Small and medium-sized enterprises can unlock $1.6 trillion clean tech market in next 10 years

25 September 2014

LONDON: Small and medium-sized enterprises (SMEs) in developing countries have a potential clean technology market of US$1.6 trillion to capitalize on in the next ten years.

The promising figure emerges from a report from the World Bank Group published by infoDev, called “Building competitive green industries”, which is focused on climate and clean technology opportunities for developing countries.

In 2011-2012 the collective clean tech sector across both developing and developed countries was a US$5.5 trillion global market, and between 2007 and 2010, it grew on average 11.8% per year, as reports “GreenTech made in Germany 3.0”, commissioned by the German Federal Environment Ministry.

By comparison, the Earth Policy Institute indicates the global economy as a whole grew on average 2.4% per year over the same period. And the clean tech sector's outpacing of the economy is not stopping any time soon: it's currently forecast to grow at around 4.1% annually until 2015-16, almost double the general global economy.

Clean tech grow

Growth in global clean technology sales 2007-12 (in US$ trillion). Image courtesy of World Bank Group / infoDev, from report “Building competitive green industries”, page 19. Figures based on U.K. Department for Business, Innovation and Skills 2013 report.

But the  clean tech market in developing countries is still widely unexplored. This report, for the first time, gives the magnitude of it. It reveals over the next 10 years, an estimated US$6.4 trillion will be invested in developing countries: of this, US$1.6 trillion will be accessible to SMEs.

At the end of 2012, developed countries invested in the sector will total US$132 billion, versus US$112 billion per year from the undeveloped ones - a gap of 18%, far less than the 250% gap in 2007, as reported by Forbury Investment Network.

clean tech market

Market size through 2023 for 15 clean technologies in developing countries (US$ trillion). Image courtesy of World Bank Group / infoDev, from report “Building competitive green industries”, page 6

This means we are not just witnessing a transfer of technology from the developed world without taking account of the local industry. This is a promising shift to grow developing countries' clean tech sector economically and socially. In 2012 alone, clean technology investment rose by 19% in developing countries compared with an overall decline of 12% globally, says the report.

“Fostering home-grown clean tech industries in developing countries can create a sustainable and wealth-producing sector of the economy,” concurs Anabel Gonzalez, Senior Director for the World Bank’s Global Practice on Trade and Competitiveness, “while simultaneously addressing such urgent development priorities as access to clean and affordable energy, clean water and climate-resilient agriculture.”


Image courtesy of World Bank Group

The map above clearly states China is the leader in this sector: with US$415 billion, the main opportunities for Chinese SMEs in an arch of 10 years are in onshore wind (about US$80 billion), solar PV (about US$70 billion), and electric bikes (about US$63 billion).

In 2011, China was globally the second largest investor in clean technology with US$45.5 billion, second only to US with US$48.1 billion - states Forbury. Bloomberg New Energy Finance also reports in 2012 China overtook the US investing US$63.8 billion - while the US invested US$53 billion. However, last year China invested US$61.3 billion, reducing for the first time in over a decade its investments in the sector - even if just by a modest 3.8%.

As a comparison, the world's biggest economy, the US, reduced its investments to US$48.4 billion, a decrease of 8.4%. The reason for this decrease, states Bloomberg, is mainly due to a continued sharp reduction in the cost of photovoltaic systems.

China green tech

Size of the clean technology market accessible to SMEs in China (US$ billion). Image courtesy of World Bank Group / infoDev, from report “Building competitive green industries”, pag. 29

However, the World Bank Group report indicates that by 2023 about US$1.5 trillion will be invested in clean technology in China. Globally, investment in wastewater treatment facilities will represent over a third of the total likely clean technology investment in developing countries - about US$2.7 trillion.


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