Master Thesis Clean Tech, the next industrial revolution?

Master Thesis

Clean Tech, the next industrial revolution?

How could knowledge exchange and cooperation contribute to the success of a

Clean Tech entrepreneur in the Northern Netherlands?

By Daphne Bos

S1551876

University of Groningen Faculty of Economics and Business

MSc Business Administration Strategy and Innovation

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This study first investigates which facilitators and barriers influence the commercial viability of Clean Tech innovation for SMES. Furthermore, it investigates how knowledge exchange and cooperation can contribute to the success of a Clean Tech entrepreneur in the Northern Netherlands.

This research identifies the different antecedents of demand and supply to map these factors into a framework that determines the commercial viability of Clean Tech innovation of SMEs. Based on In-depth interviews with entrepreneurs of two Clean Tech companies, the research framework is investigated.

The results of the two cases indicate that the scope of Clean Tech may not that clear-cut and that overlap among different sustainability concepts exists, and that entrepreneurs may be Clean Tech and social entrepreneurs at the same time. Furthermore, the results show that environmental leadership is the most important facilitator to implement Clean Technologies. The results show that the number of green consumers and the amount of community involvement is still relatively low, because the consumers do not recognise the green product benefits yet. Regulatory issues and failure of existing regulatory approaches are considered as the most important factors that hamper the implementation of the Clean Tech products.

Regards to knowledge exchange and cooperation the results show that these industry cooperation benefits are very important to change the rigidity of the market and to create awareness and acceptation of Clean Tech products. Cooperation and knowledge exchange is also essential to get access to necessary complementary resources. Many SMEs lack these resources for the successful commercialization of the innovation, and cannot develop them themselves. The results of the cross-case analysis indicate that both companies in the main have the same interests.

KEYWORDS: Clean Tech, SMEs, cooperation, knowledge exchange, networking, sustainability, social

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This Master thesis has been written as a finalizing work to obtain the degree of Master of Science in Business Administration, Strategy and Innovation, at the Faculty of Economics and Business at the University of Groningen and in order to complete my journey as a student.

Inspiration for this thesis was found during my internship at Syntens. There I wrote this master thesis during an internship of nine months.

I would like to thank several people for their support during the process of conducting this thesis. The realisation of this research would not have been possible without them. First of all, I would like to thank my colleagues at Syntens, for contributing to this thesis through discussion sessions and feedback and making it enjoyable to attend work every day. They made my stay at Syntens a very valuable learning experience.

Second, I would like to thank the interviewees, without their valuable information and opinion this thesis could not have been completed. Thirdly, a special word of appreciation should be addressed to my supervisor Dr. T.L.J. Broekhuizen, for whom I have great respect. He guided me with many useful feedback and support. Without his devoted support and exceptional patience it was impossible to succeed my thesis. Every time he took the trouble to provide me with advices and motivated me to carry on. I also would like to thank my second supervisor Dr. Maryse Brand for her willingness to judge this thesis.

Last but not least, I want to express a word of gratitude to my family and friends. My greatest thanks go to my family and boyfriend, who gave me such great support in so many ways during the completion of my thesis. Despite of the fact that I had many ups and downs, they stood together with me and helped me to motivate myself in finishing my study.

Daphne Bos

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1.4 Structure of the thesis ... 11

2. THEORETHICAL FRAMEWORK (1) WHAT IS THE CLEAN TECH BUSINESS ABOUT? ... 12

2.1 Sustainable development and sustainability ... 12

2.2 Defining Clean Tech ... 14

2.3 Related concepts ... 16

2.4 Summary of Clean Tech and sustainability concepts ... 22

2.5 Description of the Clean Tech industry ... 26

2.6 Defining Clean Tech innovation ... 31

3. THEORETHICAL FRAMEWORK (2) ... 33

DEMAND & SUPPLY SIDE OF CLEAN TECH INNOVATIONS ... 33

3.1 Barriers and Facilitators ... 33

3.2 Overview of facilitators and barriers ... 41

3.3 Translation of the barriers and facilitators into management concepts ... 42

3.4 Framework that explains the commercial viability of Clean Tech products ... 47

4. THEORETHICAL FRAMEWORK (3) ... 49

HOW CAN NETWORKING INCREASE THE FEASIBILITY OF CLEAN TECH? ... 49

4.1 External relationships: Networks and alliances ... 49

4.2 Advantages and disadvantages of networking for SMEs ... 50

4.3 Cooperation of SMEs with small versus large companies ... 55

5. RESEARCH METHODOLOGY ... 59

5.1 Research Strategy ... 59

5.2 Research design ... 59

5.3 Situation / background ... 60

5.4 Data collection method ... 61

6. RESULTS ... 63

6.1 Cooperations within Clean Tech context ... 63

6.2 Case 1: HempFlax ... 66

6.3 Case 2: Watter ... 73

6.4 Cross-case analysis ... 80

7. CONCLUSION AND DISCUSSION ... 85

7.1 Sub-research questions ... 85

7.2 Main research question ... 87

7.3 Discussion ... 88

7.4 Limitations & suggestions for further research ... 90

REFERENCES ... 92

APPENDIXES ... 98

Appendix 1: Clean Tech segments ... 98

Appendix 2: Interview outline ... 100

Appendix 3: A statement of Nature- HempFlax ... 105

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1. INTRODUCTION

In the current economy global demand for innovation to help combat climate change is rising as the share of oil and gas in our energy supply will slowly decrease. Fossil fuels are finite and will be, due to the emergence of new economies, scarcer than now. Furthermore, in the future when the bottom of the field becomes visible, the price of fossil fuels is expected to increase drastically.Worldwide, this trend is noticeable and massive investments in renewable and sustainable technologies take place. The world is searching for new alternative sources which lead to new opportunities for developers and marketers of clean energy and purification technologies (Diekmeyer, 2008).

According to Pernick and Wilder (2008), Clean Tech is bringing new opportunities for the creation of wealth, high-growth career development and innovative solutions to several global problems. The concept of clean technology is becoming the cornerstone of corporate, investment and government strategies to profit in the next decade and to guarantee economic competitiveness for the future.

At the time when the economy is under pressure and faces challenges from high and unstable energy prices, depletion of natural resources, volatile sources of fossil fuels, and environmental and security challenges, Clean Tech can bring new opportunities and can be the next big engine of business and economic growth. Pernick and Wilder (2008) state that there is a choice for investors, entrepreneurs, job seekers and governments to either embrace the new world of Clean Tech innovation or risk falling behind a host of competitors.

