said, “the need for
clean energy has penetrated the public mind.” Where previous
transformations reflected opportunities that society gradually
captured– more travel, better communication, higher
productivity, better health – clean energy is being driven by a President Mark Emmert
pressing problem staring us in the face. University of Washington
Science and technology need to catch up
As Dr. Ginger made clear, we simply do not have the technology
at present to meet the need for clean energy. Current
technologies, such as biofuels and wind, cannot scale up to the
size needed to replace substantial amounts of fossil fuels, and
current solar technologies are too expensive to produce on a
Dr. Elson Floyd, of Washington State University, expressed
doubt that we have even the capacity to meet the requirements
President Elson Floyd
Washington State University of current cap‐and‐trade legislation.
Huge capital requirements
While participation in the information revolution only required a
computer, being part of clean energy requires huge outlays of
capital for production‐scale operations. This, in turn, requires a
stable and consistent policy environment to ensure that
investors and entrepreneurs have a clear path to profitability.
John Plaza, of Imperium Renewables, described how the shifting
policy environment for biofuel use led him to temporarily shut
his plant and idle a substantial capital investment.
“If you are not willing to get the
public policy right, you should work
on something else.”
‐‐Dr. David Cheney, SRI International
Not a free market
Unlike other transformations in which governments were of secondary importance,
energy is dominated by public policy at all levels. Current energy producers are heavily
influenced by government policy and the only way to shift the balance from fossil fuels
to renewable energy in the near term will be through government intervention.
Dr. David Cheney, of SRI International, was very direct: “If you are not willing to get the
public policy right, you should work on something else.”
The unusual nature of the transformation from a fossil fuel
driven world to one driven by renewable energy leads to a
conundrum. We know that the vast majority of innovation and
industrial transformation is not driven by top‐down
directives—the Apollo and Manhattan Project approaches
rarely work. But at the same time, we cannot trust the
future of our planet to random outcomes.
What is needed is a strong, aggressive public
policy environment that incentivizes
technological progress while keeping
competition open and fierce. The question for
conference attendees was: can Washington
create that policy environment and make the
public investments needed to leverage
research and entrepreneurial energies in the
state? And do we have the stomach to engage
in that fierce competition?
Elements of a Clean Energy Strategy
Over the course of the conference, a number of key elements emerged that would form
the basis for a clean energy strategy for the state.
First of all, conserve
While it is obvious that energy transformation begins by using less, conservation
programs tend to get less attention than exotic new forms of energy. Firms like
McKinstry are making a name for themselves in the commercial and industrial arena,
but at the smaller scale, the entrepreneurial opportunities seem less enticing.
Renewable energy promises to yield disruptive technologies and multi‐billion dollar
companies, while conservation seems to promise low margins. Yet, the Northwest
Power and Conservation Council’s current plans call for 1,200 megawatts of
conservation over the next five years. An unspoken challenge to conference attendees
was to change this business paradigm and make conservation as big a part of the picture
as new energy.
At the conference, McKinstry announced a new $5 million
clean energy innovation center and incubator for our region.
“There is great demand for new green energy
efficient technologies. Companies who are
developing these now have a place to
collaborate and gain the momentum they need
Stable policy environment
to propel this industry forward.”
‐‐David Allen, Executive Vice President, McKinstry
Currently, nearly all new clean energy sources are more expensive than fossil fuels,
especially when scaled up. We also know that fossil fuels will become more expensive
and renewable energy will become less expensive, and that at some future point, their
cost curves will cross. But until we reach that point, there needs to be public policy
intervention that makes up for the price gap. That could be outright subsidies for
production (such as tax credits), mandated consumption (such as electric portfolio
standards, or biofuel blend requirements) or take‐away agreements. Whatever the
policy intervention, however, the keys are effectiveness and stability. The intervention
must have the desired economic impact, and that impact must be in place over a long
enough period of time to justify the investment in production capacity.
What complicates this further is that most investments made today will not likely be the
optimal technology for the long term and will be bypassed before their useful life is up.
For example, the solar panels used today may be superseded by the kinds of new plastic
solar cells described by Dr. Ginger. But policy cannot just jump to favor the next big
technological advance and pull the rug out from under earlier, transitional technologies.
Build and maintain a “smart grid.”
The transformation of the energy economy means moving
massive amounts of energy onto the electric distribution grid.
