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December 12, 2011 / Volume 11 / Issue 22 Dec 12 ED Now ED Now FAQs
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Green Manufacturing: What's Behind Europe's Strength, Plus Efforts to Boost the
Sector in Cleveland
By John Colm, President and Executiv e Director, WIRE-Net
How are manuf acturing leaders and organizations, policy makers and planners in Europe helping f irms enter green
markets - those f ueled by energy , env ironmental and climate change policy - and by extension, dev eloping their
economies? As the head of WIRE-Net, a Clev eland-based nonprof it organization that supports manuf acturing as
a source of community strength and economic growth, this is a question of great interest to me.
In 2010, I got the chance to examine this question in depth when I was awarded an Urban and Regional Policy
Fellowship by the German Marshall Fund of the United States. Ov er the course of this f ellowship, I v isited
Barcelona, Spain; Bologna, Italy ; Essen and Stuttgart, Germany ; and Arhus and Copenhagen, Denmark.
Because of WIRE-Net's direct relationship with leaders of hundreds of manuf acturing f irms, I was interested in
how these policies were play ing out on the f actory f loor. On my trav els, I interv iewed 17 companies and 16
business and technology centers that work closely with priv ate companies, along with national, city and regional
planning leaders in all f our countries.
I also interv iewed manuf acturing and sustainability leaders in Clev eland to gauge how the lessons f rom the
European experience could be transf erred into workable solutions at home. This article summarizes what I learned
about "manuf acturing a sustainable economy ."
The role of supranational (EU) policy
The rise of a "green" economy - the economic sector that
produces goods and serv ices with an env ironmental The "20-20-20" targets
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benef it - in Europe can be linked to the emergence of
To kick-start ef f orts to mitigate climate
green party mov ements in Germany and elsewhere, and the
change, the EU heads of state and
leadership of the European Union (EU) on climate change
gov ernment set a series of demanding
and env ironmental issues. The EU has been a driv ing f orce
climate and energy targets to be met by
in international negotiations that led to agreement on the two
2020, known as the "20-20-20" targets.
United Nations climate treaties: the UN Framework
These are:
Conv ention on Climate Change in 1992 and the Ky oto
Protocol in 1997. The Ky oto Protocol requires the 15 • A reduction in EU greenhouse gas
countries that were EU members at the time to reduce their emissions of at least 20 percent below
collectiv e emissions to 8 percent below 1990 lev els by 1990 lev els
2012. • 20 percent of EU energy consumption to
come f rom renewable resources
In 2007, EU leaders endorsed an integrated approach to
• A 20 percent reduction in primary energy
climate and energy policy and committed to transf orming
use compared with projected lev els, to be
Europe into an energy -ef f icient and low-carbon economy .
achiev ed by improv ing energy ef f iciency .
They made a unilateral commitment that Europe would cut
its emissions by at least 20 percent of 1990 lev els by Source: European Commission-Climate
2020. This commitment is being implemented through Action website, January 29, 2011.
binding legislation (see sidebar).

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ec.europa.eu/clima/policies/package
/index_en.htm
Key observations
Three primary observ ations stood out regarding the driv ers
of change in dealing with the env ironmental and economic challenges f acing Europe.
1) Aggressive national and supranational policies are leading to private innovation,
investment, job creation and competitive advantage. The EU's more aggressiv e "f ramework" of
broad env ironmental and energy targets has created long-term, stable market demand to which
European companies hav e responded, creating signif icant global competitors in a v ariety of green
manuf acturing markets (e.g., in wind, solar, water conserv ation, etc.).
In many countries, EU policies are amplif ied by national or regional regulations and targets (f or
energy reduction, f or example) and with env ironmental policies integrated into other sectors like
housing, regional dev elopment planning, transportation, and agriculture. This is contributing to a
holistic and sy stemic approach to mitigating climate change and spurring economic dev elopment.
For example, Germany has set targets to:
• reduce carbon pollution by 40 percent of 1999 lev els by 2020
• by 2020, increase renewable energy production to 20 percent of power generated
• align with the EU goal of reducing energy use to 20 percent below existing growth
projections by 2020. New building codes hav e increased demand f or energy ef f icient
homes 900 percent between 1999 and 2007.