The developments concerning Clean Tech can be harnessed to create new jobs, lessen our dependence on foreign energy sources and reduce global warming pollution. The importance of achieving sustainability has been increased for firms and pressure is rising for organizations to act in an environmentally or ecologically responsible manner and integrate a sustainable company model (Camisón, 2008).

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The worldwide market for Clean Energy Technology is growing fast. With total sales of 630 billion in 2007 the Clean Energy Technology market is larger than the global pharmaceutical industry (Van den Berg and van der Slot, 2009). The Clean Energy Technology market can be divided in two segments; Energy efficiency products, with total sales in 2007 of 540 billion and renewable energy technologies, with total sales of 90 billion. It is expected that the Clean Energy Technology will be one of the world’s main industries (Van den Berg and van der Slot, Roland Berger Report, 2009).

Energy efficiency is the most cost-effective way to reduce CO2 emissions. Clean Energy Technology contributes to energy efficiency by enabling, for example, low-energy lighting, better insulation and more effective energy storage (such as thermal storage). Energy saving products using less energy and not only saves fossil fuel but also reduces costs. The investments needed are offset by lower energy costs, which result from lesser volumes and lower prices, because of decreasing demand.

Renewable energy is derived from natural processes that are replenished constantly, energy is used which comes from natural resources such as sunlight, wind, rain and geothermal heat. Clean Energy Technology enables these solutions by developing solar cells, wind turbines, electric cars and biofuels. Clean Energy Technology is defined as those technologies that contribute directly to reducing CO2 emissions. Beside Clean Energy Technology there are technologies that affect CO2 emissions only indirectly or only present a solution after CO2 has been created, such as the recycling of fossil-based materials, material efficiency and carbon capture and storage (Van den Berg and van der Slot, 2009). The world faces the challenge to overcome the dependence of CO2 producing forms of energy. Clean energy technology is crucial to limiting global warming and protecting ecosystems by reducing CO2 emissions through energy efficiency and renewable energy products (Van den Berg and van der Slot, 2009). Hereby, the entrepreneurship of Clean Tech entrepreneurs can play a major role (van Graafeiland and Renssen, 2009). Environmental pressures on the industry are coming from many different directions, from regulative bodies and pressure groups, consumer choice, market pressure, supply chain pressures and pressure from stakeholders (van der Vorst, 1998).

Especially, small and medium-sized firms are suffering from increasing pressure to environmental adaptation, often they cannot create the required technological and organizational competences and there is not a sufficient and appropriate supply of advanced business services for green management in their surroundings (Camisón, 2008). The extra attention for cutting down expenses in consequence of the crisis causes that energy saving options become higher to the priority list. SMEs have clearly an eye for the sustainability market, however in practice concrete actions seem to be somewhat restrained by financial constraints and the need for cost savings (Bertens and Essen, 2009).

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determined by the attention of governments to sustainability and the degree to which business customers and consumers demands for sustainable products, services and /or sustainable management. Research shows that the percentage of SMEs which are confirming that the competitiveness can be improved by responding to Clean Tech is nearly in all sectors increased significantly compared with the period before the economic crisis. It seems that SMEs increasingly see opportunities instead of threats in corporate social responsibility. However, the question is whether SMEs actually respond to the market of Clean Tech and which factors are important.

Image building and an example function within the sector in the field of CSR can help retain and attract skilled and motivated employees and customers. Also the extent to which SMEs are actively searching for environmentally friendly production methods, products or services has increased slightly. Remarkable is the increase in the percentage of companies which, in spite of the fact is looking for environmentally friendly production methods, however not (yet) actively doing this at the moment. Here, it is not yet seen as a priority and the market potential is not exploited by these companies. The interest in Clean Tech can also arise from a practical motivation instead of a more idealistic one, for example by the necessity of cost reduction (Bertens and Essen, 2009).

Considering these pressures to improve the environmental commitment and performance of organizations it is important to understand the actions that firms can undertake to develop an environmentally proactive strategy (Camisón, 2008). The diagnosis of the environmental adaption problems of SMEs within the emerging Clean Tech industry and how to overcome them is an important topic which needs to be studied in depth.

1.1 Problem definition

An increasing number of organizations are considering several ‘green’ issues as a major source of strategic change. The growing social and regulatory concern results from significant changes in the social system and competitive environment. Society, governments and different companies’ stakeholders are aware of the environmental unsustainability of the companies’ activities, in consequence of the scarcity of natural resources and the continuous growth of resource consumption (Noci and Verganti, 1999). However, the research field of Clean Tech investigated from a SMEs perspective has not been greatly discussed. Not much research has been conducted specifically on the theme of Clean Tech, although most of the research on environmental management, regulation and performance has primarily focused on larger firms (Rothenberg and Becker, 2004; Camisón, 2008).

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both the challenges presented in developing environmentally adaptation and pressures to encourage green responses beyond the capabilities of typical small firms (Christmann, 2000).

According to Camisón (2008) there are three basic elements that can limit environmentally proactive adaptation by SMEs: (1) they suffer a high degree of uncertainty about the direct or indirect performance associated with the costs and environmental investments; (2) they cannot create the required technological and organizational capabilities for implementing Clean Tech practices and (3) there is an insufficient supply of advanced services for Clean Tech management around them because of failures in the availability of environmental information and consultancy services regards sustainability. SMEs are faced with the difficulty of generating all the appropriate information internally which make them incapable of internalizing the resources and capabilities needed for tackling the technological, sociological and market challenges concerning Clean Tech (Camisón, 2008). It would be interesting to trace ways for SMEs to improve or develop its environmental competences.

Another important aspect is that the organizations within the Clean Tech industry are located across different branches and do not participate in specific networks or clusters. However, these companies can learn from each other. Investigating the characteristics of the emerging Clean Tech industry and exploring of new possibilities to bring these organizations together is the basic thought of this research. Recent research from the Baken Consultant group shows that Clean Tech companies indicate the need of support and the willingness to cooperate with other Clean Tech companies.Furthermore, the companies also see advantages in collaboration with regard to advocacy, marketing and public relations (van Graafeiland and Renssen, 2009).

The companies which are operating in the Clean Tech business have a lot in common and often face the same problems that need to be tackled:

o They are labour intense; o They make use of clean labour; o Have high upfront investment;

o Have to face well-reputable and large competitors; facing global competition;

o Have the problem of obtaining legitimacy and preparing the system (e.g., electronic car producers need electricity network, producers of batteries, research centres, etc.).

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Legislation and regulation: Many companies have inadequate clearness about new regulations. There are complex differences compared with the European legislation and also licensing forms a major bottleneck for applying Clean Tech solutions. Many small businesses do not have the financial or technical means to comply with regulation. Research suggests that SMEs have greater challenges in meeting and exceeding regulatory requirements (Rothenberg and Becker, 2004).