The grid we have today, however, has neither the capacity nor
the “intelligence” to handle the task. According to David Kaplan,
of V2Green, nearly all of Washington’s CO2 emissions are
happening off the grid (i.e., very little electric generation in
Washington produces CO2), so eliminating CO2 emissions means
shifting away from fossil fuels toward cleanly‐produced energy. David Kaplan
This raises two major problems. V2Green
First, the load on the grid will increase substantially: just think what happens when cars
plug into the grid rather than the gas pump. The components in the grid may not be
large enough to handle these new loads reliably.
Second, the new clean sources of electricity tend to be intermittent. That is, the sun
shines only during the day, and the wind blows only under certain atmospheric
conditions. The grid needs to be “smart” enough to anticipate these shifts in power
availability and allow demand to change accordingly. So, imagine a power system that
has variable pricing and two‐way communication such that it can tell your clothes dryer
when to turn itself on and use the lowest‐cost power.
A smart grid will also improve reliability and customer service.
Jorge Carrasco, Superintendent of Seattle City Light, noted that a
smart grid will allow almost instantaneous restoration of power during
outages through its ability to reroute power to an area with downed
Malcolm Unsworth of Itron added that smart
meters and lines enable service changes and
Jorge Carrasco emergency cut‐offs of power and gas remotely,
Seattle City Light without requiring service calls.
Build on strengths
A number of speakers indicated that Washington already has many important building
blocks for leadership in clean energy. The region has a long history of clean energy
through hydropower, and is now a national leader in wind power.
Entrepreneurs in the state were early producers of biofuels, and the Teanaway project
will vault Washington to the top of the solar power world. Behind these innovations are
the state’s great strengths in information technologies and life
sciences, both of which are central to clean energy.
An example of a strength that the state can build
on right now is clean aviation fuel. Certain energy
users, such as planes and ships, cannot be operated
from the power grid – the physics just don’t allow
it. So, to remain viable, the airline industry must
find a substitute for petroleum‐based jet fuel. And,
since the useful life of an aircraft is measured in decades, that
Dale Smith substitute fuel must “drop in” to the planes flying today with no
The Boeing Company
modification. Dale Smith of the Boeing Company said that such a
technology exists today.
“We have a very interesting
opportunity, we have a ready voice in
the new administration to make this
industry a part of public policy.”
‐‐Dr. John Gardner, Washington State University
Both Smith and Tom Todaro of Targeted Growth, a firm that produces
feedstock for such fuel, emphasized again the need for a policy
environment that will facilitate the large scale production of such fuels.
While speaking of the region’s inherent strengths in this important
niche, Todaro said that “if we can’t pull this off we should be
Energy has always been a capital‐intensive business. All forms of
energy require major investment in plants and equipment as
well as facilities to transport energy to the user, and these
investments require decades to pay off.
Clean energy is no exception, whether it be the hundreds of
millions of dollars for wind or solar farms, or tens of thousands
of dollars for an individual solar array on a house. Maud Daudon
Maud Daudon of SNW Securities moderated a panel that explored several kinds
SNW Securities Corp.
of capital challenges.
First is the capital needed to finance new technologies and get them to market.
Speakers repeatedly referred to the “Valley of Death,” the stage between proof of
concept of a technology and the construction of commercial production capacity.
Given the scale required in the energy business, the capital required to bridge that
valley is substantial. Fortunately, as Michael Butler, of Cascadia Capital, said, energy
projects have access to a wide array of capital sources, ranging from angel investors to
“Capitalization structures of clean energy
companies are very complex, but once you
get past the complexity there are many
kinds of capital to choose from.”
‐‐Michael Butler, Cascadia Capital
A second capital need is for investments by existing utilities in wind or solar projects and
in their distribution systems. These investments need to come from more traditional
capital market sources, but also need to be backed by ratepayers. The Northwest has
traditionally had among the lowest electricity rates in the nation, so increasing rates to
fund these investments raises competitiveness concerns.
