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Against the Odds, a Green Economy Keeps Growing

People are betting on a future of stricter environmental regulations -- and corporations are listening.

The green economy continues to show almost remarkable signs of vitality, business leaders say, despite the near-total collapse of global talks, stalemate in Washington, D.C., and polls showing decreased urgency to tackle global warming.

Driving the industry, investors say, are consumer interest in the environmental and economic benefits of energy efficiency, corporate sustainability mandates and essentially a bet that at some point there will be a price on carbon emissions.

"Although there was definitely a loss of momentum for green business after Copenhagen, many sustainability initiatives are not in response to regulation," said Marc Gunther, editor of Greener World Media, publisher of GreenBiz.com and the annual State of Green Business report.

Two companies that track clean-tech investments see signs of robust growth on the horizon. Nick Parker, co-founder of the Cleantech Group, a San Francisco-based outfit that tracks and advises green investments, estimates the sector could be a $3 trillion economy within 10 years. Last year private investment in clean-tech totaled $5.8 billion, according to Cleantech.

While that was down a third from 2008, all forms of venture capital were down last year, the group noted. Meanwhile the share of venture money going to clean energy continues to increase, to 12.5 percent of total venture activity in the United States last year, reported CleanEdge, a company that researches and publishes on the sector.

Still, there are significant hurdles. U.S. industry overall "has not engaged the structural change required to materially impact critical issues like carbon intensity," said Joel Makower, Greener World Media's executive editor.

One example: U.S. companies are increasingly setting and reporting emissions targets through such programs as the Carbon Disclosure Project. But participating companies represent only a third of the Standard & Poor's index of the top 500 leading companies in the United States.

Another example: China, Japan and the European Union all threaten to eclipse U.S. gains in the sector. China alone has spent $200 billion - double the United States' investment - and could end up spending $440 billion to $660 billion over the next 10 years, according to CleanEdge.

Before industry can impact climate issues and cultivate an internationally competitive clean-tech sector, the investment has to be much broader and profound, said Salman Khan, development and strategy director for the environment division of Intertek, an international testing company that helps companies assess their green policies.

"The relative absence of policy more directly impacts businesses and regions that are energy intensive and highly regulated," Khan said. "It's a 'wait-and-see' game for most large utilities and big manufacturers."

Truman Seman, a principal with GreenOrder, a New York-based consulting firm specializing in sustainability, said the "tremendous investment and innovation" happening in the absence of coherent carbon policy is a sliver of the market's potential. "There would be much, much more if we had clear rules," he said. "The biggest barrier to significant economic advancement is securing clear climate policy in the US."

GreenOrder is helping business leaders to re-engage federal policy makers to get climate legislation in place. Seman said he has seen a rigorous resurgence of interest around a climate energy package in the wake of the tumultuous Copenhagen talks. Several consortiums of industry leaders across sectors - including Partnership for Renewable Energy (which includes Bank of America, Google, General Electric), U.S. Climate Action Partnership, or USCAP (Ford, Duke Energy, Pepsi, Shell, among others) and Climate Energy Network (a collection of small and mid-sized companies in every region of the United States) - are "terrifically energetic and committed to their work with U.S. policymakers," he said.

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