Financial resources: The results of the research of a Dutch consultant group show that purchasing grants is one of the most important financial bottlenecks. Two thirds of the respondents argue that the quality of the subsidies of the public industry is low. Furthermore, for Clean Tech entrepreneurs it is hard to gain capital for their projects and they have problems in obtaining credit (van Graafeiland and Renssen, 2009).

Management and organization: The research of the Baken Consultant group also identifies internal bottlenecks, especially with regard to different management and organizational issues. For starting entrepreneurs it is hard to develop a clear strategy and objectives. Small firms often lack technically qualified employees, or adequately educated and well-informed management. SMEs also rely on a different knowledge base than larger organizations. The level of knowledge about new technologies and how to implement them is likely to be less developed than larger companies (Rothenberg and Becker, 2004). The Clean Tech entrepreneur does not gain from experiences and knowledge of other Clean Tech organizations, because of the absence of a network. Furthermore, Clean Tech entrepreneurs are facing problems in reacting in an adequate and timely manner to the fast changing market environment (van Graafeiland and Renssen, 2009).

In this thesis the role of the Clean Tech entrepreneur in relation to the commercial viability is the main focus of the conducted research. This thesis researches the problems of Clean Tech adaptation at SMEs, particularly caused by an insufficient, appropriate supply of knowledge and information and cooperation in their surroundings, and how they can exchange knowledge, cooperate and get access to different resources which are needed for environmental adaptation and the improvement of their green learning and performance.

Since clean technology seems to be such an important issue nowadays, it is necessary to gain insights into what common problem and barriers do Clean Tech entrepreneurs face and how the system can be managed so that legitimacy can be granted to their innovation. Important is to become aware of the most important factors which have a positive influence of the success of a Clean Tech organization. In other words, which bottlenecks should be tackled to create more opportunities for Clean Tech organizations to become successful?

1.2 Research Objective

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Clean Tech. The thesis is partly theory oriented and provides knowledge that is generalizable and widely applicable to other SMEs in the Clean Tech branch. The objective of this research is to investigate the Clean Tech entrepreneurs from an SMEs perspective. Therefore, the fields of Clean Tech and SME management are brought together. For this thesis explorative research is essential for determining the theoretical relevance of the allocated propositions of the literature study. The propositions will be related to the research questions and determines the objective of this thesis research (Dul & Hak, 2008). Moreover, it is required to support the theory oriented research aimed at understanding of practice. Therefore, in the second part of the thesis the propositions are tested on the basis of an exploratory case study, which is based on the internship at Syntens. After finalizing data collection the propositions are analyzed.

1.3 Research Questions

The main Research Question is: How could knowledge exchange and cooperation contribute to the success of a Clean Tech entrepreneur in the Northern Netherlands?

Sub questions:

The sub questions forms the initial concept of the literature study and the possible relations are empirical tested. The thesis is divided in four main parts, on the basis of the exploration of the following sub questions:

I. ‘What is the Clean Tech business about?’

o How does Clean Tech differ from related concepts?

o What are the main motivations of the Clean Tech entrepreneurs and what motivates them to develop Clean Tech innovations?

o What are the current issues, market characteristics and developments in the emerging Clean Tech industry?

II. ‘What barriers and facilitators exist?’ The Demand and supply side of Clean Tech. o What internal and external barriers does the Clean Tech entrepreneur face?

o What are the most important internal and external facilitators for the Clean Tech entrepreneur?

III. ‘How can networking increase the feasibility of Clean Tech?’

o What are the advantages and disadvantages of networking for Clean Tech SMEs? o What is the willingness of Clean Tech SMEs to cooperate?

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The general outline of the thesis is divided into the following parts; the first part of the thesis presents the theoretical framework. First, the theory about Clean Tech, the industry and what barriers and facilitators exist within the Clean Tech industry is discussed. The second part of the literature review attends to answering the research questions about how networking can facilitate the feasibility of Clean Tech by describing literature on cooperation and knowledge exchange. The research is based on available academic literature added with specific insights generated from fieldwork and other data sources. In the end of this chapter a research model is presented to give a clear representation of the conducted research.

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2. THEORETHICAL FRAMEWORK (1) WHAT IS THE CLEAN TECH BUSINESS ABOUT?

In the theoretical framework an overview of relevant literature is presented. The sub questions ‘What is the Clean Tech business about? And ‘How does Clean Tech differ from related concepts?’ will be addressed in this chapter. In the first section a definition of Clean Tech will be given, after that related concepts will be defined and will be discussed with regard to Clean Tech. The second part reviews what Clean Tech innovations are. The third part will give an introduction of the Clean Tech industry by describing its characteristics.

2.1 Sustainable development and sustainability

Since the publication of the Brundtland Report in 1987 and the following Earth Summits in Rio de Janeiro (1992) and Johannesburg (2002), sustainable development has become one of the foremost issues facing the world. It is known that natural systems are vulnerable to human activity because of limited adaptive capacity, and some of these systems may undergo significant and irreversible damage. This concern is likely to become more pressing in the future as young generations become even more sensitive to these sustainable issues (Ambec and Lanoie, 2008).

There are three goals embodied in most definitions of sustainable development, namely; economic growth, environmental protection and enhancement, and the well-being of the human population (Bond and Morrison-Saunders, 2009).

The most frequently cited definition of sustainability is that is used in a report by the Brundtland Commission to a 1987 United Nations conference. It defined sustainable developments as those that ‘’meet present needs without compromising the ability of future generations to meet their needs’’. Various attempts have been made since then to elaborate this original effort to incorporate the idea that any economic or business system operates within a site, which contains natural and human resources on which the system will continue to depend in the future. A reasonable working definition of a sustainable system might now be: A sustainable system is one that fulfils present and future needs while using, and not harming, renewable resources, and human ecology and/or those of other (off-site) sustainable systems (Cooperman et al. 2011).

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According to Werbach (2009) Sustainability is much bigger than executing a green strategy, because it takes into account every dimension of the business environment: social, economic, cultural, and natural aspects. Sustainability has four equal components:

o social, to address conditions that affect us all, including poverty, violence, injustice, education, public health, and labor and human rights

o economic, to help people and businesses meet their economic needs; for people: securing food, water, shelter, and creature comforts; for businesses: turning a profit

o environmental, to protect and restore the earth, for example, by controlling climate change, preserving natural resources, and preventing waste

o cultural, to protect and value the diversity through which communities manifest their identity and cultivate traditions across generations

Nowadays the challenges to sustainability are urgent and of great impact, firms are facing growing pressure to become greener. So here lie opportunities for companies to play a critical role in helping to resolve or contribute to the sustainability challenges while building up its business. Green businesses, green jobs, and emerging green economies will be an essential part and focal point of the new world (Werbach, 2009).

