Eco industries...5.4. Presence of environmental education in the school curricula and vocational training 48 5.5. Supporting IP conditions related to green technologies 49 Eco industries

European Cluster Observatory

Eco industries

Analysis of industry-specific framework conditions relevant for the development of world-class clusters

September 2013

Enterprise

and Industry

The views expressed in this report, as well as the information included in it, do not necessarily reflect the

opinion or position of the European Commission and in no way commit the institution.

Extension of the European Cluster Observatory,

Promoting better policies to develop world-class clusters in Europe

Contract N° 71/PP/ENT/CIP/11/N04C031

Eco industries

Analysis of industry-specific framework conditions

relevant for the development of world-class clusters

Authors: Kristina Dervojeda, Fabian Nagtegaal, Mark Lengton & Peyoush Datta, PwC Netherlands.

Contacts: Kristina Dervojeda, PwC Netherlands, and Erica Monfardini, PwC Luxembourg.

Coordination: Enterprise and Industry Directorate-General, Directorate D – “SMEs and

Entrepreneurship”, Unit D5 – “SMEs: Clusters & Emerging Industries”.

European Union, September 2013.

This work is part of a service contract for the Enterprise and Industry Directorate-General of the European Commission. This report is financed under the Competitiveness and Innovation Framework Programme (CIP) which aims to encourage the competitiveness of European enterprises.

Eco industries Framework conditions for world-class clusters in emerging industries

3

Table of contents

Executive Summary 5

1. Objectives, scope and methodology 11

1.1. Rationale and objectives of the case study analysis 11

1.2. Definition and scope 12

1.3. Methodology 15

1.4. Structure of the report 19

2. Specifics of eco industries 20

2.1. Introduction 20

2.2. Key actors of the value chain 21

2.3. Key challenges of eco industries 23

2.4. Clusters in eco industries 25

3. Precursor stage: first interest in the emerging industry 26


3.2. Proximity of companies in traditional industries in transition towards environmentally friendly solutions 26

3.3. Critical mass of private consumers of eco industries 28

3.4. Social attitude supporting eco industries 29

4. Embryonic stage: entering a market environment 30


4.2. Availability of environment-related R&D subsidies 30

4.3. Availability of ‘green’ lending through banks 32

4.4. Availability of seed and venture capital for eco-innovative companies 33

4.5. Green public procurement 35

4.6. Environmental focus of university research programmes 37

4.7. Availability of environment-related R&D and other tax measures 39

4.8. Existence of eco-regulation 40

4.9. Availability of eco-innovative infrastructure 42

5. Nurture stage: demonstrating sustainable business potential 44


5.2. Critical mass of eco-companies 44

5.3. Critical mass of supply chain actors 46

5.4. Presence of environmental education in the school curricula and vocational training 48

5.5. Supporting IP conditions related to green technologies 49


4

5.6. Policy measures supporting the internationalisation of eco-innovative clusters 51

5.7. Strategy documents and roadmaps for the development of eco industries in the region 52

5.8. Dedicated cluster organisation 54

5.9. Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco industry solutions 56

6. Growth stage: sustainable industrial growth 58


6.2. Investments in industry growth 59

7. Survey on industry specific framework conditions 60

7.1. Cross-regional comparison of general framework conditions 60

7.2. Industry specific framework conditions 62

8. Conclusions and Policy recommendations 64

8.1. Key conclusions from case study analysis 64

8.2. Policy recommendations 65

Annex A: Questionnaire 70

Annex B: Sample of analysed regions 78


5

Executive Summary

The current report represents a detailed case study description for eco industries prepared by PwC for

Enterprise and Industry Directorate General of the European Commission within the “Extension of the

European Cluster Observatory: Promoting better policies to develop world-class clusters in Europe” (contract

nr 71/PP/ENT/CIP/11/N04C031).

Eco industries have a central role in enabling Europe to become a smart and sustainable economy and, as a

result, have a great potential for contributing to the goals of Europe 2020 Strategy. Eco industries offer added

value and reduced costs through the integration of measures such as, for example, water purification, energy

production and heat capture. It is a rapidly growing industrial sector producing goods and services to measure,

prevent, limit, minimise or correct environmental damage to water, air, soil and ecosystems, as well as

addressing problems related to waste and noise. It is therefore crucial to identify and analyse the framework

conditions that are key to the competitiveness of eco industries in European regions.

The objective of the case study analysis is to demonstrate which framework conditions are favourable for the

emergence of eco industries in regions, and specifically how policy makers can influence the development of

this industry. The analysis aims to maximise policy relevance and produce practical policy recommendations on

how to support the development of eco industries in Europe.

In order to obtain a realistic picture of the framework conditions relevant for the emergence and development

of eco industries, the notion of industry’s dynamic nature was put in the centre of the analysis. This notion

implies that the role and importance of the relevant framework conditions is likely to change with every new

stage of the industry’s life cycle. To be effective, supporting measures thus need to be tailored to the various

stages of the life cycle. The current analysis is built along the first four stages of the industry’s life cycle, i.e.

stages relevant for emerging industries: (1) Precursor, (2) Embryonic; (3) Nurture; and (4) Growth. Key data

sources include extensive desk-research, online questionnaire and validation interviews with industry experts

(representatives of ten European hotspots in eco industries).

The analysis confirmed that the role and importance of the relevant framework conditions changes with new

stages of the industry’s life cycle. However, all identified framework conditions prove to have a long-term

impact and are relevant for more than one stage. Figure 0-1 on the following page presents the result of the

mapping exercise of the analysed framework conditions for eco industries.

This case study is part of a number of reports prepared in the framework of the extension of the European Cluster Observatory. Two additional case studies also present results for the creative industries and for mobile services. The methodology for the case studies is described in more detail in a separate methodology report on the identification and benchmarking of ideal framework conditions. The definitions of emerging industries are detailed in the methodology report for the classification of the most active, significant and relevant new emerging industrial sectors. Emerging industries can be defined as the establishment of an entirely new industrial value chain, or the radical reconfiguration of an existing one, driven by a disruptive idea (or convergence of ideas), leading to turning these ideas/opportunities into new products/services with higher added value. The European Cluster Excellence Scoreboard Pilot Version measures regional strength in emerging industries and presents results in the fields of creative industries, eco industries and mobile services. The methodology applied by this scoreboard is described in more detail in a separate methodology report. Furthermore, a policy roadmap prepared by the European Forum for Clusters in Emerging Industries (EFCEI) introduces recommendations for actions for new linkages to promote the development of emerging industries through clusters in Europe. All reports – together with further maps by country, industry and indicators – can be found at http://www.clusterobservatory.eu/index.html#!view=aboutobservatory;url=/about-observatory /emerging-industries/ and http://www.emergingindustries.eu/.


6

Key policy recommendations per industry development stage are as follows.

Policy recommendations for Precursor stage

Policy makers can stimulate the development of eco industries at the Precursor stage in the following ways:

1) Stimulating the transition of traditional industries of the region towards environmentally

friendly solutions (and thus creating a demand for the products and services of eco industries) by means

of eco-friendly regulations and standards;

2) Influencing the engagement of traditional industries with eco industries by implementing

policies that incentivise joint networks and multi-stakeholder research platforms; such

initiatives can give rise to entrepreneurial activities in which novel ideas are developed and commercially

applied;

3) Organising social marketing and advertising campaigns promoting eco industries and green

products in the region, as well as incentivising the purchase of eco products (e.g., financial

benefits for the users of solar panels).

FIGURE 0-1: Mapping of identified framework conditions for eco industries

Policy recommendations for Embryonic stage

Policy makers can stimulate the development of eco industries at the Embryonic stage by ensuring:

1) Availability of environment-related R&D subsidies:

a) R&D subsidies, either through direct government funding of R&D or through tax credits for private

R&D activity, can help raise private R&D levels to a socially desirable level;


7

b) While R&D subsidies address market failures in the invention of new technologies, they do not provide

incentives to adopt new technologies;

c) When setting the level of R&D subsidies, policy makers need to consider the opportunity cost of

additional R&D since ignoring the costs of reducing these R&D efforts would result in overly generous

subsidies for eco R&D, and could have negative impacts on the economy as a whole.

2) Availability of ‘green’ lending through banks:

a) Policy makers can use two main options to induce a change within eco industries regarding their

emergence and access to “green” financing options: direct access to capital through Public Investment

Banks; and preferential credit;

b) Public Investment Banks should aim at giving SMEs better access to credit, supporting entrepreneurs

at all stages of their project, helping enterprises to expand their market and their export activities;

c) Low-cost credit lines and partial risk guarantees can incentivise banks to invest in higher risk-bearing

projects.

3) Availability of seed and venture capital for eco-innovative companies:

a) By providing targeted and increased support to the industry from EU Community Budget, the

European Investment Fund and European Investment Bank, private investments could be triggered.

b) This support from EU government bodies can take the form of providing a package of financial

instruments to cover different company sizes and structures (e.g., loans, guarantees, grants and tax

incentives) aimed at increasing the attractiveness for the private sector to invest in European eco

industry product development activities.

4) Green public procurement:

a) Regional authorities should put green public procurement on the political agenda of the region;

b) Regional authorities should set clear targets (e.g., developing green public procurement action plans

focussing on: certain product groups and due dates for these products; certain types of public

organisations and due dates for these organisations etc.);

c) Regional authorities should create green public procurement knowledge base (e.g., linked databases,

websites containing information on “green” criteria, specifications, best practices, eco-labels etc. on

products and procurement procedures, including legal information, procurement regulation);

d) Regional authorities should offer training opportunities for the purchasers of green public

procurement.

5) Environmental focus of university research programmes:

a) Regional authorities should introduce programmes that provide financial support for conducting

collaborative research within the environment-related disciplines (including multidisciplinary research

addressing complex issues, problem-solving research; international cooperation; addressing global and

local challenges; dissemination of knowledge and research results);

b) Regional authorities should introduce programmes dedicated to strengthening the innovative capacity

of SMEs by providing financial support for outsourcing research critical to their core business activities;

c) Regional authorities should introduce programmes that stimulate industry-academia partnerships in

order to stimulate research collaboration between public research organisations and private

commercial enterprises, including SMEs;

d) Regional authorities should introduce programmes that offer initial training of researchers, lifelong

training and career development, and international fellowships;

e) Regional authorities should create a dedicated helpdesk that would inform cluster members about calls

for proposals for the relevant EU subsidies and grants and assist cluster members with preparing

proposals.

6) Availability of environment-related R&D and other tax measures:

a) To influence the consumer’s behaviour and thereby trigger the demand for eco products in the region,

direct fiscal incentives can take a form of a subsidy or rebate provided after the purchase of an eco


8

product or paid directly at the check-out, in some cases delivered in case of replacement of the old

appliance etc.;

b) The environment-related R&D tax credit can be an effective tool for boosting innovation,

competitiveness and creating high-wage employment in the region.

7) Adoption of eco-regulation:

a) There is a need to create an environmental policy regime that is consistent with an industrial policy

focusing on innovations with sufficiently large international selling opportunities.

b) For the EU eco industries to be able to successfully develop in the future, a long-term stable policy

framework with greater harmonisation or coordination across the Member States, together with

simplification of national regulations is needed;

c) The development of a more coherent intellectual property rights (IPR) policy and legal framework is

crucial, not just within the EU, but also at the international level.

8) Availability of environmental and research & innovation infrastructure:

a) Besides large investments in the environmental infrastructure of the region, the role of policy makers is

to support the concept of public-private partnerships vital for the development of research & innovation

infrastructure.

The abovementioned policy actions are relevant also for the next two stages of industry’s development: Nurture

and Growth stage.

Policy recommendations for Nurture stage

Policy makers can stimulate the development of eco industries at the Nurture stage by ensuring/supporting the

presence of:

1) Critical mass of eco-companies:

a) The key task of policy makers is to create an environment favourable for setting up and expanding

businesses in the region.

b) The relevant measures should among others aim at ensuring easier access to funding, making

legislation clearer and more effective and developing an entrepreneurial culture and support networks

for businesses.

2) Critical mass of supply chain actors:

a) A specific role in supporting the establishment of a structured eco industries supply chain belongs to

dedicated cluster initiatives.

b) Policy makers need to promote and support cluster initiatives in their regions by financing the creation

of cluster organisations and the associated cluster-level initiatives (e.g., networking events, match-

making etc.).

3) Environmental education in the school curricula and vocational training:

a) Policy makers should include the groups targeted as beneficiaries in the programme development

process (NGOs, associations of teachers, network of environment education, etc.);

b) Policy makers should include environmental education and sustainable development experts in the

programme development process;

c) Policy makers should provide capacity-building in environmental education issues to the programme

management authorities at all levels;

d) Policy makers should ensure shorter payment periods, pre-financing possibilities and negotiating

assured national co-financing;

e) Policy makers should support organisations in developing the project proposals and managing the

projects;


9

f) Policy makers should inform potential project promoters of funding opportunities and coordinating

exchange of experiences between existing projects.

4) Supporting IP conditions related to green technologies:

a) There is a clear need for a unitary patent system. Unitary patent protection would foster scientific and

technological advances and the functioning of the internal market by making access to the patent

system easier, less costly and legally secure.

b) For the national and EU R&D funding programmes, more clear and streamlined rules for IP and access

rights need to be defined, and the necessary measures need to be taken to ensure their implementation.

c) This may be achieved through mandatory Consortium Agreement templates that may depend on the

type of project and the phase of the innovation cycle, with which the participants will be acquainted in

advance, and which will avoid spending disproportionate amounts of time and efforts for preparing the

Consortium Agreements of publicly-funded projects.

5) Policy measures supporting the internationalisation of eco-innovative clusters:

a) Examples of the policy measures supporting internationalisation include regional support in

representing the cluster abroad; regional support for inward investment activities; removal of custom

duties on green products, as well as training and coaching etc.

b) Policy makers can develop a knowledge sharing system in which eco-companies, traditional companies

and research institutes can exchange information (inter)nationally and possibly collaborate on project

for international markets.

6) Strategy documents and roadmaps for the development of eco-industries in the region:

a) Strategy documents and roadmaps should target companies of all sizes in the region, not only SMEs, as

well as universities and research institutes, i.e., there is a need for involvement of all actors of the value

chain.

b) Objectives set in strategy documents and roadmaps need to be continuously monitored and periodically

evaluated which implies appointing a responsible managing authority, monitoring committee, as well

as carrying out interviews with beneficiaries, reporting by beneficiaries etc.

c) Interest in the actions set in strategy documents and roadmaps from the company side is crucial for

their success. Higher interest is likely to be achieved if the documents are developed in close

cooperation with the key stakeholders (by means of, for example, public consultations, workshop

sessions, interviews etc.).

d) There is a constant need to adjust the strategic direction due to changes in the interests of the partners

regarding general economic situation, international investment decisions (e.g., focus on Asia), changes

in political focus etc., as well as difficulties in integrating interests of different stakeholder groups.

7) Dedicated cluster organisation:

a) Regional, national and EU authorities need to offer dedicated cluster policies that typically include

grants for cluster management activities and specific collaboration projects.

b) The level of bureaucracy related to application and implementation of cluster policies in the region

needs to be minimised (i.e., complicated management procedures; long approval procedures for

projects and excessive administrative workload need to be removed).

c) Since eco industry clusters represent highly complex systems with multiple stakeholders involved,

cluster policy measures should not be applied on a solely basis. It is rather a combination of various

complementary measures that need to be applied simultaneously (e.g., education & skills, logistics &

infrastructure etc.).

d) At the EU level, in close cooperation with national governments and regions, there is a need to support

the efforts of cluster organisations to improve their performance and reach excellence (e.g., European

Cluster Excellence Initiative and the organisation of further “train-the-trainers” activities for cluster

managers).


