The clean energy sector is increasingly playing an out-sized role in growing the Massachusetts economy, creating jobs, drawing in new workers and residents, and increasing the tax base. At the same time, foreign and other non-locally based companies are leading the way and profiting from this boom. As this sector continues to mature rapidly, the region should maximize the overall economic growth and tax revenue potential associated with that surge by fostering a home-grown clean energy economy.
According to the Massachusetts Clean Energy Center’s (MassCEC’s) Clean Energy Industry Report, this burgeoning sector is playing an outsized role in our economy. In 2016 alone, clean energy contributed $11.8 billion to Massachusetts’ Gross State Product, constituted 2.5% of the entire state economy, and employed 2.9% of the state’s labor market (a 75% increase since 2010). According to the Boston Business Journal, of the 10 highest-grossing clean energy companies in the Commonwealth in 2016, only four are currently headquartered in Massachusetts. Further, according to MassCEC, only 40% of clean energy companies’ supply chain vendors were based in the Commonwealth. While attracting companies to locate offices in the state is a vital component to our innovation economy, home-grown clean energy companies like Framingham-based Ameresco or re-located corporations like GE contribute a larger share of their profits, economic growth, and employment to our region than do those based elsewhere.
So what is the regional community doing to ensure more of this money stays in our economy?
- Research. The intellectual capital concentrated in Greater Boston is one of the region’s most valuable assets. Universities are creating spaces dedicated to spurring clean energy innovation like MIT’s Energy Initiative and the BU Clean Energy and Environmental Sustainability Initiative (CEESI). These efforts to harness the innovative ideas and talent we possess by channeling ideas into invention.
- Incubate. Dedicated clean tech incubators promote early-stage technology development by providing mentorship, connections, and training. In 2016, one third of MA clean energy companies had worked with an incubator in the previous year. Co-working spaces like the Cambridge Innovation Center also foster new companies by lowering the cost for workspaces in high-value neighborhoods, creating networking opportunities, and providing scalable business and technical services. By nurturing and empowering burgeoning disruptive companies, our region will benefit from their growth.
- Invest. In 2016, Massachusetts was the top state for early-stage per-capita clean energy venture investment in the United States. Programs like the Northeast Clean Energy Council’s Navigate tech-to-market initiative can help to facilitate matching interested investors with clean tech startups, and corporate first customers. Enabling companies to grow locally will keep them and their revenue here.
- Incentivize. Grants and incentives from the federal, state, and city governments have also helped to spur this sector expansion, both among startups and established corporations. The City of Boston and State’s successful effort to bring GE to the Seaport is expected to have significant and cascading growth impacts throughout the region. A continued and consistent effort from our public-sector leaders to advance a favorable environment for businesses to grow will yield direct economic benefits to our region and citizens.
As the clean energy industry continues to expand, the Greater Boston community should work to maximize the value captured by our city, region, and state economies by cultivating and attracting clean energy companies to our area.
Authored by Miriam Posner, Director of Energy & Environmental Policy