The terms sustainability and sustainable development have a lot of implied meaning. The terms are widely used; however the speakers are using them to mean different things. In the literature there is still no consensus about whether to address the concept as ‘sustainability’ or ‘sustainable development’. Hart (2005) states that there are many buzzwords associated with the concept sustainability and come up with a partial list to demonstrate the distinct constructs (table. 1.).

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Hart (2005) pointed out that innovation and repositioning to achieve sustainability are critical actions to increase shareholder value. In order to make companies sustainable, it is important to consider how efficiently firms operate their current assets, and how well they reposition and acquire new capabilities for the future by pursuing short-term and long-term sustainability creating activities.

Some activities may start today and pay off directly while others may begin today and have a longer-term payoff. Activities that are primarily internal to the company involve resources, technologies, capabilities, competencies and people of the company. Secondly, a company might also look at decisions affecting the internal activities of the company and the actions that primarily concern external parties, activities that are primarily external, such as suppliers and customers, have a broader stakeholder context in which the company is embedded (Hart, 2005).

2.2 Defining Clean Tech

Many concepts, frameworks and philosophies have been developed to move toward a sustainable environment. The term Clean Tech has been used in combination with many other related concepts, such as; green business, sustainability or triple bottom line industries. Between the different terms many similarities or overlap exist. To avoid confusion, the most important sustainable development concepts for this research in relation to Clean Tech will be discussed in the next paragraphs.

In the 1960s, companies and regulatory authorities foresaw environmental problems as local and emphasis was put on higher smokestacks and longer discharge pipes in order to dilute the pollution and avoid damaging people and local recipients. ‘Out of sight, out of mind’ seems to be an appropriate way to characterize the lack of environmental understanding among industries and authorities (Remmen, 2001).

In the 1970s, this understanding gradually changed because the extent of the environmental problems became more visible. However, this filter strategy resulted in the environmental problems being moved from one ‘‘medium’’ to another; for example, from air emissions to other waste materials, which had to be deposited; from waste water to sludge; from waste disposal to health and safety problems in recycling plants.

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for example, the addition of filters, or the use of other clean-up actions. The purpose of an end-of-pipe solution is to take care of and treat the impact on the environment caused by the activities of the firm, to prevent the spread of pollution (Hammar and Löfgren, 2010).

During the 1990s there was an increasing interest in the ‘greening of industry and in which manner industry has managed the environmental issues by using new approaches, systems and strategies. The greening of industry means that firms have to take responsibility for the environmental impacts concerning their production process and products (Remmen, 2001). Here the importance of Clean Tech innovations was highlighted. The concept of Clean Tech is relatively new and was popularized through the work of the founders of Clean Tech Venture network (now Clean Tech Group). From 2002 the term is used to describe the ‘’green and clean’’ technologies that venture capital investors were turning into as the next trend for technology investment after the collapse of the so-called ‘‘tech boom’’ in 2001 (Dikeman, 2008). The Clean Tech Group developed an investor membership organization concerning Clean Tech.

The term has been popularized by media at conferences and by people who carry out the message of Clean Tech, for instance by Al Gore who has been speaking up about global warming, it has popularized this topic to a broader audience (Dikeman, 2008). ‘’Clean Tech refers to any product, service or process that delivers value using limited or zero nonrenewable resources and/or creates significantly less waste than conventional offerings’’ (Pernick and Wilder, 2008, p. 2). Clean Tech is also referred to as clean technology, has emerged as an umbrella term including the investment asset class, technology, and business sectors which covers clean energy, environmental, and sustainable or green, products and services (Dikeman, 2008). Clean Tech is the industry of companies that use technologies that lead to a cleaner environment and reduce costs. Hereby, the use of renewable energy and sustainable materials are the most important drivers. Companies creating the tools, manufacturing processes, and energy sources designed to transition the world away from fossil fuels and waste (Tierney, 2011).

Clean Tech covers many related industries and is subdivided into eleven segments, covering the four main sectors: energy, transportation, water and materials (See Appendix1). Clean Tech represents a diverse range of products, services and processes across related industries that are intended to:

 “Optimize the productive and responsible use of natural resources, offering a cleaner or less wasteful alternative to traditional products or services;

 Greatly reduce or eliminate negative ecological impact;

 Have their genesis in an innovative technology or application; and

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PricewaterhouseCoopers (2008) describes Clean Tech as: “not one tidy group, but rather an array of distinct sub-sectors: solar, wind, and geothermal energy generation, biofuels, energy storage, nuclear, new pollution-abatement, recycling, clean coal, and water technologies. The common thread is that all of these sub-sectors represent technologies, services, or products aimed at reducing greenhouse gas emissions and other pollutants and promoting energy efficiency and the conservation of natural resources.” Two groups can be distinguished, there are the energy providers, these are not focused on existent companies, and companies that make use of such renewable energy technologies.

It is obvious that Clean Tech can have different meanings to different people. Pomianek and Teja (2009) use an inclusive definition of Clean Tech that goes beyond renewable/alternative energy sources and includes new energy technologies related to fossil fuels, as well as environmental technologies related to reducing carbon footprint, pollution abatement, water treatment/resource management. According to Pomianek and Teja (2009) renewable energy sources are necessary for the complete long-term future energy picture, however, these sources alone are expected to be insufficient to deal in short-term with impending energy challenges. They view Clean Tech as embracing a wide scope of technologies that address the increased global demand for energy, provide for a reduction in the negative environmental footprint of various human activities, and facilitate a greater independence from fossil fuels (Pomianek and Teja, 2009, p.8).

2.3 Related concepts

2.3.1. Green Tech

Some speakers use the term ‘’Green Tech’’ interchangeable with Clean Tech. Clean Tech can easily confused with the terms of ‘’environmental technology’’ or ‘’green tech’’ which were popularized in the 1970s and 1980s. Green Tech represents the highly regulatory driven, end-of-pipe technology of the past with limited opportunity for attractive returns, while Clean Tech is driven by broader markets economics with greater financial upside and sustainability.

Green Tech is differentiated from Clean Tech because it generally refers to the actual technology in which the industry invests, in contrast with the emerging financial industry (Dikeman, 2008). It has also been suggested that Green Tech is the re-emergence of an older term that never had a broad interest from its use in the early 1990s or prior. However, the Clean Tech term is brought to the market to advance a new concept that reflected technological improvement and new concept. Clean Tech is often purchased primarily for non-environmental reasons, however, it may bring significant environmental benefits (Dikeman, 2008).