Spain f ollowed a similar path with its solar f eed-in tarif f (FiT) in 2007. (Feed-in tarif f s require utilities
to connect to renewable energy producers and purchase that electricity on a long-term contract,
ty pically at a price based on the cost of generation.) By 2008, Spain accounted f or 40 percent of
the world's solar installations.
Italy is also seeing rapid growth in solar inv estments, due to establishment of its FiT in 2005. Italy
now installs more solar capacity each month than does Calif ornia (the largest solar market in the
U.S.) in a y ear. 2 Each country has its national champions - companies that lead the market and
that hav e created supply chains employ ing thousands as a result of well craf ted policies.
In sev eral places, Spain f or one, linking energy policy to employ ment policy has resulted in direct
job creation impacts through the use of regional sourcing requirements.
2) The EU funds and supports networks of technology assistance centers that are highly
valuable to the manufacturers they serve. Through these centers, European manuf acturing f irms
can access subsidized project and technical support to help them "green up" their products or
expand into new green markets (this network is analogous to the U.S. Manuf acturing Extension
Partnership, but can count on longer-range, multi-y ear f unding). European f irms that are dev eloping
expertise in European markets are then well positioned to compete ef f ectiv ely in emerging green
markets around the globe.
The System s View point at Work
3) Despite European countries'
in Cleveland
competitive advantages, a broader
systems view is lacking. Few of the Holly Harlan, a f ormer engineer at GE
companies v isited had adopted a sy stems Plastics, is the f ounding (now f ormer)
v iew of how 21st century "green companies" director and president of Entrepreneurs f or
should operate. Policy makers I met with Sustainability (E4S), based in Clev eland.
argued passionately that both companies and Ov er the past 10 y ears, E4S has grown
society need to take a sy stems v iew of the f rom a small pilot project at WIRE-Net into
impact of our industrialized economy on the an independent, 4,000-member network of
natural env ironment, without which indiv idual business leaders, entrepreneurs, activ ists,
policies and company practices can create and artists.
unintended negativ e impacts, or merely
change a sy mptom with no net improv ement

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in env ironmental impact.
Harlan's model program is based on her
There is not necessarily a v iew of a "green mantra of "Connect-Learn-Do" and
economy " in Europe, but a broad acceptance of the identif ies six arenas in which organizations
f inancial opportunities av ailable to companies that should f ocus to hav e a comprehensiv e
understand and adapt to new green markets. sustainability strategy . These include
culture (lev eraging employ ee choices in
sustainability ); f acility ; operations (waste,
energy , procurement); products/serv ices
Taken as a w hole
(design f or env ironment); markets; and
Regardless of one's v iew of the politics of climate community . (For more on E4S, see
change, there is a large and growing global market for www.e4s.org.)
new products and services in the green economy.
Firms in each region were pursuing
Leaders of European technology centers repeatedly
discrete parts of Harlan's model, but none
reported that energy ef f iciency projects were the
were f ollowing it comprehensiv ely . Harlan
biggest share of their portf olio. Ev ery business
noted that most companies start their
v isited had dev eloped products or serv ices in the
sustainability journey by tackling issues of
green economy , a part of their business that was
f acility and operations ef f iciency . But in
growing ev en during the f inancial crisis.
order to hav e long term regional impact,
Consultancies f rom McKinsey to Roland Berger note
companies need to dev elop sustainable
the f ast growth of the clean tech sector.
products and tap into markets in which
The EU's and its member countries' ambitious these new products can be sold.
env ironmental, energy and climate change policies
hav e created a business env ironment that is sizable,
predictable, stable, and reduces the risk of business inv estment in emerging green technologies. European
companies that are pursuing green markets are f requently market leaders in their industries, and are positioned to
exploit green markets now opening up worldwide.
The Cleveland experience: Green City on Blue Lake?
In Clev eland, interest in green markets has been growing f or the past 10 y ears, primarily f rom economic
dev elopment and env ironmental organizations, including WIRE-Net's Manuf acturing Sustainability Learners Group,
f ormed in 2001.