10

8) Well-functioning technology transfer offices within academic institutes facilitating the

adoption of eco-industries solutions:

a) Policy makers need to promote close cooperation of academia with industry, for example by having

students working in eco companies while engineers from companies engage in projects in universities

and research institutes.

b) The emergence of joint labs that are on industry premises but shared with universities and research

organisations, as well as improvements in the sharing of expensive equipment and infrastructure inside

and between clusters could be of high benefit.

The abovementioned policy actions are relevant also for the Growth stage.

Policy recommendations for Growth stage

Finally, besides the measures already mentioned above, the key measures to be taken by policy makers at the

Growth stage include:

1) Making strengthening of PPPs a core priority of research and innovation policies at this stage;

2) Advancing the rules applicable to the consortia agreements (including the IP rules);

3) Ensuring that PPPs are driven by the industry to enable bringing the results of research efforts to

industrialisation and to the market.

Concluding remarks

1) While favourable policy measures cannot solve all the challenges on their own, their presence can

significantly accelerate the development of eco industry clusters.

2) There is no generic ‘silver bullet’ across all eco industry clusters in terms of policy measures that have to be

applied. What works in one region does not necessarily have to work in another one, as myriads of

contextual factors (including historical, economic, demographic, cultural and other developments)

determine the success of the applied policy measures.

3) The critical task is to ensure that policy interventions first support an effective process of identifying the

action priorities and then provide the right tools to address whatever those priorities are.

4) Policy interventions supporting industry development should always be discussed with local companies,

and designed in a way that captures the interest of those companies. Consequently, industry’s involvement

in policy making is crucial from the very early stages, including the design stage of a policy intervention

(joint objective setting), but also its monitoring and evaluation.


11

1. Objectives, scope and

methodology

The current chapter summarises the objectives, scope and methodology of the case study analysis. The purpose

of the chapter is to familiarise the reader with the applied approach and the rationale behind it. In the end of

the chapter, we also elaborate on the structure of the current report.

1.1. Rationale and objectives of the case study analysis

The current report represents a detailed case study description for eco industries prepared by PwC for

Enterprise and Industry Directorate General of the European Commission within the “Extension of the

European Cluster Observatory: Promoting better policies to develop world-class clusters in Europe” (contract

nr 71/PP/ENT/CIP/11/N04C031).

Key objectives of the analysis

The analysis on industry specific framework conditions for the development of world-class clusters in eco

industries implies the development of a suitable, feasible and robust methodology for the identification and

analysis of cluster-specific framework conditions that are considered to be conductive to the development of

world-class clusters in emerging industries. The methodology then needs to be applied to a selection of

European regions in three emerging industries: creative, mobile services and eco industries. This exercise

among others is expected to lead to detailed case study descriptions demonstrating how emerging industries

come to and evolve in regions, and specifically how policy makers can influence the development of these

industries. The case study analysis therefore aims to maximise policy relevance and produce evidence-based

policy recommendations on how to support the development of specific emerging industries in European

regions.

Strategic importance of eco industries for Europe

The European eco industries have a great potential for contributing to the goals of Europe 2020 Strategy, the

EU’s growth strategy for the coming decade. Eco industries have a central role in enabling Europe to

become a smart and sustainable economy, which implies achieving high levels of employment and

productivity1.

Eco industries is a rapidly growing industrial sector producing goods and services to measure, prevent, limit,

minimise or correct environmental damage to water, air, soil and ecosystems, as well as addressing problems

related to waste and noise. By 2020, the market share of eco industries is projected to reach 2,200 billion EUR2.

Furthermore, eco industries should not be viewed in isolation. Strong interdependencies have emerged

between eco and traditional industries. These interdependencies will increase as traditional industries

adopt green business strategies. Eco industries have the potential to contribute to these strategies by offering

added value and reduced costs through the integration of measures such as, for example, water purification,

energy production and heat capture3.

1 http://ec.europa.eu/europe2020/index_en.htm 2 http://ec.europa.eu/dgs/jrc/downloads/jrc_2012_eco_industry_leaflet.pdf 3 http://ec.europa.eu/environment/ecoap/about-eco-innovation/policies-matters/eu/489_en.htm


12

It is therefore crucial to identify and analyse the framework conditions that are key to the competitiveness of

eco industries in European regions4.

The role of policy makers in supporting eco industries

Existing research suggests that policies and regulations are among the key drivers for

competitiveness of European eco industries5. The early adoption of environmental policies and

regulations has given Europe a global competitive advantage; however, at this moment, the eco industries are

under high pressure from global competitors. While the EU focuses on pollution reduction, waste management

and integrated chain management, Japan and the United States concentrate on hardware development and eco-

design, enabling them to have a leader position in hybrid cars, cradle-to-cradle approach and eco-design.

Furthermore, emerging nations such as China have been particularly successful in developing high-tech sub-

sectors through foreign direct investment. Therefore, adequate industrial policy initiatives for eco industries

require a careful analysis of the relevant framework conditions and the identification of potential obstacles that

have negative influence on the industry’s competitiveness6.

1.2. Definition and scope

In this sub-section, we address the definition and scope of eco industries.

Employed definition of eco industries

As a starting point, we use the OECD - Eurostat definition of eco industries and build on the distinction

between the core and connected eco industries introduced by the “Study on the Competitiveness of the EU eco-

industry” (2009) 7. The core eco industries can be defined as “those [identifiable] sectors within which the main

– or a substantial part of – activities are undertaken with the primary purpose of the production of goods and

services to measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well

as problems related to waste, noise and eco-systems.” 8

Core eco industries therefore comprise all enterprises, including service enterprises, having energy and

environment issues as the core source of income. Two broad categories of core eco industries can be identified9:

small and innovative companies acting in the field of, for example, renewable energy, waste recycling,

environmental auditing and consultancy;

capital intensive enterprises providing goods and services in specific areas, e.g., waste, wastewater,

transport.

Figure 1-1 provides an overview of activities falling under the core eco industries.

4 See also ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 5 http://ec.europa.eu/environment/ecoap/about-eco-innovation/policies-matters/eu/489_en.htm 6 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 7 Ibid. 8 The Environmental Goods and Services industry, Manual for Data Collection and Analysis, OECD and EUROSTAT, 1999 9 http://ec.europa.eu/enterprise/policies/sustainable-business/eco-industries/index_en.htm


13

FIGURE 1-1: The structure of the core eco industries

Source: Hohmeyer and Koschel (1995) (quoted in Rennings, K. (2000, p.323)10

Activities that do not fit this selection criterion will not be the main focus of the analysis. These activities fall

under the industries that are referred to as connected eco industries. Examples of connected eco industries

include automotive industry, ICT, paper industry, chemicals, eco construction. Many connected activities

depend on the core eco industries for the supply of specific technologies. Examples include the development of

environmentally friendly cars, mechanical engineering, ICT opportunities for eco industries and environmental

innovation, the relationship between eco industries and energy intensive industries; the effect of the

competitiveness of the energy markets for the renewable energy etc.11.

Building on the “Study on the Competitiveness of the EU eco-industry” (2009), within the core eco industries,

activities can be categorised alongside two dimensions: environmental classes and business activities. The

environmental classes include12:

(1) Pollution management:

Air pollution control;

Waste water treatment;

Solid waste treatment;

Soil & groundwater remediation;

Noise and vibration control;

10 Rennings, K. (2000), ‘Redefining Innovation-Eco-innovation Research and the Contribution from Ecological Economics, Ecological Economics, 32, pp. 319-322 11 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 12 Ibid.


14

(2) Resource management:

Recycled materials;

Renewable energy production;

Water supply;

Nature protection.

The relevant business activities include13:

Production of equipment and specific materials;

Provision of operational services (including monitoring);

Provision of management services;

Construction and installation of facilities;

Innovation and technological development;

Provision of environmental consulting services;

General public administration.

Eco industries are often associated with eco-innovation. An important conceptual distinction needs to be made

between eco-innovation as innovation in eco industries and eco-innovation in traditional industries such as

manufacturing or the textiles sector. Eco-innovations refer to solutions that are novel to the company and to the

market, whereas eco industries aim to produce ‘green products and technologies’ and generate ‘green energy’,

eco-innovation also encompasses goods or processes that are produced without an explicit aim to improve the

state of the environment. In many cases, the motivation to invest in eco-innovation is driven by the objective of

reducing costs for materials and/or energy, and thus increasing competitiveness and economic success14.

Scope of eco industries

Both core and connected eco industries have an immense spread over many sub-categories. These categories are listed in Table 1-1. The connected eco industries are highlighted in Italic.

TABLE 1-1: Scoping of eco industries (based on the outputs of WP3; additional codes not included in the Eco-

Innovation Report15 of the European Cluster Observatory are highlighted in Italic)

NACE code Level 4 NACE description

0620 Extraction of natural gas 0910 Support activities for petroleum and natural gas extraction 1621 Manufacture of veneer sheets and wood-based panels 1629 Manufacture of other products of wood; manufacture of articles of cork, straw and

plaiting materials 1722 Manufacture of household and sanitary goods and of toilet requisites 2014 Manufacture of other organic basic chemicals 2015 Manufacture of fertilisers and nitrogen compounds 2016 Manufacture of plastics in primary forms 2059 Manufacture of other chemical products n.e.c. 2229 Manufacture of other plastic products 2349 Manufacture of other ceramic products 2351 Manufacture of cement 2410 Manufacture of basic iron and steel and of ferro-alloys

13 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 14 “Eco-innovation and national cluster policies in Europe”, 1 July 2011, the study performed by Greenovate! Europe EEIG for the European Cluster Observatory managed by the Center for Strategy and Competitiveness at the Stockholm School of Economics 15 Barsoumian, S., Severin, A. & Van der Spek, T., 2011, Eco-innovation and national cluster policies in Europe: a qualitative review, The European Cluster Observatory, http://www.europe-innova.eu/c/document_library/ get_file?folderId=148901&name=DLFE-12846.pdf


15

NACE code Level 4 NACE description

2521 Manufacture of central heating radiators and boilers 2530 Manufacture of steam generators, except central heating hot water boilers 2599 Manufacture of other fabricated metal products n.e.c. 2651 Manufacture of instruments and appliances for measuring, testing and navigation 2811 Manufacture of engines and turbines, except aircraft, vehicle and cycle engines 2829 Manufacture of other general-purpose machinery n.e.c. 2899 Manufacture of other special-purpose machinery n.e.c. 3511 Production of electricity 3513 Distribution of electricity 3514 Trade of electricity 3521 Manufacture of gas 3522 Distribution of gaseous fuels through mains 3600 Water collection, treatment and supply 3700 Sewerage 3811 Collection of non-hazardous waste 3812 Collection of hazardous waste 3821 Treatment and disposal of non-hazardous waste 3822 Treatment and disposal of hazardous waste 3832 Recovery of sorted materials 3900 Remediation activities and other waste management services 4312 Site preparation 4621 Wholesale of grain, unmanufactured tobacco, seeds and animal feeds 4622 Wholesale of flowers and plants 4677 Wholesale of waste and scrap 4776 Retail sale of flowers, plants, seeds, fertilisers, pet animals and pet food in

specialised stores 4950 Transport via pipeline 5222 Service activities incidental to water transportation 5229 Other transportation support activities 7112 Engineering activities and related technical consultancy 7211 Research and experimental development on biotechnology 7219 Other research and experimental development on natural sciences and engineering 8122 Other building and industrial cleaning activities

The NACE codes listed in Table 1-1 stem from both the Eco-Innovation Report16 and the definition of eco

industries in the classification methodology of WP3 of this study. The additional codes identified for the eco

industries relate to: extraction, production and distribution of natural gas; the manufacturing of materials,

components and products which can have a positive impact on the natural environment (either directly or

through improvements in the manufacturing process itself); the production and distribution of electricity;

transportation; and technical consultancy and research and development.

1.3. Methodology

In the current sub-section, we highlight the key aspects of the methodology. For a detailed description of the

methodology, the reader is advised to consult the Methodology Report of the analysis on industry specific

framework condition for the development of world-class clusters in eco industries17.

Analytical framework

When studying emerging industries, their dynamic nature should not be ignored. The dynamic nature here

refers to a continuous evolution of an industry and its periodical transitions from one stage to another.

Therefore, in order to obtain a realistic picture of the framework conditions relevant for the emergence and

16 Barsoumian, S., Severin, A. & Van der Spek, T. (2011) “Eco-innovation and national cluster policies in Europe: a qualitative review”, European Cluster Observatory 17 http://www.clusterobservatory.eu/eco/uploaded/pdf/1368193004637.pdf


16

development of the industries in question, the notion of their dynamic nature should be put in the centre of the

analysis, since the role and importance of the relevant framework conditions is likely to change with every new

stage of the industry’s life cycle. To be effective, supporting measures thus need to be tailored to the various

stages of the life cycle. Furthermore, policies that aim to foster the development of clusters in emerging

industries should differ from policies that aim to strengthen clusters in mature industries.

Figure 1-2 presents the employed analytical framework for characterising different stages of the development of

emerging industries. The framework illustrates the growth/decline of an industry while it goes through the six

main stages of its life cycle ((1) precursor, (2) embryonic; (3) nurture; (4) growth; (5) mature; and (6)

decline/renewal), including three transition periods (Science -> Technology; Technology -> Application, and

Application -> Market). The framework was adapted from Phaal et al. (2011) because of its comprehensive

structure and high relevance to the scope of the current study. As can be seen from the Figure, sometimes an

emerging industry’s first stage builds on the last stage of a mature industry.

FIGURE 1-2: Life cycle of regional industrial emergence

Source: adapted from Phaal R., O’Sullivan E., Routley M., Ford S., Probert D. (2011) A framework for mapping industrial emergence, Technological Forecasting and Social Change, Volume 78, Issue 2, February pp. 217-230

Below we elaborate on each of the stages and transition periods.

Stage 1 Precursor implies activities that support the development of a certain scientific

phenomenon, business concept and/or underpinning service/technology platform in

the region, which stimulate industrial interest and investment in particular market-directed

feasibility studies.

Science - Technology Transition includes activities that support the demonstration of the

feasibility of a scientific phenomenon, business concept and/or underpinning

service/technology platform, helping the technology or service to be integrated into an

application-oriented system.

Stage 2 Embryonic refers to activities that support the improvement of the reliability and

performance of technology and services to a point where it can be demonstrated in a market

environment.


17

Technology – Application Transition implies activities that help to demonstrate the commercial

potential of technology and services in the region through revenue generation.

Stage 3 Nurture includes activities that help to improve the price and performance of

applications to a point where sustainable business potential can be demonstrated.

Application – Market Transition refers to activities that help to develop a market with mass

growth potential.

Stage 4 Growth implies activities that support marketing, commercial and business

development leading to sustainable industrial growth in the region.

Stage 5 Mature includes activities that help to refine established applications, production

processes and business models.

Stage 6 Renewal refers to activities that help to renew the industry trough the

development/adoption of new technologies that repeat the above phases.

For the analysis, the focus has been placed on the first stages and transition periods up to the Maturity stage

(Stage 5), since the study aims to analyse the framework conditions helping to foster the development of

exclusively emerging industries. Once the maturity stage has been reached, the industry per definition cannot

be considered ‘emerging’ anymore, and becomes a mature one, which, in turn, is beyond the scope of the

current study.

Key activities

Based on extensive desk-research and in-depth interviews with experts and industry representatives, the

approach implies developing a pool of relevant industry-specific framework conditions, and assigning them to

specific stages and transition periods of the regional industrial emergence.

The abovementioned activities were carried out in several steps:

(1) Step 1: developing a comprehensive overview of the relevant framework conditions

from available sources (desk-research): this sub-task included an in-depth analysis of

information on cluster framework conditions from existing sources such as EC publications (including

ECO reports), business publications, academic articles and other relevant sources. This sub-task led to

an extensive list of relevant industry-specific framework conditions.