2.3.2. Corporate Social Responsibility

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company’s obligation to exert a positive impact and minimize its negative impact on society. Corporate social responsibility means operating a business in a socially responsible manner whereby the business:

 undertakes ethical practices in employment and labour by improving workplaces

 is involved in building local communities and communicates with concerned communities regarding the consequences of its policies and products

 invests in building social infrastructure

 contributes to a cleaner environment, its protection and sustainability and

 contributes by way of its corporate governance to economic development at large (Kanji and Chopra, 2010, p120).

Corporations are increasingly adopting socially responsible actions, activities, policies and processes into its corporate strategy. A corporate social responsibility policy is profitable for a corporation’s bottom line but also for its employees, stakeholders, consumers, communities, the environment and society at large. Therefore, it is imperative to assess and know the degree to which a corporation is socially responsible (Kanji and Chopra, 2010).

Nowadays, the effect of information about CSR on consumer behaviour toward firms, brands, purchase behaviour and identification with companies is increasing. CSR is seen as an integral process of the operations of a company whereby it contributes to and invest in society in economic, environmental, ethical and social terms (Kanji and Chopra, 2010).

According to Kanji and Chopra (2010) CSR improves the company in social respects, but also the financial performance and creates an environment based on health and safety practices. A CSR policy results in a triple focus for a corporation on people, planet and profit. It can be considered that the ‘3P’ approach, which describes the interdependence between social, environmental and economic aspects, is the most popular and commonly used pillars to describe the sustainability externality (Kemp and Martens, 2007). The concept of CSR considers social, ecological and to some extent cultural aspects. Lately, there is also more emphasis on the economic aspects, due to the growing governmental pressures.

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2.3.3. Carbon footprint

A more specific concept of reducing waste and to become more sustainable is the carbon footprint; a carbon footprint is the measure of the amount of greenhouse gases, measured in units of carbon dioxide, produced by human activities. Wiedman and Minx (2008) propose the following definition of the term 'carbon footprint': "The carbon footprint is a measure of the exclusive total amount of carbon dioxide emissions that is directly and indirectly caused by an activity or is accumulated over the life stages of a product." This includes activities of individuals, populations, governments, companies, organisations, processes, industry sectors etc. It is essential that all direct (on-site, internal) and indirect emissions (off-site, external, embodied, upstream, and downstream) should take into account (Wiedman and Minx, 2008). A carbon footprint can be measured at individual or organizational level, and is typically given in tons of CO2-equivalent per year. Carbon dioxide (CO2) is a contributing factor in global warming and humans are responsible for a large portion of these emissions. Furthermore, it is usually applied at the industry level or country/region level; countries can be arranged by their ratio of Gross domestic product to carbon dioxide emissions. Here, a distinction can be made between countries which are the most efficient, by producing the most economic output with the least emissions, and countries at the bottom of the list, by being the strongest polluters per unit of economic output.

The importance of reducing our environmental impact and greenhouse gas emissions has increased. Individuals and businesses are trying to reduce their environmental impact and GHG (Green House Gas) emissions. There are two types of footprints, a primary and secondary. The primary footprint is a measure of our direct CO2 emissions from the burning of fossil fuels including domestic energy consumption and transportation. More fuel-efficient cars have a smaller primary footprint, as energy-efficient light bulbs in your home. The secondary footprint is a measure of indirect CO2 emissions from the whole lifecycle of products we use, those associated with their manufacturing and eventual breakdown. In other words, the more we consume, the more emissions are generated. For example, the greenhouse gases emitted during the production of plastic for bottles, as well as the energy used to transport the water, contribute to the secondary carbon footprint (Walser, 2010).

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Sooner or later governments will force companies to reduce and measure their CO2 emissions. Big emission suppliers, such as energy companies, chemical companies, oil and gas companies are already obliged to record and report their emissions. Another trend that can be observed is that companies reduce CO2 emissions through making investments in off-set projects and compensate their CO2 emissions. However, these companies often do not look critical to the cause of CO2 emissions and ways to reducing CO2 emissions, but only pay a certain amount per ton of CO2 emissions to commute their emission and argue that they are CO2 neutral (Schonewille and Boorsma, 2010).

2.3.4. Cradle-to-Cradle

According to Porter and van der Linde (1999) the concept of resource productivity opens up a new way of looking at both the full systems costs and the value associated with a product. Resource inefficiencies are most visible within a company in the form of incomplete material utilization and poor process controls, which causes unnecessary waste, defects, and stored materials. However, there also are many other hidden costs buried in the life cycle of the product. Environmental improvement efforts have traditionally overlooked these systems costs; the focus was namely on pollution control instead of pollution prevention. To become more sustainable and competitive companies should start focusing their strategies on innovation and resource productivity.

A concept which is in particular based on pollution prevention is Cradle-to-Cradle (C2C). The philosophy of Cradle-to-Cradle is introduced by William McDonough and Michael Braungart. The American architect William McDonough initially introduced the C2C philosophy, he was the first that extensively define sustainability fundamentals and acknowledged the mutuality of fundamental product design and the environment. In 1995, William McDonough and the German chemist Michael Braungart founded the MBDC, McDonough and Braungart Chemistry, to promote and empower the C2C philosophy and to facilitate in product and process transformations (McDonough et al. 2003). MBDC introduced the Cradle-to-Cradle model to combine all of the aspects of sustainability into one holistic process.

The Cradle-to-Cradle process starts with the creation of products that are safe for both human and environmental health, and ending with the easy recovery and reuse of the materials in the products (Nahikian, 2005). The principles of Cradle-to-Cradle encourage to fundamentally redesigning processes and products in order to make them useful, instead of less harmful to the environment, waste should be seen as a nutrient for either the environment or another technological process. C2C designs industrial systems to be commercially productive, socially beneficial, and ecologically intelligent (McDonough et al. 2003). Cradle-to-Cradle design enables the creation of wholly beneficial industrial systems driven by the synergistic pursuit of positive economic, environmental and social goals (Braungart et al 2007).

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strategy, below the distinction of eco-effectiveness and eco-efficiency will be discussed to understand the concept of Cradle-to-Cradle.

Eco-efficiency versus Eco-effectiveness

Primarily, the term eco-efficiency means ‘doing more with less’ and has its roots in early industrialization. Eco-efficiency was introduced by the World Business Council for Sustainable Development in 1992 and is achieved through ‘‘the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life cycle to a level at least in line with the earth’s carrying capacity’’ Eco-efficiency is based on maintaining or increasing the value of economic output while simultaneously decreasing the impact of economic activity upon ecological systems. Eco-efficiency starts with a linear flow of materials through industrial systems, raw materials are extracted from the environment, transformed into products and eventually eliminated. Some materials are recycled, but mainly as an end-of-pipe solution because these materials are not designed for recycling. In other words, eco-efficiency is based on more product or service value with less waste, less resource use or less toxicity.