Ash Awad, McKinstry; Tom Karier, Northwest Power and Conservation Council; Daniel Malarkey, State Department of Commerce
A third, and very problematic financing need is for conservation. Ash Awad, of
McKinstry, pointed out that “buying” power through conservation is typically as
inexpensive as the lowest cost source of new power, coal. But paying for those
conservation investments up front is very difficult, especially for residential and small
commercial buildings. Both Awad and Dr. Tom Karier, of the Northwest Power and
Conservation Council said that conservation funding needs to “superscale” in the
Get beyond traditional players
The transformation of the energy economy will affect society broadly, and the efforts to
get there should be as inclusive as possible. This need was brought home in a
pre‐conference session hosted by the Urban Enterprise Center that highlighted
entrepreneurial ventures of multi‐cultural businesses in the state. A panel of businesses
owners addressed both the entrepreneurial challenges of small business and the
opportunities to reach out to underrepresented populations with jobs and much
needed energy services.
Yale Wong Ahava Amen Donald King Dr. Skip Rowland and Jim Peoples
General Biodiesel, Inc. NewEarth Renewable DKA Urban Enterprise Center
Address the problem of scale
The difference between existing demonstrations and pilot
projects and the ultimate need for clean energy is several
orders of magnitude. Scaling up is often the largest
problem, as the nascent biodiesel industry learned when it
had to move beyond locally available feedstocks.
Rogers Weed, Director of the State Department of
Commerce, described the lessons learned from the
technology sector: add capacity in increments, and measure
and verify the performance of each increment before Rogers Weed
moving on to the next scale. Department of Commerce
Retool the workforce
While clean energy will grow out of existing industries and skill bases, the workforce still
needs to be created to design, build, and maintain entirely new energy systems.
Presidents of the state’s two research universities, Dr. Emmert and Dr. Floyd, said that
students at their institutions are excited about sustainability and renewable energy. The
UW has a proposal to build a smart grid demonstration on its Seattle campus, and WSU
will soon begin building a “smart farm” that demonstrates a wide range of sustainability
WSU President Elson Floyd, Conference Co‐Chair Tayloe Washburn and UW President Mark Emmert
Moving to Action
Conference participants divided into
five breakout sessions to discuss how
each of us, as an employer,
employee or policy‐maker, plans to
advance our region as a center for
clean energy. The sessions were
lively, and participants shared their
reactions to proposed solutions and
stated how they will move from
discussion to action. Below is a
summary of our action items: Many conference participants toured Puget Sound Energy’s
nearby Wild Horse wind and solar farm
Near‐Term Action Items
1. The Seattle Chamber will advance our region's commitment to sustainability and reduction
of fossil‐fuel use and carbon emissions through dialogue and partnership with United
Nations Secretary General Ban Ki‐moon at a gathering on Monday, October 26.
2. The Seattle Chamber’s Urban Enterprise Center will continue to support multicultural clean
energy entrepreneurs and small businesses with greater outreach in the next 12 months.
3. McKinstry will support workforce and economic development initiatives through a new
$5 million Clean Energy Innovation Center and Incubator. Groundbreaking is expected soon.
4. Over the next 6 to 12 months, a new 'owners group' of Chamber and City of Seattle
representatives will provide guidance to the Economic Blueprint for Clean Energy that was
announced at the conference, and ensure that regional efforts synch with state‐wide plans.
Medium‐Term Action Items
1. The Clean Energy Leadership Council will develop a comprehensive clean energy strategy
for the state in 2010 and advance a possible state‐wide package in 2011 that may include
funding, incentives and regulatory reform for opportunities such a smart grid build‐out,
wind and solar research and development, jet biofuels commercialization and energy
2. The Seattle Chamber’s new Clean Energy Committee will launch a public outreach campaign
over the next 12 months to educate businesses and citizens on clean energy's economic and
quality of life benefits and to provide grass roots support for a possible state‐wide package.
3. The Seattle Chamber and City of Seattle will benchmark our region against key clean
energy competitors and potential collaborators through next year's inter‐city study
missions to Boston (June, 2010) and Daejong, South Korea (April, 2010).
4. The Seattle Chamber’s new Clean Energy Committee will support upcoming regional efforts
to apply for US Department of Energy ‘clean energy hub’ status.
5. The Seattle Chamber will continue to foster greater clean energy regionalism and
connections between business and research institutions through ongoing collaboration
with the WSU Pullman and Tri‐Cities campuses.
Charging ahead into uncertainty
When it comes to the future of energy in the U.S. and the world, the only certainty is
that fossil fuels are on their way out. Nothing else is settled. We do not know what
energy technologies will ultimately win, and we cannot anticipate consumer and
business acceptance of technologies and their adaptations to them. Key public policy
questions remain unanswered, and the regulatory environment is anything but certain.
