The Chicago Region’s
“Green” Economic
Opportunities
The Midwest Green Economy: Past, Present and Future
Delta Institute and the Graham School of
Continuing Liberal and Professional Studies
January 26, 2012
Robert Weissbourd
Part I: Defining the Green
Economy
What Exactly IS the Green Economy?
First, Drivers …
Global Warming and
Pollution
High Fossil Fuel Prices
Demand for Environmentally
Demand for clean
energy
Friendly Products
generation
Demand for products that
reduce energy consumption
Demand for products that
reduce pollution
Demand for low carbon technologies is driving growth of Clean Tech.
An Info-Tech Analogy
Producers
Users
Like IT, Clean Tech will affect the way every company does business.
Segments of the Green Economy
Demand
Condition
Increase
Renewable
Energy
Generation
Subcategory
Energy source
Energy storage &
infrastructure
Segment
Wind
Solar
Fuel Cells & Hydrogen
E.E. Lighting
Reduce
Consumption
of Energy &
Natural
Resources
Reduce GHGs
& Other
Pollutants
Support
Geothermal
E.E. HVAC
End-use-based
Biomass/Biofuels
Hydro
Battery & Energy Storage Tech
Waste
Ocean/Wave
Smart Grid/Smart
Metering
E.E. Building Products
E. E. Appliances Water Efficient Products
& Materials
Audits & Retrofits
Green Architecture, Design &
Construction
Electric/Hybrid Vehicles
Process-based
Sustainable Forestry &
Related Products
Recycling & Reuse
Recycled-Content
Products
Systems-based
Logistics
Public Mass Transit
Local Food Systems
Product-based
Green Building Products &
Construction Materials
Systems-based
Green Chemicals &
Related Products
Carbon Sequestration
Nuclear Energy
Air & Water Purification
Technologies
Conservation & Management
Service-based
Air/Water/Sewage/Solid
Waste Management
Pollution Control &
Prevention
Remediation
Tech. & Services
Services
Research, Engineering &
Consulting
Regulatory &
Compliance
Education &
Training
Organic Farms & Food
Production
Green
Finance
Advocacy &
Policy
Broad Opportunities in the Green Supply Chain
Gearbox housings
New 42,000 sq foot
facility
Auto-supplier created gearbox housings product line for wind developer.
Regional Green Strategy Development
Identify Growth
Sectors
Analyze
Regional Assets
Determine
Development Needs
Develop Products and
Services
Apply established economic development strategies to green opportunities.
The Next Economy = Green
Expected Global Annual Clean Energy Investment
500
Geothermal, marine, low
carbon tech
400
Small hydro
300
Biofuels
200
Biomass + Waste-to-Energy
100
Solar
0
Wind
“The rebuilt American economy must be more export-oriented
and less consumption-oriented, more environmentally-oriented
and less fossil energy-oriented, more bio- and software
engineering-oriented and less financial- engineering-oriented...”
2030
2025
2020
2015
2010
Source: Bloomberg New Energy Finance
2005
Billions of U.S. Dollars
600
Part II: Overview of
Chicago’s Green
Opportunities
Identify Growth Sectors and Analyze
Regional Assets: Chicago
Identify Growth Sectors and Analyze
Regional Assets: Chicago
0
0
Chicago’s Opportunities in Renewable Energy
Wind
Solar Thermal
Chicago is home to over a dozen
wind headquarters and over 100
component suppliers.
Biofuels/Biomass
Chicago’s Opportunities in Energy Efficiency
Chicago has more LEED-certified
buildings than any other city.
Chicago’s highest
specialization is in
Energy Efficient
Lighting and the
region has over 30
firms working in
the space.
Vehicle Electrification
Energy Efficient Lighting
Green Buildings
Over 100 firms are participating in the IITled Smart Grid Regional Innovation Cluster
Building Energy Management
Smart Grid
Chicago ranks #1 in the country for
employment in “Air and Water
Purification Technologies.”