(2) Step 2: compiling and structuring framework conditions: this sub-task implied the grouping

of identified framework conditions into categories based on commonality patterns among those

framework conditions thereby creating a nomological net of factors. The commonality patterns here

refer to specific stages and transition periods of the life cycle. Furthermore, potential causal

relationships between various groups of framework conditions were extracted from the desk-research

analysis.

(3) Step 3: collecting evidence from a selection of European regions: this sub-task included

additional desk-research on the regions in question complemented by an online questionnaire and in-

depth interview rounds with the regional representatives of the industry in question. A complete

overview of the content of the online questionnaire is provided in Annex A. For each region included

in the analysis, a sample of key stakeholders was drawn, with a helicopter view on the development

of the industry in the region. The helicopter view in this case means understanding the overall picture

of the industry’s development in the region rather than having a one-sided perspective. The included

groups of stakeholders were: (1) cluster managers; (2) policy makers (regional/national); and (3)

industry associations/chamber of commerce or similar. We aimed at developing a list of 5-10


18

stakeholders per hotspot and then to make a shortlist with 3 key stakeholders to be involved in an in-

depth analysis.

(4) Consolidating the collected evidence and developing detailed case study descriptions:

the final step implied putting all the collected evidence together into one integrated case study

description, and, based on the key findings and conclusions, extracting practical policy

recommendations.

Analysed framework conditions

The results of the first two steps of the analysis are presented in Table 1-2.

TABLE 1-2: Consolidated overview of the identified framework conditions for eco industries (the acronyms in

the table refer to the specific stages of the industry lifecycle: P = Precursor Stage; E = Embryonic Stage; N =

Nurture Stage; G = Growth Stage; M = Maturity Stage).

Framework conditions Relevant stages

1. Financial framework conditions P E N G M

1.1. Availability of environment-related R&D subsidies

1.2. Availability of ‘green’ lending through banks (lower interest rate

on environmentally-friendly investments)

1.3. Availability of seed and venture capital for eco-innovative

companies

2. Industrial framework conditions P E N G M

2.1 Critical mass of eco-companies (e.g., companies in air pollution

control, cleaner technologies and processes (CTP), energy management,

monitoring and instrumentation, landscape services, marine pollution control,

noise and vibration control, recovery and recycling, renewable energy,

transport pollution control, waste management, water and wastewater

treatment etc.)

2.2. Critical mass of supply chain actors: presence of eco-innovation

consultancy services, presence of research centres for eco-innovation, presence

of equipment suppliers, presence of utility companies

3. Market framework conditions P E N G M

3.1. Proximity of companies in traditional industries in transition

towards environmentally friendly solutions -> Critical mass of business

consumers of eco-industries

3.2. Critical mass of private consumers of eco industries

3.3. Green public procurement (i.e., public authorities use their

purchasing power to support goods and services with lower impact on the

environment)

4. Cultural framework conditions P E N G M

4.1. Social attitude supporting eco industries (e.g., attitude of citizens

towards environment, public awareness of environmental problems,

perception of green brands by consumers, perception of eco-innovation by

business)

5. Knowledge framework conditions P E N G M

5.1. Environmental focus of university research programmes

5.2. Presence of environmental education in the school curricula

and vocational training

6. Regulatory and policy framework conditions P E N G M

6.1. Availability of environment-related R&D and other tax

measures18

18 E.g., CO2 carbon tax; severance taxes on the extraction of mineral, energy, and forestry products; specific taxes on technologies and products which are associated with substantial negative externalities; waste disposal taxes and refundable fees; taxes on effluents, pollution and other hazardous wastes etc.

http://en.wikipedia.org/wiki/Pollution


19

Framework conditions Relevant stages

6.2. Existence of eco-regulation (i.e., rules and regulations prescribing

eco-efficient standards such as green procurement19)

6.3. Supporting IP conditions related to green technologies (e.g.,

accelerated examination process for patent applications relating to green

technologies; green patent database and other green patent tools)

6.4. Policy measures supporting the internationalisation of eco-

innovative clusters (e.g., regional support in representing the cluster

abroad; regional support for inward investment activities; removal of custom

duties on green products)

7. Support framework conditions P E N G M

7.1. Availability of eco-innovative infrastructure (e.g., new fuelling

systems, sophisticated traffic control, diffused energy distribution systems)

7.2. Strategy documents and roadmaps for the development of eco-

industries in the region

7.3. Dedicated cluster organisation (cluster manager or similar) to

coordinate the development of eco-industries in the region

7.4. Well-functioning technology transfer offices within academic

institutes facilitating the adoption of eco-industries solutions

1.4. Structure of the report

The structure of the report is organised following the dynamic model of industry’s development in the region.

Chapter 2 addresses the framework conditions relevant for the Precursor stage. Chapter 3 focuses on the

framework conditions important at the Embryonic stage. Chapter 4 elaborates on the framework conditions

relevant for the Nurture stage. Finally, Chapter 5 addresses the Growth stage. As shown in the Table 1-2, a

framework condition is often relevant for more than one stage of industry’s development. In Chapters 3-6, we

elaborate on framework conditions per stage, but to avoid repetition, if one framework condition is relevant for

more than one stage, we specify it in the text where this framework condition first appears. In case there are

considerable differences with other stages, we mention the same framework condition in the chapters dedicated

to those other stages. In Chapter 7, we integrate the analyses of specific stages, draw the key conclusions and

formulate policy recommendations. Annex A of the report contains the questions from the online questionnaire

relevant for eco industries. Annex B provides an overview of the analysed regions and key data on eco

industries-related clusters in those regions.

19 Green procurement requires a company or organisation to carry out an assessment of the environmental consequences of a product at all the various stages of its lifecycle. This means considering the costs of securing raw materials, and manufacturing, transporting, storing, handling, using and disposing of the product. For more information, see http://www.iisd.org/business/tools/bt_green_pro.aspx


20

2. Specifics of eco industries

In this chapter, we elaborate on the specifics of eco industries, and particularly the key actors of the value chain,

key challenges of the industry and the formation of clusters in eco industries.

2.1. Introduction

Eco industries mainly emerged on the basis of traditional, now mature, industries driven by

the demand for essential commodities such as water supply or services like waste collection20.

A trend can be observed of former traditional industries increasingly focusing on eco activities and gradually

transforming into eco industries. Examples of this transformation are found in the recycling industries where

former mining companies have refocused on recycling, and in the renewable energy sector, where traditional

energy suppliers are increasingly incorporating green energy supply into their business models21. The

emergence and development of eco industries is further accelerated by new environmental legislation setting

strict requirements and specific timeframes to comply with new regulatory standards and targets. It includes

compliance with the EU legislation and national legal requirements, for example, water quality targets and

production targets for energy from renewable sources22.

There is hardly any other industry where growth, competitiveness and performance are more strongly linked to

the (environmental) policy agendas and regulatory framework conditions. Regulations aiming to minimise the

negative environmental and social impacts create business opportunities that allow for development of a whole

new industry. Besides regulations, eco industries are driven by technology, and the abovementioned business

opportunities can only be exploited if technology permits doing so23.

The demand for eco industries-related products and services comes from both private and public (i.e., cities and

municipalities, local and regional agencies, and national and international authorities) sectors. In some sectors,

a trend can be observed of increasing service offerings. Such a development can be explained by high

competition within manufacturing markets and higher profitability of service-related activities. Furthermore,

there is an increasing need for integrated solutions, and customers (for example, industrial sites and water

treatment plants) increasingly prefer to outsource environmental management and monitoring24.

Due to increasing global awareness about environmental issues and the need for energy efficiency and

emissions control, public budgets available for eco industries worldwide keep growing, particularly in

developed countries. A significant part of these budgets targets technological developments (R&D). Public

budgets, in turn, trigger the investments from the private sector. These developments resulted in a new type of

investors, so called ‘green’ investors. Interestingly, in the United States, the investments into eco industries

until recently were mainly inspired by economic rather than environmental considerations. In Japan,

20 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 21 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 22 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 23 Ibid. 24 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416


21

commercial banks have started playing an important role in supporting eco industries. The EU eco industries

have a global competitive advantage thanks to the early adoption of environmental policies and regulations and

the fact that earlier than elsewhere Europe was confronted with the negative effects of environmental pollution.

Nevertheless, this competitive position is threatened by emerging countries like China25.

One of the key characteristics of eco industries is diversity. The types of activities falling under the

core eco industries vary from high-tech complex services in, for example, renewable energy and air pollution

control to mature and well established applications in recycling and waste treatment. Such diversity implies

considerable differences within the sub-sectors of eco industries with regard to innovation and technological

potential, and with regard to finding and validating new opportunities for creating value added. While SMEs

play a major role in regulation-driven markets such as air pollution control and eco-construction, older sub-

sectors such as waste treatment and collection are dominated by large multinational companies. In case of

recycling, large companies are at the top of the collection and processing chain, while SMEs are at the base and

have a role of collecting, sorting and processing at smaller scale and feeding their output into the production of

large companies26.

2.2. Key actors of the value chain

Existing studies clearly demonstrate the complexity of interactions within and across the value chain of eco

industries. This complexity can partially be explained by the fact that the boundaries between eco industries

and traditional industries are blurring, and a strong interdependence exists between eco industries and

traditional manufacturing activities. Since traditional industries are increasingly moving towards green

business strategies and adopting environmental technologies to improve resource efficiency and reduce

emissions, the abovementioned interdependence and convergence of eco industries and traditional industries is

expected to increase even more in the future27.

Companies in eco industries considerably vary in size and form, from international multi-

utilities groups, state industrial companies, public administration, R&D groups and SMEs, to

niche firms specialised in one market segment and private expert consultants. Furthermore,

significant differences in company size and form can be observed between sub-sectors and across countries28.

Companies operating within eco industries often emerge from industrial manufacturing companies. In mature

markets, such companies tend to be subsidiaries of larger corporations, particularly in the waste management,

water supply, waste water treatment and air pollution control sectors. In case of eco-construction and vibration

control, activities tend to originate with small firms, some of which are then integrated into larger firms. Many

of these companies have expanded their activities to operate at the European or global level and have become

worldwide industry leaders in, for example, waste management, water supply, waste water treatment and wind

turbine manufacturing. At the same time, newer, regulatory-driven markets, like environmental monitoring,

are dominated by more specialised SMEs29.

The general structure of the EU eco industries reflects the abovementioned general industry trends.

New “regulation driven” EU markets are usually formed by SMEs, while older and established eco industries

markets tend to consist mainly from larger and international firms. As the new markets grow, firms tend to

25 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 26 Ibid. 27 Ibid. 28 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 29 Ibid.


22

grow in size, and concentration trends can be observed over time. Additionally, the integration of activities of a

firm proves to depend on its size. For example, large waste management firms tend to integrate all activities

within the firm with hardly any external suppliers or sub-contractors involved. At the same time, environmental

monitoring activities are often (at least partially) outsourced to external parties30.

Table 2-1 provides a non-exhaustive overview of the eco industries supply chain for the main sub-sectors

identified by the “Study on the Competitiveness of the EU eco-industry” (2009)31.

TABLE 2-1: Overview of eco industries supply chain for the main sub-sectors32

Upstream: supplying sectors

Core eco industries Downstream: client sectors

Competitiveness aspects

Steel, Glass, Textiles &

clothing, ICT (hardware),

electronic equipment,

Automotive, Publishing and printing/paper, Petrochemicals/plastics, chemicals

Recovery and recycling Steel, Glass, Textiles, ICT

(hardware), electronic

equipment, Automotive,

Publishing and printing /

paper production, Petrochemicals/plastics,

packaging industry,

chemicals, special alloys

Consumer demand/ awareness

Global competition for materials and prices of commodities in world markets

Policy / regulations;

International and EU (e.g. REACH, WEEE, life cycle strategies, etc.)

Competition from developing countries in dismantling activities.

Innovation & Technology

Raw materials supply for

equipment

Air pollution control Steel and other energy intensive industries, automotive, aerospace, chemistry, cement, offices, hospitals, households

Innovation, ability to provide small scale solutions (nanotechnology), transfer of knowledge

Suppliers of wind, solar, heat, and other technologies & equipment.

Bio-fuels supplying sectors,

e.g. agriculture (sugar,

wheat, maize, rape-seed)

Mechanical engineering

services

Renewable energy production

Energy intensive industries,

Automotive, Transportation,

Aerospace, Households, public sector, eco-buildings

Policy / regulations (EU and international agreements)

Global competition for

resources

Access to finance Technology

Energy prices

Mechanical engineering

Machinery and equipment

Waste water treatment

and water supply

All industries households

public sector

Consumer demand basic commodities and services

Industry standards

New investment opportunities

Building materials (wood,

cement, glass)

Plastics (bioplastics)

Chemicals (insulation

Eco-construction Real estate developers, institutional investors, commissioners of public

buildings construction

Access to finance Green procurement

policies

Divergence of regulation and standards (internal

30 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 31 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 32 Ibid.


23

Upstream: supplying sectors

Core eco industries Downstream: client sectors

Competitiveness aspects

materials)

Electronics sector

Energy saving lighting

producers

Climate control equipment

(heat and energy saving)

Renewable energy

sector

market)

Households, public sector,

services sector (e.g. etailing) and industry

Waste management Industry, renewable energy

sector and energy suppliers.

Industry standards, regulations, renewable energy (bio-mass)

2.3. Key challenges of eco industries

The main challenges that the EU eco industries have to face include the following33:

The absence of a strong organising entity (lead firm) in most eco industries supply

chains: such organising entities or lead firms can, for example, be found in the supply chains of

traditional industries such as automotive industry, where original equipment manufacturers are strong

organisers and integrators of supply chains, retaining control over the processes within it. Given the

absence of strong organisers, public policy may have a role in mobilising and further integrating the

supply chain of eco industries.

Various barriers in the process of technology transfer: examples of such barriers include

limited adoption and application capacity of environmental technologies in specific supply chains (i.e.,

weak innovation systems, where the technologies are available, but not reaching key clients and end-

users) and the need for further development of capital markets for eco industries in traditional sectors.

Furthermore, technology transfer needs to take place between firms but also between countries. In this

respect, the heterogeneous implementation of the various regulations at a country level is a point of

attention.

Lack of a uniform implementation and enforcement of relevant directives, standards

and certification procedures at the level of the Member States: it creates an uncertain and

non-transparent business environment, which in turn increases the costs of doing business across

Europe. These factors are unfavourable for investments and growth of the industry. Therefore, for the

EU eco industries to be able to successfully develop in the future, a long-term stable policy framework

with greater harmonisation or coordination across the Member States, together with simplification of

national regulations is needed. Furthermore, the development of a more coherent intellectual property

rights (IPR) policy and legal framework is crucial, not just within the EU, but also at the international

level.

Absence of an open global market for the attraction of non-EU talent: the technological

evolution and progress in the field of eco innovation have altered the required labour skills. There is an

increased need for new skills and a higher skill level. This factor is putting pressure on the competitive

33 Based on the results of ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416


24

position of the European companies. Therefore, educating and training the current labour force and

revising the inflexible labour market regulations are required for the EU industries to stay competitive.

Limited access to finance in some of the capital-intensive sub-sectors of eco-industries:

Several aspects can be highlighted within this point.

o The extent to which access to finance represents a challenge differs per sub-sector. In the

recycling industry, for example, access to finance for innovation is not what constitutes a

barrier for the sector’s development. The main challenge in this sub-sector is related to the

absence of collaboration to get the necessary funds. In the environmental technologies

industry, however, investments are often considered to be riskier than investments in other

technologies. These perceived risks negatively influence capital injections.

o Besides the sub-sector, also the size of the firm matters as regards access to finance. Venture

capitalists active in the market mainly focus on larger companies and projects. SMEs, in turn,

have to rely on traditional local banks for funding. At the same time, banks are rather risk-

averse and are not specialised enough in the technological specifications of eco industries

projects to be able to fully evaluate the risks involved.

o Additionally, long pay-back periods, a relatively high level of uncertainty, and the financial

crisis all have a negative impact on the level of availability of funding.