But in the face of all these unknowns, we cannot sit back and wait for resolution.
The risks of getting into the clean energy business are huge, but the potential rewards
are so large that no forward‐looking region can afford to sit out this period of
turbulence. In the 19th century, great industrial empires were built on petroleum, and
in this century, it is certain that new industrial giants and a myriad of small and medium
sized businesses will emerge in clean energy. This sector will likely be concentrated in a
limited number of regions of the world as new industry clusters take shape.
Participants in the 2009 Regional Leadership Conference learned that Washington has the
people, businesses and institutions to be one of those regions, but that its position is by
no means assured. Only through a long‐term commitment at every level of government
and civic leadership can we hope to emerge as winners in the new energy economy. Or,
as Governor Gregoire put it, we need to be at the table and not on the menu.
“Business people are the new
environmentalists, we are the ones that
are going to make something happen.
We need to stop talking and start doing.”
‐‐David Allen, Executive Vice President, McKinstry
Bonnie Berk 3 Phase Energy Systems
Stacy Noland Berk and Associates
Obsidian Investment Advisers, LLC
Phil Bussey and Kirk Nelson
Greater Seattle Chamber of Commerce
Bonneville Power Admin. Regence BlueShield Ross Macfarlene
Kathy Putt Deputy Seattle Mayor
Comcast Tim Ceis
Governor Christine Gregoire
Davis Wright Tremaine
Berk and Associates
The Boeing Company Premera Blue Cross
The Brick Puget Sound Energy
Cascadia Capital Regence BlueShield
Climate Solutions SNW Securities
Collins Woerman Starbucks Coffee Company
Davis Wright Tremaine Strategies 360
The Fearey Group Teanaway Solar Reserve
Grays Harbor Paper University of Washington
Kaye Smith Enterprises Virginia Mason
Microsoft Corporation Washington Dental Service
PBS&J Wells Fargo Insurance Services
• Co‐ Chair Tayloe Washburn, Member, Foster Pepper PLLC
• Co‐Chair David Allen, Executive Vice President, McKinstry
• Phil Bussey, President & CEO, Greater Seattle Chamber of Commerce
• Marc Cummings, Director Public Affairs, Pacific Northwest National Laboratory
• Maud Daudon, President & CEO, SNW Securities Corp.
• Graham Evans, Executive Director, Washington Clean Technology Alliance
• John Gardner, VP for Economic Development & Global Engagement, WSU West
• Marcia Garrett, Executive Director, WSU West
• Ann Grodnik, Assistant VP, Public Finance, SNW Securities Corp.
• Genevieve Guinn, Director Corporate Communications, McKinstry
• Suzanne Hartman, Director of Communications and Public Affairs, Seattle City Light
• Susan Hempstead, Dir. Local Gov’t & Community Services, Puget Sound Energy
• Donald King, President and CEO, DKA
• Charles Knutson, Sr. VP Policy & Operations, Greater Seattle Chamber of Commerce
• Alvin Kwiram, Vice Provost Emeritus, University of Washington CLEAN
• Ross Macfarlane, Senior Advisor, Business Partnerships, Climate Solutions
• Daniel Malarkey, Deputy Director, Washington State Department of Commerce
• Susannah Malarkey, Director, Technology Alliance
• Steve Marshall, Senior Fellow, Cascadia Center, Discovery Institute
• Rad Roberts, Intellectual Property Manager, College of Arts & Sciences, U of W
• Kevin Wilhelm, CEO, Sustainable Business Consulting
Conference Staff from the Greater Seattle Chamber of Commerce
• Phil Bussey, President and CEO
• Charles Knutson, Sr. Vice President, Policy and Operations (Conference Director)
• Ann Reid, Manager, Public Affairs (Conference Coordinator)
• Alicia Graham, Program Coordinator, Public Affairs (Conference Registrar)
• George Allen, Sr. Vice President, Government Relations
• Christina Donegan, Vice President, Communications
• Emmy Jordan, Sr. Vice President, Member Relations
• Evelyn Lemoine, Vice President, People Programs
• Skip Rowland, Executive Director, Urban Enterprise Center
• Michael Wu, Chief Information Officer
Aerial view of Puget Sound Energy’s Wild Horse wind and solar farm