Water Purification and Treatment
Organic Farming & Food
Production
Chicago’s Waste to
Profit Network is a
national model of
“byproduct synergy,”
in which one
company’s trash
becomes another’s
treasure.
Green Chemicals
Recycled Content Products
Chicago’s Opportunities in Waste
Remediation and Pollution Control
Part III: Examining Business
Opportunity – the Energy
Efficient Lighting Sector
Illustrating a Cluster Approach to Green
Economic Development
Market Analysis: Energy Efficient Lighting
 Huge LED growth
projected: from 7%
market share in
2010  60% in 2020
 30+ Chicago area
companies, >1000
employees
Source: McKinsey and Company
Barriers to Market Growth
LED
CFL
Incandescent
Light bulb projected lifespan
50,000 hours
10,000 hours
1,200 hours
Watts per bulb (equiv. 60 watts)
10
14
60
Cost per bulb
$35.95
$3.95
$1.25
KWh of electricity used over
50,000 hours
500
700
3000
Cost of electricity (@ 0.10per KWh)
$50
$70
$300
Bulbs needed for 50k hours of use
1
5
42
Equivalent 50k hours bulb expense
$35.95
$19.75
$52.50
Total cost for 50k hours
$85.95
$89.75
$352.50
COST SAVINGS OVER 50,000 HOURS, IN A HOME WITH 25 BULBS
Total cost of bulbs and energy
$2148.75
$2243.75
$8812.50
Savings to household by switching
from incandescents
$6663.75
$6568.75
0




Cost to Performance Curve
Product Quality
Distribution barriers
Confidence in Commercial Viability
Market Dynamics: Change is in the Air
“The LED and energy efficiency
markets are a big challenge for
traditional lighting businesses.
They are used to being “order
takers” with repeat business
every 6 months based on how
many light bulbs they know are
going to burn out. If they
embrace LED, there will be no
bulb turnover, no predictable
repeat sales.”
“I’ve never seen so many new
companies pop up in so short a
time. Our customer base has
almost tripled in number.”
“I think you will see lots of new products for
niche applications. To be profitable you will
have to get into these markets. You will
have to have something someone else
doesn’t have.”
“LEDs will drive change in the distribution
model. Traditional distributors are avoiding
the LED market because it is too technical.”
“A big challenge with this market is its
archaic distribution system. You need to
make same sale several times, to the
architect, to the engineer, to the building
owner. There needs to be a new model.”
“We think the most interesting investment
opportunities in EE Lighting are on the
integration side…”
Firm interviews and industry research reveal a transforming industry.
Understanding the Emerging Cluster
 Opportunity in broader cluster made up of:
 Energy efficient lighting
 Architecture, design and engineering
 Commercial building management
 Energy efficient HVAC
 Energy software and controls
 Energy management integration
 EE Lighting Sector  “Integrated Lighting
and Building Energy Systems” Cluster
Strategies for ILBES Cluster
 Make Chicago the easiest place in the world to do real
world applied R&D on building energy efficiency.
 Consortium of architects, engineers, designers, developers,
property owners, property managers, energy management
companies, utilities and component suppliers
 Proactive “IP mining” for leading edge technologies
 Applied R&D networks for rapid prototyping
 Technology demonstration sites – Merch. Mart?
 Proactive relationships with venture and equity firms
 Public sector as lead adopters
Summary
 Enormous market opportunity is rapidly emerging as
demand for energy and resource efficient products
and services affects how every company does
business
 Chicago has major competitive advantages: firms in
currently “green” or related industries (particularly
within strong manufacturing base); human capital;
infrastructure; knowledge and technology
specializations; demand conditions; etc.
 In context of emerging markets and competition
elsewhere, we need to compete deliberately –- build
institutional capacity, business led opportunity
identification and development, investment.
The Chicago Region’s
“Green” Economic
Opportunities
The Midwest Green Economy: Past, Present and Future
Delta Institute and the Graham School of
Continuing Liberal and Professional Studies
January 26, 2012
Robert Weissbourd