Increasing global competition from emerging economies: global competition within eco

industries becomes increasingly stronger. Europe’s position is threatened by the development of

emerging economies such as China and India:

o The EU has managed to retain its role as world leader in specific sectors such as chemicals,

pharmaceuticals, food processing and petrochemical industries through a strong focus on

higher value added and technologically advanced products and processes. However, the

dominance of its global position in most of these sectors has declined.

o Demand for environmental goods and services increasingly depends on the question whether

eco industries can add value to products, processes or brands. Where they are seen exclusively

as required by regulations and as adding costs, demand for such goods and services is likely to

be strongly based on cost considerations and lower cost competitors with similar technologies

(for example, from China) are likely to be chosen over European producers.

Technological limitations: the current state of technology development does not always allow eco

industries to satisfy the needs of their customers in traditional industries. For example, energy

intensive sectors such as the steel and non-ferrous metals heavily depend on stable energy supply and

prices. However, at this moment, energy supply from renewables is not able to provide the kind of

steady supply needed for this traditional industry. Similarly the chemicals sector needs high quality and

pure inputs for certain products and processes. Currently, the eco industries sector is not yet able to

ensure this kind of quality to allow for a substantial increase in recycled materials in chemical products.

Information asymmetry: potential clients are often not aware about the eco industries-related

technologies that exist and applications that may increase their competitiveness. It can partially be

explained by a high diversity of applications of eco industries and a high level of technical complexity of

these applications. For potential customers, the cost of searching for potential solutions might

overweight the long-term benefits of such solutions due to their relatively uncertain benefits. It is

particularly the case for SMEs.


25

2.4. Clusters in eco industries

A high diversity of eco industries makes it rather difficult to identify general trends in terms of geographical

concentration and integration of activities in clusters. Nevertheless, a trend can be observed of the integration

of specialised eco industries-related companies into larger industrial groups. This trend involves both large

companies and SMEs. The main motives of companies to engage in such integration include their desire to

expand their geographical coverage, extend the range of their activities, penetrate broader markets and reach

certain critical size in order to be able to bear higher R&D costs34.

Existing studies suggest that the geographic location of eco industries and their range of operations are linked35.

In the EU, eco industries are therefore often geographically concentrated in certain areas, even in sub-sectors

dominated by large international firms such as waste management. However, in certain sub-sectors, less

geographical concentration can be observed. These are the sub-sectors that are not constrained by the need for

local resources and which operate on a global scale, for example, air pollution control, consolidated water

supply and waste water treatment36.

As mentioned before, strategic partnerships are evolving between traditional and eco industries, aimed

specifically at tackling environmental issues. For example, waste management and recycling companies partner

with automotive and airplane manufacturers to develop closed chain management. Since core eco industry

companies are often more aware about evolving policies and legislation, for instance, in the field of recycling

they may advise traditional industries on strategies to prepare for upcoming regulations. Examples of such

partnerships can be found in materials recycling, where eco industries companies provide advisory services to

clients in, for example, electronics or ICT sectors37.

The abovementioned developments lead to the emergence and growth of clusters in eco industries. Clusters are

generally seen as fostering technology and knowledge transfer among industry players and their suppliers and

clients, thus contributing to the competitiveness of the sector. Geographically concentrated clusters may offer

advantages in terms of more efficient use of resources and reduction in emissions due to reduced transportation

needs. Clusters often emerge as a result of private initiatives. However, there are also various examples of

clusters driven by policy initiatives or public-private partnerships38. In any case, public policy may provide an

enabling environment, which can further strengthen the cluster and the competitiveness of companies within

it39.

34 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 35 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 36 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 37 Ibid. 38 Public-private partnerships can have distinct structures (contracts or partnerships) and modes of operation (e.g. “coproduction” and consensus building between public and private actors, risk-sharing arrangements, decision making, criteria used to select projects). They can add value in different ways: synergies, cost reductions, transaction costs, mobilisation of private resources etc. They need to be coordinated with other policy instruments (e.g., public R&D, financing, creation of markets for eco-innovation). Source: OECD (2011) “Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation”, OECD Publishing, available at http://dx.doi.org/10.1787/9789264096684-en 39 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416


26

3. Precursor stage: first interest

in the emerging industry

In this chapter, we elaborate on the framework conditions relevant to the development of eco industries in the

region at the Precursor stage, the first stage of the industry’s lifecycle. We first address each specific framework

condition in detail and then discuss the implications for policy makers at this stage of industry’s development.

3.1. Introduction

The Precursor stage corresponds to the activities that demonstrate the first interest of the region in a

particular emerging industry. Specifically, this stage implies activities that support the initial

development of a phenomenon of eco industries in the region, i.e., a business concept and/or underpinning

service/technology platform, which stimulate industrial interest and investment in particular market-directed

feasibility studies.

The following framework conditions have been identified as particularly relevant for this stage of industry’s

development:

Proximity of companies in traditional industries in transition towards environmentally friendly

solutions (market; relevant for all stages);

Critical mass of private consumers of eco industries (market; relevant for all stages);

Social attitude supporting eco industries (cultural; relevant for all stages).

3.2. Proximity of companies in traditional industries in transition

towards environmentally friendly solutions

This framework condition implies the proximity to companies in traditional industries which are in transition

towards environmentally friendly solutions, driven by trends such as new environmental regulation, cost

reduction and/or consumer awareness. This group of companies constitutes the business customer base of eco

industries. This framework condition is particularly relevant for a part of eco industries formed by small and

innovative companies acting in the field of, for example, renewable energy, waste recycling, environmental

auditing and consultancy.

Essence of framework condition

Examples of the relevant traditional industries include construction, textile, automotive, chemicals. Traditional

industries are now looking more and more into sustainable solutions for their businesses, as they move more

towards green business strategies or greener manufacturing processes. Provided eco industry companies are

located close to traditional industries, opportunities arise such as knowledge sharing, development of

integrated platform solutions etc., resulting in the increased ability of eco industry companies to better satisfy

the needs of their business customers. The interactions across the value chains between eco and traditional

industries become closer and more intensive, with integrated approaches being put forth the most.

Role of framework condition

For eco industries, being in close proximity to the relevant traditional industries has a number of benefits. First,

it allows for achieving stronger informal ties and higher levels of trust between eco industry companies and


27

their business customers. Second, it significantly reduces logistics costs. Third, by initially supplying only

within the close proximity of the company facilities, any problem can be followed up quicker and ultimately

solved to ensure a full functioning product in order to proceed to a large-scale roll out. Finally, link to

traditional industries allows eco industry companies to advance their products and ensure their differentiation.

The latter is possible by developing dedicated functions and technologies focused on specific application areas.

Therefore, already at the Precursor stage, eco industry companies strongly benefit from access to, and proximity

of traditional industries. At later stages of industry’s development, it is essential for eco industry companies to

engage in clusters or centres of excellence that include suppliers and end-users, and focus on new applications

and solutions. Forming such centres of excellence enables IP generation and capturing new market

opportunities.

Influence of policy makers

Traditional industries are typically developed over a large time span. This development often has deep historical

roots, and it is quite hard for policy makers to influence this factor. However, by means of adopting eco-

oriented regulations and standards, policy makers can stimulate the transition of traditional industries towards

environmentally friendly solutions, thus creating a demand for the products and services of eco industries.

Additionally, policy makers can influence the engagement of traditional industries with eco industries by

implementing policies that incentivise joint networks and multi-stakeholder research platforms. Such


applied.

Capital region of Denmark: Copenhagen District Energy Partnership40

This example shows how policy makers can stimulate the transition of traditional industries towards environmentally

friendly solutions.

Copenhagen is an example of a highly efficient energy system which considerably reduces CO2 emissions, and at the

same time reduces costs for both society and the individual consumer. By combining production of heat and power and

using all available types of fuels, including waste and biomass, Copenhagen has a world-class energy efficient heating

system. Copenhagen has recently launched an ambitious and comprehensive plan aiming at 100% CO2 neutrality.

Since the 1980’s, Copenhagen has used heat planning to achieve long term energy savings. Before the implementation of

heat planning, Copenhagen citizens were supplied with heat from electricity, individual natural gas and oil boilers and

district heating based on coal.

The Danish legal framework governing power and heat production, environmental standards and energy planning

requirements are in the historical context considered dominant drivers for this transition. Today, subsidies and energy

taxes are the main drivers of the ongoing process of getting more biomass to the (Combined Heat and Power) CHP

plants of greater Copenhagen. Subsidies are given to electricity production based on biomass, and heat production based

on fossil fuels is taxed heavily. There is no tax on heat produced from biomass. Like the exchanges of CO2-quotas on the

European emission market, these subsidies and taxes make CHP production based on biomass more economically

feasible than CHP production based on fossil fuels41.

40 http://www.districtenergypartnership.com/da-DK/CASES/CASES-COPENHAGEN.aspx 41 http://www.copenhagenenergysummit.org/applications/Copenhagen,%20Denmark-District%20Energy%20Climate%20Award.pdf


28

3.3. Critical mass of private consumers of eco industries

This framework condition implies the presence of a sufficient mass of private consumers of eco industries in the

region.


Critical mass of private consumers, and more specifically local demand conditions are crucial for the

emergence of eco industries. Demand conditions refer to the type of users and size of the market. Firms that

face a sophisticated domestic market are likely to sell superior products because the market demands higher

quality, and a close proximity to such consumers enables the firm to better understand the needs and desires of

the customers42.

Private consumers are highly sensitive to factors such as price, quality and reliability. There are, however,

numerous other factors that play an important role in the purchasing behaviour of consumers, all embodying

the cultural capital index of a particular region. Examples of relevant eco industry products for private

consumers include solar panels and water-saving systems.


Not all eco products require the presence of a critical mass of private consumers in the region, as some may be

easier exportable than the others. A straw enabling the filtration of contaminated water is an example when

having a critical mass of consumers in a region is less important. A European device that enables the filtration

of any water source and provides the user with clean filtered water, essentially removing the bacteria and other

harmful substances43 is an export product for the third world countries. Such a product does not have a large

scope within Europe, since the infrastructure and water purifying installations provide households with

relatively clean drinking water from the tap. In the third world countries however, similar systems are often

non-existent, especially in rural areas. At the same time, in the area of eco-construction, acquiring international

consumers, despite their interest could prove to be hard, since transportation costs can make purchasing

unattractive. For that sub-sector, the importance of having a critical mass of consumers in their own region is

highly important.


Policy makers can stimulate the creation of a critical mass of private consumers by stimulating the demand for

eco products. Examples of measures stimulating the demand include social marketing and advertising

campaigns promoting eco industries and green products in the region, as well as incentivising the purchase of

eco products (e.g., financial benefits for the users of solar panels).

Capital region of Denmark: Europe’s leader in the adoption of electric cars

The biggest Danish power company has partnered with a California start-up company, Better Place, to build a

nationwide grid to support electric cars, composed of thousands of charging poles in towns and cities and service

stations along highways where depleted batteries can be swapped for fresh ones on long trips. The project is strongly

supported by the Danish government. The support includes tax breaks for electric car buyers and free parking

for the drivers of electric cars in downtown Copenhagen44.

42 Kemp R. & Horbach J. (2008) “Measurement of competitiveness of eco-innovation”, Deliverable of the MEI project 43 http://www.vestergaard-frandsen.com/lifestraw 44 http://www.time.com/time/world/article/0,8599,1960423,00.html


29

3.4. Social attitude supporting eco industries

This framework condition implies the presence of positive social attitude supporting eco industries in the region.


Social attitude towards eco industries in the region refers to the general level of consciousness of people in the

region about the environment and the role they can play in solving the global environmental challenges. The

more environmentally-friendly is the orientation of people in the region, the higher the demand for eco industry

products and services. The so called “going green” movement is continuing to build momentum, especially in

developed countries45. Diverse stakeholder groups become more and more eco-friendly, which stimulates the

emergence and development of eco industries in various regions of the world.


Positive social attitude towards eco industries creates the demand for eco products in the region.

Efforts to develop awareness of private and business consumers on the availability of technologies and services

offered by eco industries, as well as on their costs and potential benefits, are required to stimulate the demand

and industrial emergence. Several existing instruments such as eco-labels have proven effective to raise

awareness and build consumer trust in the quality of the goods and services delivered.

Specifically, positive social attitude towards eco industries leads to the following benefits for the industry:

Continuously increasing local demand for green (or greener) products and services;

Extension and/or diversification of product choices (e.g., dedicated products with eco-labels);

Shift in spending of consumers towards greener brands within the same product category;

Readiness of consumers to pay a premium price for green products.


Social attitudes often have deep historical roots and are relatively difficult to change. Nevertheless, policy

makers can play an important role in stimulating the region to engage in a transition towards a greener way of

life. Examples of the relevant stimulating measures include social marketing and advertising campaigns

promoting eco industries and green products in the region, as well as incentivising the purchase of eco

products.

Capital region of Denmark: promoting climate-friendly policies A clean environment is reported to be particularly important to the Danes. Denmark is currently ranked as the most

climate-friendly country the world, with the most efficient policies to reduce greenhouse gas emissions and prevent

climate-change. This is the verdict of the United Nations’ Climate Change Performance Index 2013. Thirty years of

focused energy policy has placed Denmark at the forefront in the development and use of renewable energy, such as

biofuels, wind, wave and solar power46.

45 Sarkar A.N. (2013) “Promoting Eco-innovations to Leverage Sustainable Development of Eco-industry and Green Growth”, European Journal of Sustainable Development, 2, 1, pp. 171-224 46 http://studyindenmark.dk/news/denmark-the-most-climate-friendly-country


30

4. Embryonic stage: entering a

market environment


region at the Embryonic stage, the second stage of the industry’s lifecycle. Similar to the previous chapter, we

first address each specific framework condition in detail and then discuss the implications for policy makers at

this stage of industry’s development.

4.1. Introduction

The Embryonic stage corresponds to the activities that support the improvement of the reliability and

performance of technology and services to a point where it can be demonstrated in a market

environment. Specifically, this stage implies activities that help to demonstrate the commercial potential of

technology and services in the region through revenue generation.


development:

Availability of environment-related R&D subsidies (financial; relevant also for Nurture and Growth

stages);

Availability of ‘green’ lending through banks (financial; relevant also for Nurture and Growth stages);

Availability of seed and venture capital for eco-innovative companies (financial; relevant also for

Nurture and Growth stages);

Green public procurement (market; relevant also for Nurture and Growth stages);

Environmental focus of university research programmes (knowledge; relevant also for Nurture and

Growth stages);

Availability of environment-related R&D and other tax measures (regulatory and policy; relevant also

for Nurture and Growth stages);

Existence of eco-regulation (regulatory and policy; relevant also for Nurture and Growth stages);

Availability of eco-innovative infrastructure (support; relevant also for Nurture and Growth stages).

4.2. Availability of environment-related R&D subsidies

Government funding is often an important prerequisite for industry to be able to enter the market. Eco-

products often are more expensive than traditional solutions. The specific needs of some projects, for example,

in the renewable energy sector, sometimes imply long pay-back periods and high risk or uncertainties regarding

market potential which make it difficult to obtain adequate private financing at limited costs.


A substantial amount of new eco industries-related knowledge is produced in innovation projects conducted by

firms in the private sector. However, due to high costs and high uncertainty about the success of such

innovation projects, firms may engage in less R&D activities than is socially desirable. In order to foster


31

innovative activities and economic growth, governments often use R&D support programs aimed at increasing

R&D effort in the private sector47.