The eco-efficiency concept encompasses damage management and guilt reduction, it begins with an assumption that industry is 100% bad, and goes on with the goal of attempting to make it less bad (fig. 1). Companies which are eco-efficient may reduce resource consumption and pollution, and provide temporary economic advantage in the short-term (Braungart et al., 2007).

Figure 1 Eco-efficiency versus eco-effectiveness.

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ecological systems and enables long-term economic prosperity. It is assumed that eco-effectiveness will benefit an industry that is already good and is about maximizing a positive footprint, instead of reducing the negative effects of the eco-efficiency paradigm. Eco-effectiveness approaches moves beyond zero emission by focusing on the development of products and industrial systems that maintain or enhance the quality and productivity of materials through subsequent life cycles (Braungart et al., 2007).

Striving for eco-effectiveness is about reaching a technological metabolism where recycling is using materials for the same product or a better product over and over again, the so called ‘‘upcycling’’ process. Eco-efficiency has an end-of-pipe approach and instead of true recycling the process is actually downcycling, a downgrade in material quality, which limits usability and maintains the linear, cradle-to-grave dynamic of the material flow system (Braungart et al., 2007). The ultimate aim of the Cradle-to-Cradle philosophy is to be 100 percent eco-effective, here it will be entirely beneficial to ecological systems.

2.3.5. Social entrepreneurship

Entrepreneurship can be defined as ‘the process of creating value by putting together a unique package of resources to exploit an opportunity’ (Shane and Venkataraman, 2000). Entrepreneurship is concerned with discovering and exploiting opportunities and is closely related to innovation. Social entrepreneurship deals with the issue of green, from the perspective of the one that executes the business and on the motivations of the entrepreneur. Social entrepreneurship is often based on ethical motives and moral responsibility,the motives for social entrepreneurship can also include less altruistic reasons like personal fulfilment. The main focus is on social value, while the creation of economic value is seen as a necessary condition to guarantee financial viability (Mair and Marti, 2006).

The underlying drive for social entrepreneurship is to create social value, above personal and shareholder wealth and that the activity is characterized by innovation, or the creation of something new rather than simply the replication of existing practices (Austin et al., 2006).

Different definitions considering green entrepreneurship are used; ecopreneurs, green entrepreneurship, sustainable entrepreneurship and social entrepreneurship and are often used interchangeable for the same concept. It is hard to define environmental entrepreneurship and identifying the typical characteristics of the ecopreneur, because they come in many different forms. It can be assumed that sustainability entrepreneurship links our knowledge about entrepreneurship to our knowledge about different sustainability concepts. The emerging field is interdisciplinary by nature. The focus lies on individual entrepreneurs or small entrepreneurial teams and the impact they have on the wider socioeconomic system (Schaper, 2010).

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to facilitate quality of life improvement within organization and society (Horwitch and Mulloth, 2010). Commercial entrepreneurship tends to focus on breakthroughs and new needs, while social entrepreneurship often focuses on serving basic, long-standing needs more effectively through innovative approaches (Austin et al., 2006). Social entrepreneurs focus more on social concerns while traditional entrepreneurs focus more on market-oriented concerns. Both seek profits to drive their businesses forward and both seek to make important changes in the marketplace. However, the difference seems to be in the degree of intent(Massetti, 2008).

Schaper (2010) discuss the importance of distinguishing between at least three types of entrepreneurship based on the entrepreneur its motives or purpose; ‘responsible entrepreneurs’, who are conventional, profit seeking entrepreneurs and are motivated to try to reduce their negative environmental and social impacts out of sense of duty. The ‘opportunistic entrepreneurs’, who may directly contribute to environmental and social improvements but only when market incentives exist, they are primarily motivated by profit-seeking. And ‘sustainability-driven entrepreneurs’ whose fundamental purpose for starting an company is to contribute to improving the social and ecological well-being, as well as satisfy their own quality-of-life interests, and who earn market-based income as a means of achieving these goals.

A factor that appears to be common to many environmental entrepreneurs is their intentionality. Their personal belief system, their values, usually sees the protection of the environment and the desire to move to a more sustainable future as important goals for themselves. For some ecopreneurs altruistic goals are more important than financial earnings or commercial viability. For others it is in conjunction with traditional measures of economic and commercial success and for others, it is still a secondary factor after business feasibility and has a more rational approach (Schaper, 2010).

2.4 Summary of Clean Tech and sustainability concepts

The current attention for ‘’Clean Tech’’, while reflecting the perceived need to make better use of the world’s resources, has to some extent obscured to much wider message encompassed by the sustainability concept. Clean Tech considers a diverse range of products, services and processes, intended to; provide superior performance at lower costs, while reducing or eliminating negative ecological impact and also improving the productive and responsible use of resources (Cooperman et al., 2011).

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economic benefits derived from using Clean Tech. And, every company, not just a Clean Tech company has a role to play regarding sustainability and can achieve a competitive advantage from the process of creating a more sustainable business model (Cooperman et al., 2011).

Looking at the production process of Clean Tech products there can be a distinction between four forms. First, the ingredients or components of the product will be replaced by cleaner alternatives. Second, resource efficiency and productivity will be pursued to manufacture and produce in a manner that saves energy; here also the term business process reengineering is used. The third is related to the production process, deals with reducing waste and recycling, here it is mainly about end-of-pipe solutions. The last one is about energy as the end product, such as wind mills and solar energy. The first three forms are part of the segment of energy efficiency products and the forth form belongs to the segment of renewable energy technologies.

To demonstrate the differences and communalities between the concepts the table below gives an overview of the characteristics of the different sustainability concepts, goals and scale.

SUSTAINABLE DEVELOPMENT CONCEPTS

CONCEPT FOCUS/CHARACTERISTICS GOAL SCALE

Clean Tech

Reducing or eliminating negative ecological impact and also improving the productive and responsible use of resources. The focus lies on the preservation of natural resources.

Key aspects are; Energy efficient products, business process engineering and renewable energy technologies. ‘‘Energy as end product’’.

A distinction of two forms can be made:

- Making use of Clean Tech to reduce fossil energy - Developing Clean Tech

energy

In the beginning it was voluntarily, however, now more and more imposed by regulations.

Bringing newopportunities for the creation of wealth, high-growth career

development and innovative solutions to several global problems.

Products, services and processes, intended to provide superior

performance at lower costs. Marketing, but more industry driven than at a company level.