While some limited policy support exists at the f ederal, state and municipal lev els, it is not as f ar-reaching as it is
in Europe. For example, under f ederal law, the Production Tax Credit (PTC) prov ides an income tax credit of 2.2
cents per kilowatt-hour f or the production of electricity f rom wind turbines. Howev er, the PTC has historically had
a sunset ev ery two y ears, and it has f requently f ailed to gain the political support needed f or renewal, leading to
a boom and bust cy cle in U.S. wind turbine installations. A major campaign is under way now f or renewal of the
PTC to preserv e thousands of U.S. jobs in the wind industry .
In addition, the PTC does not address the issue of where the turbines or their components are manuf actured,
creating a disconnect between U.S. energy and employ ment policy . This has created a huge U.S. market f or
European and Asian turbine manuf acturers, with U.S. f irms mostly relegated to play ing catch-up. Many Asian
producers operate with strong gov ernment subsidies, which giv e them an adv antage in the U.S. market.
Especially in today 's economy , this can undermine popular political support f or clean energy goals, as the
promise of new "green jobs" appears to hav e f aded.
• State efforts
At the state lev el, Ohio enacted an Alternativ e Energy Standard (also known as a renewable portf olio standard)
that sets a target f or renewable and clean electricity production of 25 percent by 2025 (29 states and the District
of Columbia hav e passed similar laws, but sev eral - including Ohio's - are now under threat of repeal or
amendment).
Ohio's law is silent on where the alternativ e energy equipment is manuf actured; howev er, it has led to the
dev elopment of Ohio wind f arms (with ov er a gigawatt now under dev elopment, enough to power about 750,000
homes). These wind f arms can be a driv er f or localized production, giv en the size of utility -scale wind turbines.

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The state of Ohio f unded a statewide supply chain dev elopment ef f ort in 2007-2008, which was managed by
WIRE-Net's wind initiativ e, GLWN (f ormerly known as the Great Lakes Wind Network). GLWN and the Ohio
Department of Dev elopment partnered to establish Ohio's wind component supply chain as the best-def ined in
the nation. GLWN is now managing a project to help Ohio-based wind suppliers integrate Lean Manuf acturing into
their business strategy to help them remain competitiv e in the global wind industry .
• Local efforts
Other opportunities to encourage green manuf acturing exist locally . Clev eland, like most U.S. manuf acturing
regions, has a f ederally supported partner in the Manuf acturing Extension Partnership (MEP), f unded by the U.S.
Department of Commerce. In cooperation with the U.S. Env ironmental Protection Agency , the MEPs hav e
of f ered technical assistance consulting in the eco-manuf acturing arena through the "Eco-Smart" program.
This prov ides technical support to companies f or a v ariety of env ironmental improv ements, including green
product dev elopment. The expertise av ailable mirrors that of the European tech centers, many which pursue EU
f unding f or industry partnership projects. The consulting f ees charged, howev er, are not inexpensiv e, and can
present a barrier f or many small and medium-sized f irms.
Other initiativ es that support a "green markets" manuf acturing approach in the Clev eland region, plus supporting
green policies in other areas, include:
• City support of the Clev eland Industrial Retention Initiativ e, managed f or the city by WIRE-Net
as a resource and solutions broker f or the city 's 1,000 manuf acturing companies. (This program
could prov ide support to a signif icant part of the city 's economic base to "grow with green," as a
WIRE-Net board member put it.)
• NorTech's Energy Enterprise, a collaborativ e regional ef f ort to driv e growth across targeted
sectors in adv anced energy .
• The Corporate Sustainability Network, which encourages the sharing and implementation of
sustainable practices among the region's corporate sector.
• The city of Clev eland of f ers building dev elopers a small interest rate "credit" on the f inancing f or
a building or dev elopment that utilizes "green" design standards.
• Along with its inner-ring suburbs, Clev eland is enacting Ohio's f irst Alternativ e Energy District.
Within the district, a Property Assessed Clean Energy (PACE) f inancing tool is designed to help
businesses borrow f or energy improv ements, loans which then are paid of f through property tax
assessments.