Direct government subsidies can stimulate firms to perform R&D that without the support would be privately

unprofitable. However, the effectiveness of the support program heavily depends on the quality of the projects

that are covered by it. Program managers may be encouraged to support projects with the best technical merits

and the highest potential for commercial success, i.e., projects that have high private returns and would have

been undertaken even in the absence of the government support48.

The availability of environment-related R&D subsidies is reported to be most effective for SME’s49, who

otherwise would not be able to uptake R&D activities. The latter can be explained by the fact that, as mentioned

above, many eco technologies require extensive R&D which, in turn, implies high costs. The availability of R&D

subsidies can motivate small businesses to continue with the development of the technology.


R&D subsidies, either through direct government funding of R&D or through tax credits for private R&D

activity, can help raise private R&D levels to a socially desirable level. Therefore R&D subsidies are reported to

be a useful measure to complement other eco-related policies; however, they do not have the ability to stimulate

the development of the industry on their own. While R&D subsidies address market failures in the invention of

new technologies, they do not provide incentives to adopt new technologies50.

Furthermore, when setting the level of R&D subsidies, policy makers need to consider the opportunity cost of

additional R&D. Since R&D requires highly trained personnel, at least some new eco-related R&D efforts will

come at the expense of other R&D. Just as spillovers make the social returns to eco R&D high, they also make

the social returns to other types of R&D high. Thus, some of the large social benefits of additional eco R&D are

offset by large opportunity costs from giving up other types of R&D spending. Ignoring the costs of reducing

these R&D efforts would result in overly generous subsidies for eco R&D, and could have negative impacts on

the economy as a whole51.

Lombardia (Italy): regional calls through Finlombarda52

Finlombarda S.p.A. is the holding company of Lombardy Region. It was established in 1971 upon initiative of the major

banks operating in Lombardy (Cariplo Mediocredito Lombardo, Banca Popolare di Milano, Banca Commerciale

Italiana) and Lombardy Region, which then acquires 30% of the shares. It is a public-private venture.

Finlombarda’s aim is to support regional economic and social development initiatives through financial and managerial

tools. Finlombarda operates under regional government's mandate, having as a mission to promote the development of

the regional economy and provide consultancy services. Finlombarda provides economic and financial assistance to

build financial models for the financing of specific renewable energy plants.

Finlombarda’s specific activities in the renewable energies sector are:

Investigation of suitable instruments;

47 Einiö E. (2013) “R&D Subsidies and Company Performance: Evidence from Geographic Variation in Government Funding Based on the ERDF Population-Density Rule”, Government Institute for Economic Research (VATT), and Spatial Economics Research Centre (SERC), London School of Economics (LSE). Available at: http://personal.lse.ac.uk/einio/RetD_Subsidies.pdf 48 Idem. 49 Bérubé C., & Mohnen, P. (2007) “Are Firms that Received R&D Subsidies more Innovative?”, CIRANO - Scientific Publication No. 2007s-13; available at SSRN: http://ssrn.com/abstract=1123632 50 Based on Popp D. (2004) “R&D subsidies and climate policy: Is there a “free lunch”?”, Working Paper 10880, http://www.nber.org/papers/w10880 51 Idem. 52 http://www.ensure-project.eu/partners/finlombarda/


32

Direct investments in the equity of firms operating in clean technologies sector;

Participation in co-financing with financial institutions;

Subscription of shares of investment funds dedicated to clean technologies;

Credit facilities for the purchase of equipment with high efficiency.

Capital region of Denmark: The Energy Technology Development and Demonstration Program (EUDP)53

The main objective of the EUDP is to ensure the development and demonstration of new energy technologies, which can

reduce dependency on fossil energy, and which can contribute to minimising the CO2 burden and the environmental

impact of energy consumption. Applications can be submitted for funding for projects regarding all types of energy

technologies which meet the above objective.

The EUDP especially encourages submission of innovative projects within energy efficiency (construction, processes,

appliances etc.) with significant commercial potential. The projects must focus on developments in relation to existing

technologies and solutions, the possibility of solutions that can be replicated and scaled up/down, as well as financial

competitiveness.

Furthermore, this call for applications provides the option of applying for funding for preliminary projects to participate

in EU development and demonstration projects launched through realisation of “New Entrants Reserve” allowances.

EUDP funding is awarded with an expectation that the projects funded will lead to market implementation of the new

products and technologies developed by the project. An important objective is to ensure involvement of private investors

in projects. It is important to concentrate on functionally delineated projects, with innovative and patentable

technological content that is deemed technically practicable and which meets a market demand and has a well-defined

customer target.

4.3. Availability of ‘green’ lending through banks

While governmental funding is an important prerequisite for the emergence of eco-industries, private funding

is increasingly important in the development of the industries in later phases of the industry’s lifecycle. Private

funding in this context includes an array of solutions such as green lending by banks, availability of venture

capital and private equity.


“Green” lending refers to tailored loans by banks intended for environment-related projects. Generally, these

loans are different from regular loans in terms of interest rates, flexibility, duration and governmental

guarantees54. Green lending is more attractive for eco companies than traditional lending due to its higher

flexibility, lowered risks and lower financial burdens. The availability of green loans can enable businesses to

fund future projects or to further advance existing products.


Green lending is particularly important for capital-intensive projects, such as, for example, offshore wind power

(OWP) generators. Such projects need a long term backing in terms of finance and support. However, recent

economic developments, namely the financial crisis, drastically affected the availability of funding for eco

industries. Taking the example of OWP generators, financing from commercial banks became non-existent and

the only financing deal to be made by 2010 was with the support of the European Investment Bank. Prior to the

53 http://www.ens.dk/en-US/policy/Energy_technology/Danish_Funding_Programmes/Documents/Energy%20Technology%20Development%20and%20Demonstration%20Programme.pdf 54 Ghosh, A., & Himani, G. (2012). Governing Clean Energy Subsidies : What , Why , and How Legal?, (August).


33

2008 crisis, there were 45 public equity funds for green investments. In 2008 and 2010 however, there were 20

and 3, respectively. The repercussions of the onset of the crisis were particularly noticed by SMEs55.


Policy makers have some options to induce a change within eco industries regarding their emergence and access

to “green” financing options. Two primary options that policy makers can deploy are56:

Direct access to capital through Public Investment Banks;

Preferential credit.

Public Investment Banks represent financial companies owned by the state aiming to offer SMEs and mid-cap

enterprises better access to finance. Such banks typically provide investments through venture capital, loan and

debt instruments. They often aim to constitute a “one-stop-shop” for SMEs and mid-cap enterprises in their

search of funding. The Public Investment Banks are expected to:

Give to SMEs better access to credit;

Support entrepreneurs at all stages of their project;

Help enterprises to expand their market and their export activities.

Preferential credit, in turn, refers to investments coming from commercial or development banks. Investing in

renewable energies entails slightly higher risks relative to products of traditional industries. To encourage the

banks to invest in eco industries, various options could be offered. Low-cost credit lines and partial risk

guarantees can incentivise banks to invest in higher risk-bearing projects57.

4.4. Availability of seed and venture capital for eco-innovative

companies

As FUNDETEC research highlights58: “The financing difficulties are perceived to be much more salient

regarding environmental technologies, which are often considered riskier than other technology investments,

and as they are more subject to regulatory risk, and experience greater competitive disadvantages within

current market structures”. The research found that problems of access to finance mainly relate to two aspects:

an expectation gap between technology developers, private investors and policy makers; and an existing gap

between early-stage innovation and commercialisation leading to the so-called “valley of death”59

.


In the high tech industry such as eco industries, capital in general and seed and venture capital in particular are

often regarded as essential. Young firms in high tech areas only expand some time after they have been set up,

but when they do so, these firms belong to the principal generators of economic growth and employment. These

innovative firms should therefore be assisted in their initial phase of development with capital in order to reach

the high development level successfully. According to empirical studies, firms that can profit from venture

55 Jacobsson, R., & Jacobsson, S. (2012). Environmental Innovation and Societal Transitions The emerging funding gap for the European Energy Sector — Will the financial sector deliver ? Environmental Innovation and Societal Transitions, 5, 49–59. 56 Idem. 57 Ghosh, A., & Himani, G. (2012). Governing Clean Energy Subsidies: What, Why, and How Legal? ICTSD, available at: http://ictsd.org/downloads/2012/09/governing-clean-energy-subsidies-what-why-and-how-legal.pdf 58 FUNDETEC (February 2008), “Funding environmental technologies – final report” 59 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416


34

capital achieve much higher innovation performance. The increased competition which accompanies the

increased importance of innovative firms is highly beneficial and can also help the old enterprises to increase

their level of innovating and thus contribute to the growth more intensely. Another empirical study for Europe

indicates that firms assisted with venture capital achieve substantially higher growth rates than old enterprises

that have not experienced such assistance60.


An extensive body of academic research suggests that access to finance plays a crucial role in boosting

innovation. This role has two dimensions: accelerating growth and ensuring long-run success. First, investors

provide the capital to speed the development of companies. Second, the evidence suggests that the early

participation of venture firms helps innovators sustain their success long after their company goes public and

the venture capitalists move on61

.

In recent years, companies in several sub-sectors of eco industries (e.g., waste management and established

renewable energy companies) have been able to attract venture capital and obtain stock listings. In general, the

interest in the emerging eco industries on the part of venture capitalists is reported to be increasing, and they

actively seek opportunities in the sector, although the availability of venture capital for green investments is

reported to be more prominent in the US and even China than in the EU62

.

Although there are venture capitalists active on the European eco industries market, they mainly focus on the

larger companies and projects. Most SMEs have to rely on traditional local banks for their funding. However,

traditional banks are not specialised enough in the technological specifications of innovation projects in eco

industries to be able to adequately evaluate the risks involved. Moreover, as mentioned above, traditional banks

mostly have a rather risk averse profile, which makes it difficult for environmental technology suppliers to get

the funds needed. It is especially the case for larger projects involving higher investments, often already in the

demonstration phase63

.


The revenues in the eco industries sector are earned much later after the initial investment has been done.

Therefore, there is a need for substantial and long-term financing. There is however insufficient level of venture

capital available in the European clusters in general. This leads to deprivation of the innovative activities and

slower growth of SMEs, and the whole financing burden is often placed on the public funding64. Therefore, in

Europe, the public authorities have a role to play in ensuring growth in this type of private financing,

particularly in the high-tech sectors. One of the biggest challenges in the clusters is suggested to be the need to

increase the level of private venture capital.

Access to European funding is especially hampered because of the complicated administrative requirements for

companies in the clusters. Especially smaller companies have difficulties to cope with these requirements.

Furthermore, it is often difficult to strike a balance between what the founders/owners demand for their

60 “The market for venture capital in Germany”, Deutsche Bundesbank, Monthly Report October 2000 available at http://www.bundesbank.de/download/volkswirtschaft/mba/2000/200010mba_art01_venturecapital.pdf 61 http://www.freakonomics.com/2009/12/28/can-public-funded-entrepreneurship-work-a-qa-with-the-author-of-boulevard-of-broken-dreams/ 62 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 63 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 64 OECD (2009) “Clusters, Innovation and Entrepreneurship”, ed. Potter J. and Miranda G., Chapter 2 “The micro-nanotechnology cluster of Grenoble, France”, Centre of Entrepreneurship, SMEs and Local Development


35

shares and what the venture capitalists are willing to pay. This often creates delay in the process of financing.

Finally, some companies complain that the subsidy landscape in Europe is too fragmented to be of any support.

By providing targeted and increased support to the industry from EU Community Budget, the European

Investment Fund and European Investment Bank, this challenge could be countered. This support from EU

government bodies can take the form of providing a package of financial instruments to cover different

company sizes and structures (e.g., loans, guarantees, grants and tax incentives) aimed at increasing the

attractiveness for the private sector to invest in European eco industry product development activities.

Capital region of Denmark: Vækstfonden

Vækstfonden is a state investment fund, which aims at creating new growth companies by providing venture capital and

competence. Since 1992 Vækstfonden has, in cooperation with private investors, co-financed growth in 4,100 Danish

companies with a total commitment of approx. 11.4 billion DKK. Vækstfonden invests equity or provides loans and

guarantees in collaboration with private partners and Danish financial institutions. The companies which Vækstfonden

has co-financed since 2001 represent a total turnover of approx. 27 billion DKK and employ approx. 22,000 people all

over the country65.

4.5. Green public procurement

Green public procurement is another major driver of eco industries. By means of green public procurement,

public authorities can execute a significant element of demand for eco products and services through their

purchasing practices66.


Green public procurement can be formally defined as “a process whereby public authorities seek to procure

goods, services and works with a reduced environmental impact throughout their life cycle when compared to

goods, services and works with the same primary function that would otherwise be procured”67. The core

objective of green public procurement is to encourage public authorities to purchase goods, services, and works

with a lower impact on environment. The integration of ‘green’ policy into public procurement procedure

contributes to sustainable consumption and fosters economic growth. The European Commission has actively

promoted the idea of ‘green procurement’; however, it still remains a voluntary instrument for Member States.

The extent of ‘green’ purchasing practice differs significantly within European Union68.


Green public procurement is reported to be a powerful instrument for stimulating innovation and encouraging

companies to develop new products with enhanced environmental performance69. It stimulates a more

sustainable use of natural resources and raw materials, and thereby creates opportunities for emerging eco

industries70. It can shape production and consumption trends, and a significant demand from public authorities

for “greener” goods creates or enlarges markets for environmentally friendly products and services. By doing so,

green public procurement also provides incentives for companies to develop environmental technologies71.

65 http://www.vf.dk/?sc_lang=en 66 Reid, A. & Miedzinski, M. (2008): SYSTEMATIC Innovation Panel on eco-innovation. Final report for sectoral innovation watch; http://www.europe-innova.org 67 European Commission’s Communication “Public procurement for a better environment”, COM(2008) 400 68 “Green public procurement in the European Union”, www.maastrichtuniversity.nl/web/ 69 European Commission’s Communication “Public procurement for a better environment”, COM(2008) 400 70 UNEP Year Book 2008, available at: http://www.unep.org/Documents.Multilingual/Default.asp?DocumentID=528&ArticleID=5748&l=en 71 European Commission’s Communication “Public procurement for a better environment”, COM(2008) 400


36

Existing studies have confirmed that in European regions, there is a considerable market for cost-effective

green public procurement, in particular in sectors where green products are not more expensive than the non-

green alternatives (taking into account the life cycle cost of the product). Furthermore, green public

procurement affects the whole supply chain and also stimulates the use of green standards in private

procurement72.


The main obstacles for policy makers to take up green public procurement are reported to be as follows73:

Limited established environmental criteria for products/services or ineffective mechanisms of

communication of these criteria;

Insufficient information on the relative costs of environmentally-friendly products compared to similar

products with no or limited environmental benefits; and, as a result, low awareness of the benefits of

environmentally friendly products and services;

Low awareness about legal possibilities to include environmental criteria in tender documents;

Lack of political support and, as a result, limited resources for implementing/promoting green public

procurement in the region;

Lack of coordinated exchange of best practices and information between regions.

The following measures need to be taken by policy makers to ensure active use of green public procurement in

the region74:

Putting green public procurement on the political agenda of the region;

Setting clear targets (e.g., developing green public procurement action plans focussing on: certain

product groups and due dates for these products; certain types of public organisations and due dates for

these organisations etc.);

Creating green public procurement knowledge base (e.g., linked databases, websites containing

information on “green” criteria, specifications, best practices, eco-labels etc. on products and

procurement procedures, including legal information, procurement regulation);

Offering training opportunities for the purchasers of green public procurement.

