1. Robert Weissbourd The Midwest Green Economy: Past, Present and Future The Chicago Region’s “Green” Economic Opportunities Delta Institute and the Graham School of Continuing Liberal and Professional Studies January 26, 2012

2. Part I: Defining the Green Economy

3. What Exactly IS the Green Economy? First, Drivers … Demand for low carbon technologies is driving growth of Clean Tech. Demand for clean energy generation Demand for products that reduce energy consumption Demand for products that reduce pollution Global Warming and Pollution High Fossil Fuel Prices Demand for Environmentally Friendly Products

4. An Info-Tech Analogy Like IT, Clean Tech will affect the way every company does business. ProducersUsers

5. Segments of the Green Economy Demand Condition SubcategorySegment Increase Renewable Energy Generation Energy source WindSolarGeothermalBiomass/BiofuelsHydroWasteOcean/Wave Energy storage & infrastructure Fuel Cells & HydrogenBattery & Energy Storage Tech Smart Grid/Smart Metering Reduce Consumption of Energy & Natural Resources End-use-based E.E. LightingE.E. HVAC E.E. Building Products & Materials E. E. AppliancesWater Efficient Products Audits & Retrofits Green Architecture, Design & Construction Electric/Hybrid Vehicles Process-based Sustainable Forestry & Related Products Recycling & Reuse Recycled-Content Products Systems-based LogisticsPublic Mass TransitLocal Food Systems Reduce GHGs & Other Pollutants Product-based Green Building Products & Construction Materials Green Chemicals & Related Products Nuclear Energy Air & Water Purification Technologies Systems-based Carbon SequestrationConservation & Management Service-based Air/Water/Sewage/Solid Waste Management Pollution Control & Prevention Remediation Tech. & Services Organic Farms & Food Production SupportServices Research, Engineering & Consulting Regulatory & Compliance Education & Training Green Finance Advocacy & Policy

6. Broad Opportunities in the Green Supply Chain Auto-supplier created gearbox housings product line for wind developer. New 42,000 sq foot facility Gearbox housings

7. Regional Green Strategy Development Identify Growth Sectors Apply established economic development strategies to green opportunities. Analyze Regional Assets Determine Development Needs Develop Products and Services sectors

8. The Next Economy = Green Source: Bloomberg New Energy Finance Expected Global Annual Clean Energy Investment Billions of U.S. Dollars 600 500 400 300 200 100 0 2005201020152020 2025 2030 “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...” Geothermal, marine, low carbon tech Small hydro Biofuels Biomass + Waste-to-Energy Solar Wind

9. Part II: Overview of Chicago’s Green Opportunities

10. Identify Growth Sectors and Analyze Regional Assets: Chicago

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12. Chicago’s Opportunities in Renewable Energy Biofuels/BiomassWind Solar Thermal Chicago is home to over a dozen wind headquarters and over 100 component suppliers.

13. Over 100 firms are participating in the IIT- led Smart Grid Regional Innovation Cluster Chicago has more LEED-certified buildings than any other city. Vehicle Electrification Chicago’s Opportunities in Energy Efficiency Green Buildings Smart Grid Energy Efficient Lighting Building Energy Management Chicago’s highest specialization is in Energy Efficient Lighting and the region has over 30 firms working in the space.

14. Recycled Content Products Chicago’s Opportunities in Waste Remediation and Pollution Control Green Chemicals Water Purification and Treatment Organic Farming & Food Production Chicago ranks #1 in the country for employment in “Air and Water Purification Technologies.” Chicago’s Waste to Profit Network is a national model of “byproduct synergy,” in which one company’s trash becomes another’s treasure.

15. Part III: Examining Business Opportunity – the Energy Efficient Lighting Sector Illustrating a Cluster Approach to Green Economic Development

16. 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

17. Barriers to Market Growth  Cost to Performance Curve  Product Quality  Distribution barriers  Confidence in Commercial Viability LEDCFLIncandescent Light bulb projected lifespan50,000 hours10,000 hours1,200 hours Watts per bulb (equiv. 60 watts)101460 Cost per bulb$35.95$3.95$1.25 KWh of electricity used over 50,000 hours 5007003000 Cost of electricity (@ 0.10per KWh)$50$70$300 Bulbs needed for 50k hours of use1542 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$6568.750

18. 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.” Firm interviews and industry research reveal a transforming industry. “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.” “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.” “I’ve never seen so many new companies pop up in so short a time. Our customer base has almost tripled in number.” “We think the most interesting investment opportunities in EE Lighting are on the integration side…”

19. 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

20. 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

21. 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.

22. Robert Weissbourd The Midwest Green Economy: Past, Present and Future The Chicago Region’s “Green” Economic Opportunities Delta Institute and the Graham School of Continuing Liberal and Professional Studies January 26, 2012