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Based on economic and

environmental/ecological motives.

Green Tech

End-of-pipe technology with limited opportunity for attractive returns.

Controlling solution, not focused on resource efficiency and productivity and not focused on business process reengineering. Technology driven.

Based on ecological/environmental and economic motives.

Highly regulatory driven.

Controlling instead of prevention, end-of-pipe solutions. (smaller part of Clean Tech)

Minimization of waste Not used as a marketing tool, internally focused. Downcycling Company level Industry Corporate social responsibility (CSR)

Company’s obligation to exert a positive impact and minimize its negative impact on society. Operating a business in a socially responsible manner.

Officially covers all aspects of responsibility including

environmental, main focus lies on workforce, employees and society. It Is not mainly about products. Business process reengineering is just a part of it.

Voluntarily.

Technical and non-technical driven, with the accent on non-technical aspects.

Based on social, environmental/ ecological, economic and cultural motives

Improvement of reputation. Used as marketing tool to stimulate sales and profits. Improving the public image. A mix between the positive impact of the company on society and maximising its own returns.

Additional activities often not related to core-business.

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Measurement of direct and indirect CO2 emissions.

Identifying and prioritizing emission reduction opportunities. Business process engineering (effectiveness) or through reducing CO2 emissions (efficiency). Less voluntarily.

Mainly technical driven, sometimes non-technical driven.

Driven by economic and

environmental/ecological motives.

Trying to reduce their environmental impact and Green House Gas emissions. Minimization of waste. Strengthen their share in sustainability and send a signal that they recognize the importance of climate change.  Marketing tool.

Product./ process specific Organization wide Industry Global Cradle to Cradle  Eco-effectiveness  Eco-Efficiency

Redesigning processes and products in order to make them useful, instead of less harmful to the environment.

Waste should be seen as a nutrient for either the environment or another technological process. Eco-efficiency is based on more product or service value with less waste, less resource use or less toxicity. (downcycling)

Eco-effective approach deals directly with the issue of maintaining or upgrading the quality and productivity of material resources.(upcycling)

Energy efficiency products, business process engineering and renewable energy technologies. ‘‘Energy as end product’’. Voluntarily.

Mainly technical driven, sometimes non-technical driven. Motivated by economic, ecological/environmental and social drivers. Prevention of waste. Creation of beneficial industrial systems driven by the synergistic pursuit of positive economic, environmental and social goals.

Marketing tool. Eco-efficiency: Damage management and guilt reduction  Strives for zero emission.

Cradle-to-cradle: Supports and regenerates ecological systems and enables long-term economic prosperity. It is assumed that

eco-effectiveness will benefit an industry that is already good and is about maximizing a positive footprint. Whole value system.

Product./ process specific Organization

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entrepreneurship

Operates at the intersection of the market, state and civil society. Committed to serve human needs and to facilitate quality of life improvement within organization and society.

Voluntarily.

Technology and non-technology driven.

Motivated by social,

environmental/ecological, cultural factors, less based on economic motives.

Reduce their negative environmental and social impacts out of sense of duty. Image building.

motivated by profit-seeking and/or to contribute to improving the social and ecological well-being. Altruistic goals versus more financial/commercial goals.

Individual or organizational

wide

Table 2 Sustainability concepts 2.5 Description of the Clean Tech industry

Clean Tech is at the heart of a huge global revolution, driven by many different factors. Individually each of these factors is significant however cumulatively they are very powerful (CMS report, 2009). Global corporations across different industries are moving quickly to pursue Clean Tech revenue opportunities. During the financial downturn, businesses saw opportunities in Clean Tech for cost savings and efficiency improvements.

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2.5.1. Market characteristics of the Clean Tech industry

Clean Energy Technology reduces Co2 emissions by increasing energy efficiency and enabling alternative sources like solar, wind and biomass. The Clean Energy Technology market can be distinguished in two segments: Energy efficiency products and renewable energy technologies (Van den Berg and van der Slot, Roland Berger Report, 2009). Solutions for reducing Co2 emissions should be sought into reducing primary energy demand, but also in alternative sources that does not emit Co2. Clean Energy Technology contributes to energy efficiency by enabling, for example, low-energy lighting, better insulation and more effective energy storage. Energy saving products using less energy and also reduces costs. Renewable energy is derived from natural processes that are replenished constantly, energy is used which comes from natural resources such as sunlight, wind, rain and geothermal heat. Clean Energy Technology is defined as those technologies that contribute directly to reducing CO2 emissions (Van den Berg and van der Slot, 2009).

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The Netherlands play a relatively minor role in the growing and attractive industry of Clean Tech, however it has the potential to do much better. The Roland Berger report (2009) has taken into account 27 EU member states and all G7 and BRIC countries and the major renewable energy and energy efficiency segments, a country’s position in the ranking reflects its ability to produce and sell products and services that reduce CO2 emissions. High ranking countries also generate high economic value and employment for a skilled workforce, many countries have strong domestic demand and the spin-off employment to install Clean Energy Technologies locally is also high. Based on this study, rankings by aggregate product sales over 2008 in absolute (EUR billion) and relative terms (as a % of GDP) the Netherlands ranks 17th in overall, GDP-weighted Clean Energy Technology sales and achieves only a top ten position in solar and insulation technologies. In absolute terms the Netherlands ranks 12th with sales of some EUR 900 million (Van den Berg and van der Slot, 2009).

2.5.2. Current issues and developments in the Clean Tech industry

Pomianek and Teja (2009) have observed several attributes that appear to be common themes for many Clean Tech ventures. Firstly, Clean Tech requires a significant interdisciplinary knowledge of scientific and engineering principles. Secondly, Clean Tech initiatives often require a longer time path to get commercialised, it requires persistence, patience, and long-range business strategies from the Clean Tech entrepreneur. Furthermore, it can also occur that there exist limited possible routes to market, caused by an existing hierarchy that controls some infrastructure. Companies should take into account the durability of the existing infrastructure, the high cost and time required to make significantly changes to the infrastructure and the reluctance of consumers to change their behaviour when it is about energy consumption. Therefore, Clean Tech companies should position their innovation with care in which way it will be adapt or interface with the existing framework. Clean Tech takes often huge capital investments, so it needs a bigger financial scope and scale in relation to other technology sectors and it has to deal with complex government regulations and public perception (Pomianek and Teja, 2009). Besides the urge to resolve or contribute to the sustainability challenges there also exists tiredness regards environmental policies, because it may hamper innovation, competitiveness and growth of companies (Porter and van der Linde, 1995). Climate sceptics argue that science regards climate change is a deception to fool the tax payers, they are afraid that an extensive climate pact will ruin the economy, due to the high costs for business (locale courant der duurzaamheid, 20091). However, besides the fact if the sceptics are right or not, it is a known fact that crude oil is becoming scarce. According to the latest prognosis of the International Energy Agency (IEA) the peak in oil production lies in 2020. Scarcity is already the order of the day because, due to the recession and the temporary low oil prices there is invested less in oil extraction. The IEA foresees a growing demand for oil because the rising economies of India and China (locale courant der duurzaamheid, 2009).