Capital region of Denmark: Strategic partnership for Green Public Procurement75

The City of Copenhagen and Copenhagen Cleantech Cluster have established an innovation platform to involve

stakeholders in the development of the smart city. The innovation platform method is based on experiences with public–

private innovation from the U.S., the Netherlands and Finland, where intelligent public demand has been tested as a

tool to solving some of modern society’s grand challenges that call for radical innovation and very active participation

from the public sector.

The process can be divided into four phases:

Identifying and prioritising challenges: The process starts with the identification and prioritisation of

important challenges by the public authorities. In this phase, it is crucial that the public authority is committed

to invest time and resources in developing the solutions to the challenge.

From grand challenge to specific problems: The next step is to collect knowledge about the challenge and ideas

about how the challenge can be solved. Concrete solutions are not explored in this phase, which instead

addresses in which strategic direction the solution could be found. It is important to be open to many ideas and

explore alternatives.

In the case of the “smart city” platform, experts, entrepreneurs and other stakeholders were invited to help understand

the grand challenge in more detail, and break it down into more specific problem areas. The first finding was that citizen

72 Idem. 73 Idem. 74 “Green public procurement in Europe” (2006), Virage, Centre for Environmental Studies, Global to Local, Macroscopio, SYKE 75 http://www.iisd.org/pdf/2012/procurement_innovation_green_growth_continues.pdf


37

engagement and data availability are the most important issues, and, based on this finding, the focus of the platform

became more specific: to identify how existing and new data can be made available through a digital infrastructure.

This challenge was discussed at a series of meetings between the city and the cluster, where city representatives

presented obstacles and opportunities for a solution. Based on these discussions, it became clear that it would be of

great benefit to explore further how a digital infrastructure could be established, and it was decided to move to the next

phase.

Innovation teams: Partners and stakeholders with the competencies to contribute to solving this more specific

challenge are identified, and possible solutions and barriers are explored in more detail. It is important that the

public sector is actively engaged throughout the process, since they are ultimately procuring a solution.

In this case, the more specific challenge of establishing a digital infrastructure was explored in more than 20 meetings,

six workshops and a digital workshop with more than 200 experts involved. Topics addressed included data availability,

open vs. closed standards, business models for establishing a digital infrastructure, waste management, water

management, transportation, energy consumption etc. Over a period of six months, these interactive elements provided

substantial knowledge and input for how to establish a digital infrastructure for a smart city.

Procurement and Implementation: Based on knowledge and input, the next step is to put out a tender for a new

solution. The identity of the procurer is not given; it might be a public authority, but it could also be an

association with public sector backing.

In the Copenhagen case, a test case has been developed in the area of traffic. The City wishes to reduce CO2 emissions

from traffic looking for available parking spots. The Copenhagen Cleantech Cluster has facilitated a three-month process

to develop different scenarios to solve this challenge. The scenarios will be handed over to the City of Copenhagen,

which can use them for inspiration to develop the final procurement material/criteria. This way, the City will be a very

qualified buyer, which has received the best possible input from leading researchers, companies, entrepreneurs and

citizens before defining what they wish to buy.

4.6. Environmental focus of university research programmes

The current framework condition implies the integration of environmental focus into the research programmes

of local universities and other relevant research institutions.


Environmental research among others includes areas like climate change, natural hazards, environment and

health, natural resources management, biodiversity, marine environment, land and urban management,

environmental technologies, earth observation, and tools for sustainable development76. A central role in

conducting environmental research in European regions belongs to regional environmental technology

development centres. The latter are formed by universities, administrative agencies, research institutes,

industries and non-governmental organisations with a common objective to solve unique local environmental

problems collectively. The responsibilities of such centres include analysis and research of local environmental

pollution, development of environmental technology, environmental education and technical support to

enterprises coping with environmental management problems, dissemination of new environmental

technologies, and promotion and education regarding new environmental technologies to people in the

region77.

Environmental research is closely linked to the environmental economy, encompassing firms from all areas of

business – from the construction industry to mechanical engineering, electrical engineering and metalworking,

to trade and service companies. A particular role in environmental research belongs to SMEs. SMEs have a role

76 http://ec.europa.eu/research/environment/index_en.cfm?pg=about 77 OECD (2011) “Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation”, OECD Publishing, available at http://dx.doi.org/10.1787/9789264096684-en


38

in a whole range of environmental research topics, for example, waste management and recycling, water saving

and purification, energy saving and use, air purification, the development of environmentally friendly products

and noise reduction78.


Environmental research allows for promoting the sustainable management of the environment and its

resources through increasing knowledge about the interactions between the climate, biosphere, ecosystems and

human activities. It also enables developing new technologies, tools and services that address environmental

issues, e.g., prediction tools and technologies for monitoring, prevention, mitigation of and adaptation to

environmental challenges and risks. Finally, environmental research is crucial for informing decision-makers in

their design of environmental policy, as well as business leaders and citizens about the challenges and

opportunities they face79.


Policy makers can stimulate the development of environmental research in the region by:

Introducing programmes that provide financial support for conducting collaborative research within

the environment-related disciplines (including multidisciplinary research addressing complex issues,

problem-solving research; international cooperation; addressing global and local challenges;

dissemination of knowledge and research results80);

Introducing programmes dedicated to strengthening the innovative capacity of SMEs by providing

financial support for outsourcing research critical to their core business activities81;

Introducing programmes that stimulate industry-academia partnerships in order to stimulate research

collaboration between public research organisations and private commercial enterprises, including

SMEs82;

Introducing programmes that offer initial training of researchers, lifelong training and career

development, and international fellowships83;

Creating a dedicated helpdesk that would inform cluster members about calls for proposals for the

relevant EU subsidies and grants and assist cluster members with preparing proposals.

Another important policy action is public investment in basic research. Such research has a public good

character and is therefore unlikely to be undertaken by the private sector. At the same time, it helps address

fundamental scientific challenges and fosters technologies that are considered too risky, uncertain or long-

gestating for the private sector. Furthermore, governments can influence the direction of the existing research

effort, for example, by prioritising thematic and mission-oriented research programmes aimed at addressing

environmental challenges, though without necessarily specifying the nature of the research required. Finally,

governments can take action in improving the process of translating research into innovation, for example, by

strengthening the links between science and business84.

Capital region of Denmark: Green Campus of the University of Copenhagen

The University of Copenhagen has opened the Green Campus Office to facilitate the process of incorporating

sustainability into the overall development, operation and general conduct. The University is prioritising sustainability,

and its goals are ambitious: “The University of Copenhagen will work towards becoming one of Europe’s

most green campus areas”. Focus of The Green Campus initiative is reducing the University’s environmental

78 http://ec.europa.eu/research/environment/index_en.cfm?pg=sme 79 Based on http://ec.europa.eu/research/environment/index_en.cfm?pg=environment 80 http://ec.europa.eu/research/environment/pdf/summary-leaflet_en.pdf 81 http://ec.europa.eu/research/environment/index_en.cfm?pg=sme 82 Idem. 83 Idem. 84 OECD (2011) “Fostering Innovation for Green Growth”, OECD Green Growth Studies, OECD Publishing


39

impact, especially concerning energy consumption and CO2 emissions. The efforts include global collaboration and

involvement of employees and students85.

The employees and students of the university have a vital role in the efforts to turn the university into one of the

greenest campus areas in Europe. Green Action is the headline of the university’s work for energy efficient

habits among the employees and students. Through campaigns and information, the energy consumption and

CO2 emission of the university has been reduced significantly. During the latest campaign in 2012, the employees and

students of managed to save 2,5 % in electricity consumption. This corresponds to about 2,5 million DKK on an annual

basis86.

The focal point in Green Action is more than 260 Green Ambassadors. The Green Ambassadors are employees who

have volunteered to help their colleagues to promote good energy habits at divisions and institutes: remembering to turn

off unused equipment and by making agreements with colleagues about turning off the light, closing fume cupboards

and tidying up refrigerators regularly87.

4.7. Availability of environment-related R&D and other tax

measures

Environment-related R&D and other tax measures represent another framework condition supporting the

development of eco industries in the region. This framework condition becomes increasingly popular. Besides

stimulating (or discouraging) certain types of activities, the advantage of tax measures compared to regulatory

instruments refers to their efficiency and the fact that they can raise public revenues to be used elsewhere in the

economy88.


Environment-related fiscal measures can be divided into two main categories: tax instruments and subsidies.

Taxes are levied on goods directly or indirectly linked to environment-related activities. Taxes are often labelled

pricing instruments, as they impose a price on the environmentally harmful aspects of production or

consumption and thus aim at influencing consumer behaviour by increasing prices (including emissions trading

schemes). Subsidies, in turn, aim to encourage producers and consumers to choose the inputs and goods that

have favourable properties from the environmental perspective. In contrast to taxes, they provide incentives by

decreasing the price or purchasing costs of a product89. The use of environment-related fiscal measures has

increased throughout Europe during the past two decades, and existing tax schemes have been revised and

refined90.


In general, the main advantage of fiscal measures is efficiency. The costs of reaching a given environmental

target are minimised. Imposing fiscal measures generally requires less detailed information than regulation and

thus entails lower administrative costs. Furthermore, tax measures set a price on each unit of

pollution/emissions and thus induce firms to constantly seek new pollution reduction possibilities and to invest

in less-polluting technologies. Consequently, this is a powerful incentive for innovation. Finally, fiscal

instruments are also effective for shifting consumers’ behaviour towards a more sustainable direction. They give

85 http://introduction.ku.dk/campus/green_campus/ 86 http://introduction.ku.dk/campus/green_campus/ 87 http://groengerning.ku.dk/info-eng/ 88 Kosonen K., & Nicodème G. (2009) “The role of fiscal instruments in environmental policy”, Working Paper June 2009, available at: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_19.pdf 89 Idem. 90 European Environment Agency (2006) Market-based Instruments for Environmental Policy in Europe, pp. 41-49


40

price signals that change the relative prices of “dirty” and “clean” consumption goods and encourage consumers

to choose environmentally-friendly goods91.

A particular role in the development of eco industries refers to R&D-related fiscal measures. Generous

incentives through R&D tax incentives can make a region a relatively more attractive location for R&D

investments than other regions. Furthermore, R&D investments are risky, which means that firms, and mostly

small firms and start-ups, are more likely to face financial challenges when investing in R&D, and tax incentives

can offer an attractive solution. Finally, the R&D tax incentives contribute to knowledge spillovers to other

firms and organisations, making the industry as a whole more competitive92.


Regional and national governments can use a wide range of different tax measures to support the development

of eco industries. To influence the consumer’s behaviour and thereby trigger the demand for eco products in the

region, direct fiscal incentives can take a form of a subsidy or rebate provided after the purchase of an eco

product or paid directly at the check-out, in some cases delivered in case of replacement of the old appliance

etc.

The environment-related R&D tax credit can be an effective tool for boosting innovation, competitiveness and

creating high-wage employment in the region, by:

Creating an incentive for public-private partnerships to fuel innovation and economic activity;

Spurring innovation and start-up companies;

Seeding surrounding areas with additional investment in not only scientific research but also indirect

business benefits;

Anchoring high-tech business investments near research facilities; and

Enabling rapid time-to-market production when manufacturing plants are located close to research.

However, tax measures alone may be insufficient to boost the development of eco industries in the region, and

need to be complemented with other policy instruments93.

Capital region of Denmark: Exemption from registration tax for electric vehicles

In Denmark, the adoption of green vehicles is incentivised by abolishing the registration tax for electric vehicles that

weigh less than 2,000 kg. Fossil fuel vehicles, on the other hand, are taxed heavily, thus making the adoption of electric

vehicles more attractive94.

4.8. Existence of eco-regulation

The current framework condition refers to rules and regulations prescribing eco-efficient standards.


As mentioned before, there is hardly any other industry where growth, competitiveness and performance are

more strongly linked to the (environmental) policy agendas and regulatory framework conditions. Regulations

91 European Environment Agency (2006) Market-based Instruments for Environmental Policy in Europe, pp. 41-49 92 “R&D tax incentives: rationale, design, evaluation” OECD, November 2010, available at http://www.oecd.org/dataoecd/61/13/46352862.pdf 93 Kosonen K., & Nicodème G. (2009) “The role of fiscal instruments in environmental policy”, Working Paper June 2009, available at: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_19.pdf 94 http://www.acea.be/images/uploads/files/20100420_EV_tax_overview.pdf


41

aiming to minimise the negative environmental and social impacts create business opportunities that allow for

development of a whole new industry95.

There is a wide range of EU regulations in force concerning the environment. The main areas covered are96:

Nature and biodiversity;

Integrated pollution control;

Waste management;

Air pollution;

Water pollution;

Noise pollution;

Environmental impact assessment;

Genetically modified organisms.

Much of the EU legislation to protect the environment is quite technical, as it sets out detailed technical and

scientific standards. It is also usual for the legislation to require Member States to provide information to the

European Commission about how they are implementing the rules and about how effective they have been. In

addition, there are several international conventions on environmental protection. In general, these are ratified

by the EU and then implemented through EU legislation97.


Various empirical studies have confirmed that complying with environmental regulation is one of the key motives to innovate among eco industry companies. Research data indicate that eco industry firms rank meeting regulation requirements as having a highly important effect on their innovation activities, more often than any other sector98. Moreover, standardisation is important in enabling the uptake of eco-innovation and environmental technologies and facilitating their dissemination99.

The enforcement of environmental regulations is reported to be a key driving factor for some sub-sectors of eco industries such as the recycling, waste management sectors and a number of sub-segments of the renewable energy sector (wind energy and biomass)100. Increasingly strict regulations worldwide (e.g., in China) are likely to lead to new opportunities for pollution control technologies and services, as well as waste management and recycling. The environmental regulations are expected to have a positive influence on the production of eco products and services in the future. Nevertheless, the international competitiveness of the EU eco industries depends on avoiding the fragmentation of markets by ensuring that environmental regulation does not lock the EU eco industries in the domestic market101.

95 Ernst & Young (2006) “Study on Eco-industry, its size, employment, perspectives and barriers to growth in an enlarged EU”, Final report, August 2006, available at http://ec.europa.eu/environment/enveco/eco_industry/pdf/ecoindustry2006.pdf 96 http://www.citizensinformation.ie/en/environment/environmental_law/eu_environmental_law.html#la82be 97 Ibid. 98 2008 Centre for European Economic Research (ZEW) report quoted in ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 99 Reid, A. & Miedzinski, M. (2008): SYSTEMATIC Innovation Panel on eco-innovation. Final report for sectoral innovation watch; http://www.europe-innova.org 100 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 101 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416


42

At the same time, when regulations and standards are excessively strict, they may become barriers to competitiveness of eco firms. Such effects differ per sub-sector of eco industries and are suggested to be particularly strong for connected eco industries (eco-construction, automotive etc.). The need to comply with overly strict regulations may force eco companies to move their activities abroad102.


An important task for policy makers in the longer term is to create an environmental policy regime that is consistent with an industrial policy focusing on innovations with sufficiently large international selling opportunities. Furthermore, there is a need to remove certain regulatory barriers to market development through international agreements, or by agreeing on international standards. These activities, however, need to be performed at the EU level. Regional policy makers may play a role in lobbying for specific parts of regulation103.

One of the key challenges related to eco industries in Europe refers to a lack of a uniform implementation and

enforcement of relevant directives, standards and certification procedures at the level of the Member States and

regions. It creates an uncertain and non-transparent business environment, which, in turn, increases the costs

of doing business across Europe. These factors are unfavourable for investments and growth of the industry.

Therefore, for the EU eco industries to be able to successfully develop in the future, a long-term stable policy

framework with greater harmonisation or coordination across the Member States, together with simplification

of national regulations is needed. Furthermore, the development of a more coherent intellectual property rights

(IPR) policy and legal framework is crucial, not just within the EU, but also at the international level104.