Clev eland May or Frank Jackson also has spearheaded "Sustainable Clev eland 2019," a city -wide sustainability
ef f ort, and has organized three annual regional sustainability summits since 2009. His goal is to make real a
popular slogan describing Clev eland as a "Green City on a Blue Lake," and to make Clev eland a national
sustainability leader by 2019 - the f if tieth anniv ersary of the inf amous Cuy ahoga Riv er f ire that helped giv e birth
to the American env ironmental mov ement.
Many larger corporations are greening their production processes and dev eloping green products, but there are
major opportunities to connect sustainability to Clev eland's 1,000 manuf acturers, not to mention the rest of the
manuf acturing sector in the northeast Ohio region, which is the single largest consumer of energy . But a single
city or a f ragmented American region still lacks the economic and policy lev ers to compete with what the
European Union is adv ocating f or its 17 member nations. National leadership is needed.
Sustainability is here to stay
Global warming, political instability in oil-rich regions and the nuclear disaster in Japan will combine to f urther
encourage the growth of clean tech and clean energy markets, as will continued natural resource scarcity . Clean
tech ov erall is projected to grow to more than $4.6 trillion3 by 2020. Within clean tech, worldwide clean energy
inv estment is projected to reach $2.3 trillion. 4
Furthermore, the European Commission has just released an aggressiv e road map towards reduction of
greenhouse gases by 80 to 90 percent by 2050. While support f or clean-tech policy in America continues to
f alter, major play ers like China, Germany and the EU f orge ahead. The European (and Asian) experience at the
regional and company lev els is demonstrating that a sweeping, long-term, stable policy regime is needed to

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enable the f aster dev elopment of a U.S.-based green industry , as well as to create an env ironment in which more
ef f icient and cost-ef f ectiv e technological innov ations can be dev eloped and brought to market.
Without broader, more powerf ul policy driv ers, such as f eed-in tarif f s, northeast Ohio's small and medium-sized
eco-manuf acturing f irms will be sev erely limited in their opportunities, and the market will be largely dominated by
global play ers who are adapting to international green markets. Absent such action, the U.S. could be limiting its
manuf acturing sector to "also ran" status in the world's growing clean tech industries.
Next Generation Manufacturing
Conducted in 2009, the Next Generation Manuf acturing surv ey used data f rom sev eral thousand
U.S. small and medium-sized manuf acturers to identif y six success f actors critical to the "next
generation" of competitiv e manuf acturers. One of these is green and sustainable manuf acturing.
Green/sustainability ranks low among the strategic priorities f or U.S. manuf acturers despite
increasing env ironmental regulation, growing consumer demand f or green products and cleaner
production methods, and new requirements f rom manuf acturers f or greener supply chains. Only 16
percent of respondents rank green/sustainability as highly important to their success ov er the next
f iv e y ears. Surprisingly , another 16 percent said it was not important…
The demand f or green/sustainability excellence - f rom customers, OEMs, policy makers and
regulators - is impacting U.S. manuf acturers with growing f orce, and this pressure is expected to
increase substantially in the near f uture. America's manuf acturers must prepare to manage this
trend by being proactiv e, not reactiv e. Manuf acturers do not hav e the luxury of waiting until they
f eel ready to respond, because the f orces driv ing demand f or env ironmentally responsible
manuf acturing are increasing in number and power ev ery day . U.S. manuf acturers must begin to
take aggressiv e steps toward green/sustainable manuf acturing now, or they will suf f er negativ e
impacts to their rev enues, prof its, brand and reputation that may be irrev ersible.
From "Next Generation Manufacturing Study," by the Manufacturing Performance Institute for the
American Small Manufacturers Coalition, June 2009.
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This is the def inition used by the Brookings Institution in Sizing the Green Economy , 2011, Wash, DC.
2
Westphal, Rene, "Global Solar Outlook: Optimism and Emergent Warning Signs", Solar Industry , September
2010.
3
"The Green Machine", The Economist, March 13, 2010.
4
Pew Charitable Trusts, "Who's Winning the Clean Energy Race: G-20 Inv estment Powering Forward", 2011.
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