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Furthermore, less dependency on oil bring along geopolitical advantages. The addiction to oil is a source for conflicts, for instance looking at the situation of Saudi-Arabia and the power of oil dictators.

Furthermore, there is a trade-off between economy and ecology consisting of the social or environmental benefits versus the costs of an environmental concept. Porter et al. (1995) state that this perspective of environmental regulation is incorrect and considers environmental pollution as a form of economic waste. They state that when scrap, harmful substances or energy forms are discharged into the environment as pollution, it is a sign that resources have been used in an incomplete, inefficient or ineffective manner. Regulating the discharge of waste will eventually increase the costs without creating any customer value, since the value of waste is not returning in the product. Consequently, a self-fulfilling prophecy is created. According to Porter et al. (1995) the shift from pollution control to pollution prevention should be regarded a step in the right direction. Companies must start focusing their strategies on innovation and resource productivity to become both sustainable and competitive (Porter and van der Linde, 1995).

Results of the annual International Business Report (IBR 2010) of Grant Thornton shows that despite the poor economic circumstances, the willingness to introduce Clean Tech applications in Dutch SMEs is in twelve months increased from 42 to 55 percent, even if these applications have a negative effect on the operating results. The Grant Thornton Business Monitor of December 2009 demonstrated that 61 percent of SMEs which have borrowed money or wants to borrow from a bank over the last two years will spend the credit on sustainable and/or innovative projects. From the same survey it appears that 87 percent of the respondents are aware of the fact that government subsidies are available for projects in the field of innovation and sustainability. Meanwhile, the choice for sustainability by companies goes beyond building a "green image", corporate Social Responsibility is becoming a true belief2.

Pernick and Wilder (2008) identified several growth factors that are pushing Clean Tech into the mainstream and driving the fast growth, expansion and economic necessity of the Clean Tech phenomenon across the globe. These factors are creating the dynamic, lucrative business and investment opportunities for established companies, entrepreneurs and investors (Pernick and Wilder, 2008). The most powerful growth factor for today’s Clean Tech growth is economics, the costs for clean energy are falling as the costs of fossil fuel energy is increasing. The future of Clean Tech is moving towards scaling up manufacturing and driving down costs. As the market of Clean Tech expands efficiencies will improve and production volumes will increase than economies of scale will be created and the costs of new technologies consistently go down (Pernick and Wilder, 2008). One of the great

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advantages of most clean energy technologies is price stability in comparison with their conventional counterparts (Pernick and Wilder, 2008).

An interesting development is that the world’s largest corporations are speeding up their adoption of Clean Tech products and services to create a competitive advantage through resource efficiency and sustainable growth. The investments made by venture capital funders are targeting cost efficiencies, new revenue streams, but also considers internal objectives for sustainability and climate change. Results of the Ernst & Young Clean Tech insights and trends report show that for many companies spending on Clean Technology has risen with 3-5% of annual revenues. 66% of the respondents of the survey indicated that Clean Tech has become a corporation wide initiative supported by senior management and 85% pointed out that the pace of the strategic response to climate change of their company is significantly or moderately speeding up compared with two years ago (Clean Tech insights and trend report, Ernst&Young, 2009). An unprecedented influx of capital is changing the Clean Tech industry, investments in Clean Tech have moved from primarily government research and development project to multinationals, venture capitalists and individual investors. Governmental institutes still have a significant role, however, the shift brings Clean Tech to the commercial forefront (Pernick and Wilder, 2008).

Investing in Clean Tech is essential to achieve sustainable energy supply and to avoid or mitigate the negative effects of climate warming. On business level, investment in Clean Tech can result in a higher return, higher productivity, higher competitiveness and strategic advantage (first mover advantage). Figure 2 shows the evolution of the global venture capital investment in Clean Tech. There is a strong increase of venture capital investment, with a breakthrough from 2006. Furthermore, the share of the Clean Tech venture capital investment has risen sharply. This share increased in the U.S. from 1, 4 % in 2001 to 5, and 4 % in 2007. In the European Union, a similar increase can be observed, from 1.6% in 2001 to 4.4% in 2007 (Van Passel, 2009).

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It can be observed in figure 2 that in the last period of 2008 the total amount of venture capital investment has declined, however, this does not implicate that the beginning of the credit crunch was the cause of the fall in investments. It may have had the opposite effect, nearly 55% of the respondents of the Ernst&Young trend research indicated that recovering from the current crisis will fasten the

implementation of their company’s strategy regarding clean technology. The global financial crisis has highlighted the need to employ clean technologies as important tool for

operational efficiency and reduction of costs, but it has also accelerated the adoption of Clean Tech (Clean Tech insights and trend report, Ernst&Young, 2009).

Unfortunately, the Netherlands does not seem to be succeeding in capturing a high listing looking at developments regarding Clean Energy Technologies. Wind energy, biofuels, insulation and solar are the four main segments, the Netherlands has no leading position in any of these segments. It would seem that the Netherlands neither profits nor contributes as much as it should when looking at the available resources. The Netherlands has the companies, the knowledge, capital, responsibility and industry to play a much greater role in the Clean Tech industry. The Netherlands possesses an excellent knowledge base and knowledge institutions, however, it fails to turn it in feasible solutions delivered on a commercial scale. The difficulty lies in the translation of the knowledge base into real innovations. To improve the productivity of its knowledge the Netherlands has to focus more on knowledge exchange and cooperation (Van den Berg and van der Slot, 2009).

2.6 Defining Clean Tech innovation

Clean Tech is a combination of environmental technology with economic value; environmental technologies have been reframed as ‘Clean Tech’ and promoted as the next wave of industrial innovation. While, environmental technologies are often thought of as regulative solutions to environmental problems like pollution, Clean Tech innovation offer more upstream, preventive, efficiency-driven solutions. Clean Tech is about resource efficiency and productivity in supply, how to produce and manufacture to save energy (Schaper, 2010).

Innovation in response to environmental regulation can be divided into two broad categories. The first is new technologies and approaches that minimize the cost of dealing with pollution once it has occurred, the end-of-pipe approach. The second category is the more important type of innovation which addresses the root causes of pollution by improving resource productivity in the first place.