Capital region of Denmark: Emission Free Zone Copenhagen

Particle pollution was, as is in many big cities, a significant problem in Copenhagen, resulting in almost 500 deaths

annually. As a result, environmental zones were implemented in September 2008. The zones cover 65% of Copenhagen’s

inhabitants, which was further extended in 2009. The zones require vehicles to meet minimum standards, which have

to be displayed on the windscreen. As a result, as of 1 July 2010 there were 150 less deaths, 750 fewer cases of bronchitis

and fewer cases of asthma and respiratory illnesses105.

4.9. Availability of eco-innovative infrastructure

The current framework condition implies the presence of infrastructure that facilitates the development of eco

industries.


Two types of infrastructure are relevant for the development of eco industries: environmental infrastructure

that creates a general demand for eco products and services, and research & innovation infrastructure that

allows for developing new technological solutions and translating them into practical applications.

Environmental infrastructure can be defined as “any capital asset that utilises environmental resources to

provide a community service”. The relevant fields are drinking water, energy efficiency, environmental

planning, waste management etc. The design and location of environmental infrastructure can have a

significant effect on a region’s economic growth and environmental health. Environmental infrastructure is

associated with considerable building and maintenance costs. These high costs force regional governments to

look for innovative and sustainable ways of dealing with infrastructural issues106.

102 Idem. 103 Idem. 104 Idem. 105 http://www.eltis.org/index.php?id=13&study_id=2175

106 http://www.cscd.gov.bc.ca/lgd/pathfinder-environment.htm


43

Research & innovation infrastructure, in turn, implies the presence of appropriate R&D facilities (e.g.,

universities, research centres, private laboratories, conceptual design centres etc.) and technology transfer

offices, incubators or similar organisations facilitating the development and commercialisation of eco

technologies in the region. Such infrastructure often takes a form of a science park with all the abovementioned

institutions concentrated in one area. Additionally, some other specific types of infrastructure are essential for

innovation activities. Particularly transport and communication infrastructures are increasingly considered a

critical factor for economic success and raising productivity. Hence innovation related to alternative fuel

vehicles, user-friendly public transport or renewable energy relies on infrastructure for new fuelling systems,

sophisticated traffic control, diffused energy distribution systems etc.107.


Both types of infrastructure play central and complementary roles in the development of eco industries in the

region. As mentioned above, while environmental infrastructure creates market demand and business

opportunities for eco industry companies, eco-related research & innovation infrastructure is crucial for

discovering, testing, piloting and commercialising eco products and services.


Public-private partnerships can play a vital role in providing strong investments into the research & innovation

infrastructure and are essential for meeting the needs of the clusters. The partnerships between the firms and

research centres are essential for collaborative research, training initiatives and knowledge transfer within the

cluster. The geographical proximity of different cluster actors also strengthens and encourages the public-

private partnerships and allows easier collaboration. Moreover, more active collaboration between research

institutions and SMEs benefits both sides. It allows public research bodies to ensure they secure the best

possible economic benefits, while at the same time allowing SMEs to obtain the support they need to refine the

technologies they develop108. Besides large investments in the environmental infrastructure of the region, the

role of policy makers in this respect would therefore be to support the concept of public-private partnerships.

Capital region of Denmark: Better Place electric vehicle infrastructure

This EIB funded project implies financing of electric vehicle infrastructure and service scheme and associated R&D costs

in Denmark. Specifically, the project concerns investments in R&D expected to be carried out in existing facilities, and

the roll-out of a demonstration infrastructure network for recharging and swapping of batteries for the Electric Vehicle.

The total budget granted by the EIB is 29,200,000 EUR109.

107 OECD (2009) “Sustainable Manufacturing and Eco Innovation: Framework, Practices and Measurement”, OECD Synthesis Report 108 OECD (2009) “Clusters, Innovation and Entrepreneurship”, ed. Potter J. and Miranda G., Chapter 2 “The micro-nanotechnology cluster of Grenoble, France”, Centre of Entrepreneurship, SMEs and Local Development 109 http://www.eib.europa.eu/projects/pipeline/2010/20100310.htm


44

5. Nurture stage:

demonstrating sustainable

business potential


region at the Nurture stage, the third stage of the industry’s lifecycle. Similar to the previous chapters, we first

address each specific framework condition in detail and then discuss the implications for policy makers at this

stage of industry’s development.

5.1. Introduction

The Nurture stage corresponds to the activities that help to improve the price and performance of applications

to a point where sustainable business potential can be demonstrated. Specifically, this stage implies developing

a market with mass growth potential.


development:

Critical mass of eco-companies (industrial; relevant also for Growth stage);

Critical mass of supply chain actors (industrial; relevant also for Growth stage);

Presence of environmental education in the school curricula and vocational training (knowledge;

relevant also for Growth stage);

Supporting IP conditions related to green technologies (regulatory and policy; relevant also for Growth

stage);

Policy measures supporting the internationalisation of eco-innovative clusters (regulatory and policy;


Strategy documents and roadmaps for the development of eco-industries in the region (support;


Dedicated cluster organisation (support; relevant also for Growth stage);

Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco-

industries solutions (support; relevant also for Growth stage).

5.2. Critical mass of eco-companies

The current framework condition implies the presence of a sufficient mass of companies active in eco

industries, for example, in the areas of air pollution control; cleaner technologies and processes (CTP); energy

management, monitoring and instrumentation; landscape services; marine pollution control; noise and

vibration control; recovery and recycling; renewable energy; transport pollution control; waste management;

water and wastewater treatment etc.


As mentioned above, eco industry companies can be split into two broad categories: one of small and

innovative companies acting in the field of, e.g. renewable energy, waste recycling, environmental auditing

and consultancy; the other of more capital intensive enterprises providing goods and services in specific


45

areas, e.g. waste, wastewater, transport110. Both types of companies play a vital role in the development of eco

industries in the region. Eco industry clusters need thriving start-ups as well as more mature companies that

can act as role models.


Large firms can play a catalytic role in a number of ways. First of all, they create a critical mass of experienced

managers and workers. Secondly, they can provide a customer and supplier base. Thirdly, large companies

provide ideal conditions for high technology firms to grow and develop. Finally, large companies have

multiplier effects in terms of a region’s local economy for materials and services (these can range from

university graduates to office supply services to raw materials’ production). Therefore, large firms can play a key

role in diffusing knowledge and technology to SMEs, nurturing future entrepreneurs and inspiring spin-outs.

They can be important in terms of stimulating innovation sales and exports and provide a critical ‘route to

market’ for SMEs, both directly and as a base for access to world markets. Where firms do not take forward

innovative ideas themselves, employees of large firms sometimes choose to start-up their own businesses to fill

a perceived gap in the market111.

At the same time, many innovative ideas usually come from small dedicated firms. As large firms become even

larger (e.g., due to mergers and acquisitions), they usually do not increase their amount of scientific discoveries

with the same pace. In fact, existing research shows that large firms typically experience a decreasing number of

discoveries112. The proximity of small companies to large firms provides partnering opportunities for product

development, manufacturing and marketing, and a source of management expertise for small companies.


The key task of policy makers is to create an environment favourable for setting up and expanding

businesses in the region. The relevant measures should among others aim at ensuring easier access to

funding, making legislation clearer and more effective and developing an entrepreneurial culture and support

networks for businesses113.

A vibrant business climate for eco companies in the region is a highly complex phenomenon resulting from a

wide variety of factors. Key relevant measures can be summarised as follows:

Promoting the concept of eco industries in the region (e.g., social marketing and advertising campaigns

promoting eco industries and green products in the region, as well as incentivising the purchase of eco

products);

Promoting eco-entrepreneurship in schools and universities;

Developing public-private partnerships;

Simplifying access to finance for eco companies;

Introducing programmes that support SME growth (financial support; training and coaching) etc.

These measures are explained in detail throughout the report.

110 http://ec.europa.eu/enterprise/policies/sustainable-business/eco-industries/index_en.htm 111 DTI Report (2004) “A Practical Guide to Cluster Development”, a report to the Department of Trade and Industry and the English RDAs by Ecotec Research & Consulting 112 Anderson T., Schwaag Serger S., Sorvik J., and Wise Hansson E. (2004) “The Cluster Policies Whitebook”, International Organisation for Knowledge Economy and Enterprise Development (IKED) 113 http://europa.eu/legislation_summaries/enterprise/business_environment/index_en.htm


46

Capital region of Denmark: Number of Green Growth companies in the Greater Copenhagen Area, year 2010114

The numbers below demonstrate the presence of a sufficient critical mass of eco companies in the region of Copenhagen.

Core (more than 33% green activity of total industry activity): 559 Companies

Intermediate (between 10% and 33% green activity of total industry activities): 5.510 Companies

Peripheral (between 5% and 10% green activity of total industry activities): 5.687 Companies

Annexed (less than 5% green activity of total industry activities): 17.918 Companies

5.3. Critical mass of supply chain actors

The current framework condition implies the presence of a sufficient mass of supply chain actors in the region

including eco-innovation consultancy services, research centres for eco-innovation, equipment suppliers, utility

companies etc.


The presence of a supply chain implies that parts of value added are provided by external partners. This process

is driven by transaction/switching cost and deals with the bilateral dependency between suppliers and

producers. Strategic alliances and joint ventures are becoming increasingly important for eco industries, since

business environment is becoming more and more competitive. Knowledge is transferred among partners in the

network and thereby the importance of partnerships in the chain increases since it allows to maximise value

and to optimally overcome business challenges. By identifying value adding moments in the chain

and ensuring a better fit and collaboration between partners in the chain, common higher

gains are expected for the whole supply chain as well as for its individual partners115.

In European regions, however, an established supply chain of eco industries is often absent. There is reported to

be a lack of homogeneity, and there are not enough drivers for the supply chain to organise itself. Because of

weak linkages throughout the supply chain, eco innovations with market potential often fail to reach the

market, or reach the market too late. Furthermore, specific eco industry players such as SMEs working in

certain niches are often spread across different European countries, which leads to poorer communication

channels in the supply chains. As a result, such companies fail to fully take advantage of the internal European

market and the opportunities provided by it116.


The presence of a critical mass of supply chain actors is beneficial for nurturing and growth. The companies

might be able to set up a powerful lobby that would pave the way for political decisions; demonstration and field

testing is better possible when there is a critical mass, and cooperations between research institutes and

industry can be set up and be more effective117. It is important to note, however, that a large part of the relevant

supply chain is not part of eco industries (i.e., it is formed by connected industries).

114 http://www.cphcleantech.com/media/1477642/damvad_green_growth_in_copenhagen.pdf, Source: DAMVAD 2011, retrieval from Experian, based on the industry weights calculated from the register data from Statistics Denmark 115 EIM (2011) “Business models of eco-innovations”. An explorative study into the value network of the business models of eco-innovations and some Dutch case studies 116 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 quoted in

Barsoumian S., Severin A. and Van der Spek T. (2011) “Eco-innovation and national cluster policies in Europe”, A qualitative review, the study performed by Greenovate! Europe EEIG for the European Cluster Observatory managed by the Center for Strategy and Competitiveness at the Stockholm School of Economics 117 OECD (2011) “Better Policies to Support Eco-innovation”, OECD Publishing


47


Cooperation and partnerships within a supply chain flourish in a healthy business environment. Such an

environment can be provided and sustained by government institutions and policies118. In the previous sub-

section, we already highlighted the key measures leading to the creation of a favourable business climate in the

region.

Furthermore, a specific role in supporting the establishment of a structured eco industries supply chain belongs

to dedicated cluster initiatives. Clusters foster the establishment of formal and informal networks and are

reported to be useful instruments to support the streamlining of supply chains. Clusters help ensuring that

supply chains are more integrated, cooperation is formalised, and that eco companies with their products and

services are in close contact with actors across the whole supply chain119. Consequently, policy makers need to

promote and support cluster initiatives in their regions by financing the creation of cluster organisations and

the associated cluster-level initiatives (e.g., networking events, match-making etc.). We will elaborate on this

aspect in Sub-section 5.8 of the Report.

Strong supply chains in turn lead to the situations when public authorities have a stronger incentive to propose

generous public funding schemes that would benefit the entire industry120.

Lombardy (Italy): Green Supply Chain121

The Green Economy Network is an informal grouping of companies based in Lombardy, set up by Assolombarda in

mid-2011 to improve information flows, foster cooperation, accelerate international growth and boost business

opportunities. The Green Economy Network now involves around 400 SMEs, Italian groups and multinationals, for

aggregate revenues of 50 billion euro and 25,000 employees in the Province of Milan alone, active in a variety of

manufacturing industries and sectors, from water treatment to renewables, from energy efficiency to eco-compatible

products. Today metalworking companies account for half of the network, while 26% of the sample are innovative

service providers.

Ten specialisations feature in the network, with strong representation of companies active in renewable energy (43%),

water (38%) and waste (33%).

The Green Economy Network is growing continually, thanks to innovative projects, the appeal of the green sector (also

due to the growing sustainability requirements of the former emerging economies) and networking capability: 78% of

the firms in the network say they are ready to form alliances or groupings, with the percentage rising to 83% for joint

projects. The most popular form of cooperation is working groups, chosen by 77% of the companies, followed by

temporary company associations (66%) and network contracts (43%).

118 EIM (2011) “Business models of eco-innovations”. An explorative study into the value network of the business models of eco-innovations and some Dutch case studies 119 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 quoted in

Barsoumian S., Severin A. and Van der Spek T. (2011) “Eco-innovation and national cluster policies in Europe”, A qualitative review, the study performed by Greenovate! Europe EEIG for the European Cluster Observatory managed by the Center for Strategy and Competitiveness at the Stockholm School of Economics 120 OECD (2011) “Better Policies to Support Eco-innovation”, OECD Publishing 121 http://www.amapola.it/the-green-supply-chain-in-lombardy/


48

5.4. Presence of environmental education in the school curricula

and vocational training

The current framework condition implies the integration of environment-related issues into the school

curricula and vocational training.


Environmental education can be integrated into school curricula as an interdisciplinary goal of formal

education. It can also be part of informal education, and a part of daily life during leisure time activities, as well

as a substitute for or extension to the formal education sector122.

Environmental education implies experiencing, sharing, creativity, and sensitivity. Environmental education

activities can include informing the population, discovery activities (e.g., guided visits, games, outings), but can

also consist of the active participation of the public (e.g., workshops, volunteering, excursions, role plays, field

trips or holidays). Materials and guidelines on environmental education are typically provided by the public

sector, as well as NGOs123.


Education and training programmes are essential for developing the human capital needed to deliver eco-

innovative solutions and create a potential labour force for “green jobs”. A number of European regions have

taken measures to mainstream environmental education in the school curricula or vocational training. A few

regions have also started to focus on creating specific skills and a knowledgeable workforce for emerging

environmental industries124.

The demand and supply of eco industries-relevant skills in Europe will mainly be affected by globalisation, as

well as technological and demographical change (including population ageing and migration). Eco industries

will need employees with new skills and with a higher skill-level125. Furthermore, numerous existing skills will

become obsolete and therefore educating the current labour force is crucial to maintain a competitive

advantage. However, also low skilled people will always be needed for some sub-sectors within eco industries126.


Policy makers play a central role in ensuring that environmental education is embedded in school curricula and

vocational training. The following measures can be proposed127:

Including the groups targeted as beneficiaries in the programme development process (NGOs,

associations of teachers, network of environment education, etc.);

Including environmental education and sustainable development experts in the programme

development process;

122 Wagner M. et al. (2011) “Environmental Education: Contribution to a Sustainable Future”, Nationalpark Donau-Auen GmbH, Surf Nature project, funded by the European Regional Development Fund through the INTERREG IVC programme 123 Idem. 124 OECD (2011) Better Policies to Support Eco-innovation, OECD Publishing 125 Strietska-IIlina (2008), Skills net, Enterprise surveys as a tool for skill needs analysis,

http://agora.cedefop.europa.eu/skillsnet2008innet/UsersFiles/sa/documents/Presentetion2/12_Strietska.ppt#273,3 126 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 127 based on Wagner M. et al. (2011) “Environmental Education: Contribution to a Sustainable Future”, Nationalpark Donau-Auen GmbH, Surf Nature project, funded by the European Regional Development Fund through the INTERREG IVC programme


49

Providing capacity-building in environmental education issues to the programme management

authorities at all levels;

Simplifying the application and reporting procedures;

Ensuring shorter payment periods, pre-financing possibilities and negotiating assured national co-

financing;

Supporting organisations in developing the project proposals and managing the projects;

Informing potential project promoters of funding opportunities and coordinating exchange of

experiences between existing projects.

Capital region of Denmark: “A new climate generation” project128

The project “A new climate generation” involves four Copenhagen schools and the idea is to train

nursery and school teachers to teach about the environment and 1500 school students as climate

ambassadors. The project is part of Copenhagen's Climate Plan, which also includes a number of other initiatives,

such as the Children’s Climate Forest project which has already resulted in school students planting 8111 trees.

The object of Copenhagen’s Climate Plan is to contribute to a greener environment and a carbon neutral Copenhagen in

2025.

5.5. Supporting IP conditions related to green technologies

Supporting IP conditions related to green technologies include accelerated examination process for patent

applications relating to green technologies; green patent database and other green patent tools.


An important characteristic of many eco goods and services is the fact that they involve integrated systems. To

develop such integrated systems, multidisciplinary skills are needed. The required skills are not always

available within one company, and collaboration with other stakeholders in the supply chain allows overcoming

the lack of specific skills129. Such collaborations, however, require clear agreements regarding Intellectual

Property Rights (IPR).

Over the last few years, several initiatives have been developed in Europe, aiming at promoting collaboration

between research institutions and businesses by means of creating the appropriate IP conditions (for example,

new IPR regimes, guidelines or model contracts), and many Member States plan to intensify their efforts in this

direction. However, these initiatives are often designed with a national perspective, and fail to address the

transnational dimension of knowledge transfer130. Therefore, there is a need for a more level playing field

regarding IPR protection in Europe. A major barrier is the inconsistent and often inadequate rules and

approaches for managing IPR resulting from public funding131.

The current European patent system, including the phase after granting a patent, is characterised as highly

expensive, fragmented and complex. The lack of a unitary patent protection system has so far constituted a

128 http://www.dac.dk/en/dac-cities/sustainable-cities-2/all-cases/education/copenhagen-the-new-climate-generation/ 129 IDEA Consult and ECORYS Netherlands (2009) “Scoping Study on completing the European Single Market for environmental goods and services”, a study prepared for DG Environment of the European Commission, available at: http://ec.europa.eu/environment/enveco/economics_policy/pdf/sm_egs_july2010.pdf 130 IDEA Consult and ECORYS Netherlands (2009) “Scoping Study on completing the European Single Market for environmental goods and services”, a study prepared for DG Environment of the European Commission, available at: http://ec.europa.eu/environment/enveco/economics_policy/pdf/sm_egs_july2010.pdf 131 IDEA Consult and ECORYS Netherlands (2009) “Scoping Study on completing the European Single Market for environmental goods and services”, a study prepared for DG Environment of the European Commission, available at: http://ec.europa.eu/environment/enveco/economics_policy/pdf/sm_egs_july2010.pdf


50

market barrier for European entrepreneurs to an effective functioning in both the EU internal market and on

the world markets132. It is also widely recognised as a hindrance to innovation in Europe133.


IP plays an important role in the development of eco industries. Eco industries are often high-tech in nature

and therefore depend more on codified and science-based knowledge and the formal protection of IPR while

many other less high-tech sectors rely more on experimentation and interactive learning with suppliers and

customers.

At the same time, IP issues are often mentioned as a barrier to the diffusion of eco-innovation. On the one

hand, technology developers claim that more strict IP protection stimulates innovation and its wider diffusion.

On the other hand, technology adopters view IP as increasing the cost of technology and making access to eco-

innovation more difficult. This debate is particularly active in the field of environmental technologies as eco-

innovation has some public good characteristics, i.e., the diffusion of environmentally superior products

benefits the wider community134.


If Europe wants to stay competitive, there is a clear need for a unitary patent system. Unitary patent protection

would foster scientific and technological advances and the functioning of the internal market by making access

to the patent system easier, less costly and legally secure. It would also improve the level of patent protection by

making it possible to obtain uniform patent protection in the participating Member States and eliminate costs

and complexity for undertakings throughout the Union, especially for SMEs135.

On 17 December 2012, the Council of the European Union, adopted two regulations with a view to

implementing enhanced cooperation in the area of the creation of unitary patent protection (PE-CO_S 72/11)

and its translation arrangements (18855/2/11 REV 2)136. The two regulations entered into force on 20 January

2013137. The new unitary patent aims to radically reduce, by up to 80%, translation and related costs for

obtaining patent protection in the EU138. The regulations will apply from 1 January 2014 or the date of entry

into force of the Agreement on a Unified Patent Court139.

Furthermore, rules for IPR management are a fundamental aspect of publicly-funded R&D projects, defining

the success of dissemination and utilisation activities. It is therefore vital that these rules take into account the

mission and legitimate interests of both public research institutes and participating industrial partners. For the

national and EU R&D funding programmes, more clear and streamlined rules for IP and access rights need to

be defined, and the necessary measures need to be taken to ensure their implementation. This may be achieved

through mandatory Consortium Agreement templates that may depend on the type of project and the phase of

the innovation cycle, with which the participants will be acquainted in advance, and which will avoid spending

disproportionate amounts of time and efforts for preparing the Consortium Agreements of publicly-funded

projects140.

132 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/134394.pdf 133 http://ec.europa.eu/unitedkingdom/press/press_releases/2011/pr1138_en.htm 134 OECD (2011) “Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation”, OECD Publishing, available at http://dx.doi.org/10.1787/9789264096684-en 135 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/134394.pdf 136 http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/intm/134394.pdf 137 http://www.epo.org/news-issues/news/2013/20130219.html 138 http://ec.europa.eu/commission_2010-2014/barnier/headlines/news/2012/12/20121211-2_en.htm 139 http://www.epo.org/news-issues/news/2013/20130219.html 140 EC (30/11/2011), Public Consultation for Horizon 2020: Written contributions from European organisations received in response to the Green Paper, cross-document analysis of Question 20


51

5.6. Policy measures supporting the internationalisation of eco-

innovative clusters

The current framework condition includes policy measures supporting the internationalisation of eco

industries.


As a regional eco industry matures, the strongest growth opportunities for most sectors are considered to be in

outside the regional or national market, in fast growing emerging economies. For this reason, EU and

Member State initiatives to support eco industries in understanding and accessing export

markets should be pursued and expanded to stimulate growth.


Internationalisation in many sub-sectors takes place through trade in services and investments as opposed to

trade in goods. Given the increasing environmental pressures, emerging legislation and international

commitments, there are many opportunities for the internationalisation of the EU eco industries, particularly in

the areas of waste management, recycling (integrated chain management) and specific segments of the

renewable energy sub-sector141.

Although a large number of European SMEs are reported to be engaged in international activities, only a small

part is involved in activities outside the Internal Market. At the same time, the potential customers are likely to

be located in the international market. Many European eco-innovators may find that it is easier to find

customers in international markets than in their home market, which is often overcrowded and highly

competitive. With this in mind, eco companies have a strong motivation to internationalise, but for a growing

business this can be difficult due to constraints on staff, time, skills, market intelligence and finance142.

In order to support the internationalisation of SMEs, the clusters themselves need to have their own

internationalisation strategy. This not only ensures transparency for their members but also helps keep the

cluster “on-track” when it comes to delivering internationalisation support. These strategies need to refer to

specific markets and specific eco-innovation focus areas in order for them to be effective143.


Examples of the policy measures supporting internationalisation include regional support in representing the

cluster abroad; regional support for inward investment activities; removal of custom duties on green products,

as well as training and coaching etc.

Furthermore, there is a role for public authorities in promoting the international cooperation in the field of

public research. Joint investment in pre-competitive research, mapping of R&D needs, multilateral science &

technology cooperation, and pooled knowledge make it possible to share costs and effectively and efficiently

141 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 142 Interview with Gareth Jones, the Operations Manager at the UK Centre for Economic & Environmental Development (UK CEED) “Internationalization for eco-innovative companies & the ECOCLUP Project”, 22 March 2012, available at: http://www.ecopol-project.eu/en/media_material/highlights/?itemid=127&a=viewItem 143 Interview with Gareth Jones, the Operations Manager at the UK Centre for Economic & Environmental Development (UK CEED) “Internationalization for eco-innovative companies & the ECOCLUP Project”, 22 March 2012, available at: http://www.ecopol-project.eu/en/media_material/highlights/?itemid=127&a=viewItem


52

stimulate eco-innovation at world scale. Such cooperation facilitates outreach and access to funding and can

contribute to technology transfer and capacity building144.

Finally, policy makers can develop a knowledge sharing system in which eco-companies, traditional companies

and research institutes can exchange information (inter)nationally and possibly collaborate on project for

international markets.

Capital region of Denmark: International Cleantech Network145

Being the first network of its kind, the International Cleantech Network (ICN) aims to connect selected cleantech

clusters around the world and to create a whole new way for companies and knowledge institutions to go international.

ICN was founded in Copenhagen in 2009 as collaboration between Copenhagen Cleantech Cluster and the Colorado

Clean Energy Cluster with the mission to connect the world's leading cleantech clusters and exchange competencies so

as to add value and knowledge to the companies and research institutions in the partner clusters.

The aim for ICN is to reach 15 clusters, especially leading clusters from emerging markets, i.e. Brazil, China and Russia,

where it can be difficult for foreign companies to gain a foothold. ICN provides the foundation for this. The network's

services for its member companies and knowledge institutions span from initial market insights and opportunity

spotting in each cluster through education, research, exchange programs and entrepreneurship and incubation

collaboration to tailor-made partnership building.

5.7. Strategy documents and roadmaps for the development of eco

industries in the region

The current framework condition implies the presence of strategy documents and roadmaps for the

development of eco industries in the region.


Many Member States and European regions have developed strategies and roadmaps to support the

development of eco industries146. These documents can be characterised as consisting of the following key

dimensions.

Direction: where the industry is trying to get in the long term;

Scope: what the key activities are that the industry should focus on;

Competitive advantage: what the key strengths of the local industry are and how those can be best utilised;

Resources: what resources (i.e., skills, assets, finance, relationships, technical competence, facilities)

are required to realise the strategy;

Climate: what external factors are likely to affect industry’s development (e.g., political, economic, legal factors);

Stakeholders: what the values and expectations of the key industry stakeholders are and how those can affect industry’s development.


Strategy documents to support eco industries provide opportunities to coordinate a policy dialogue on this

complex and multifaceted issue in a whole-of-government approach. Strategies are also useful as benchmark

documents. The knowledge base made from roadmaps and country profiles has proven highly useful for

144 OECD (2011) “Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation”, OECD Publishing, available at http://dx.doi.org/10.1787/9789264096684-en 145 http://www.cphcleantech.com/ccj2-bridgingclusters 146 OECD (2011) “Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation”, OECD Publishing, available at http://dx.doi.org/10.1787/9789264096684-en


53

benchmarking exercises. However, some information is missing on policy measures that would make the

assessment and comparisons even more useful. For instance, more qualitative information on the status and

design of instruments would be needed to characterise them further and assess their potential impact on eco

industries; additional information on target, budget (annual or total when appropriate) would be desired as

well. In addition, it would be useful for regions to report on policies that were successful and lessons that have

been learned from the use of particular policies147.


When developing strategy documents and roadmaps, policy makers need to take into account several aspects:

Strategy documents and roadmaps should target companies of all sizes in the region, not only SMEs, as


chain. Examples of other relevant stakeholder groups include industry associations, regional

development agencies, chambers of commerce, employers’ associations, municipalities, business

networks, schools and training centres etc.

Objectives set in strategy documents and roadmaps need to be continuously monitored and periodically



Interest in the actions set in strategy documents and roadmaps from the company side is crucial for




There is a constant need to adjust the strategic direction due to changes in the interests of the partners



Capital region of Denmark: Roadmap for Smart Grid R&D148

In October 2011 Danish Ministry for Climate, Energy and Building published the “Main report - The Smart Grid

Network’s recommendations”. Following part-recommendation 25 of the Ministry’s main report, a research network has

submitted a roadmap for Smart Grid research focusing on:

Strengthening and marketing of research infrastructure to positioning Denmark as a global hub for Smart Grid

development;

Strengthening of basic research into complex relationships of electric systems with large quantities of

independent parties;

Increased awareness/understanding of consumer behaviour and socio-economic factors.

The roadmap contributes to identifying needed focus efforts to strengthen research, development and demonstration

within the 2020 time frame. The research in preparation of the roadmap has been conducted by DTU Electrical

Engineering, Center for Electric Power and Energy with participation of Aalborg University, Aarhus University,

University of Southern Denmark, Technical University of Denmark, Alexandra Institute, DI Confederation of Danish

Industry, Danish Energy Association, Energinet.dk, Ministry for Climate, Energy and Building, Ministry of Foreign

Affairs of Denmark, and the Danish Energy Agency.

147 OECD (2011) “Better Policies to Support Eco-innovation, OECD Studies on Environmental Innovation”, OECD Publishing, available at http://dx.doi.org/10.1787/9789264096684-en 148 http://www.powerlab.dk/English/About_PowerLabDK/News_Press.aspx?guid=%7B5CE354C0-7FC3-48CE-86A8-92D7B1C904A8%7D

http://www.energinet.dk/EN/Sider/default.aspx


54

5.8. Dedicated cluster organisation

The current framework condition implies the presence of cluster manager or a similar initiative to coordinate

the development of eco industries in the region.


Cluster initiatives are organised efforts to enhance the competitiveness of a cluster involving private business,

public bodies and/or academic institutions within a regional and sectoral system149. Cluster initiatives are

increasingly managed by specialised organisations, so-called cluster organisations. By a cluster

organisation one should understand organised efforts to facilitate cluster development, which can take various

forms, ranging from non-profit associations, through public agencies to companies150. A cluster organisation

typically functions as a mediator between various cluster members and adds value by stimulating collaboration

both within the cluster and between the cluster and the outside world151.


Cluster organisations often engage in a wide set of activities, ranging from information provision, commercial

cooperation and innovation support, enhancing the business environment, human resources upgrading,

business development, to cluster expansion152. Therefore, cluster organisations are not only promoting

networking, they are also providing information about the cluster, lobbying, facilitating collaborative

agreements, addressing education and training needs, and promoting the cluster nationally and internationally.

Existing studies show that specifically in case of eco industries, cluster organisations prove to add value in

terms of technology and knowledge transfer, and foster collaborative relationships between suppliers and

clients. Furthermore, they establish a close link between SMEs, large companies and R&D institutions and can

thus help overcome a lack of knowledge sharing and persisting information asymmetries153 in the eco industries

sector. The presence of cluster organisations are often highlighted as one of the key reasons to invest in, for

example, cleantech clusters. Finally, cluster organisations in eco industry clusters often help achieve integration

with traditional industries by facilitating cross-industry interactions (the interdependence trend described in

Chapter 2)154.


Cluster support helps maintain or create employment in regions, and allows firms to be more adaptive and

creative in their organisation restructuring efforts155. Therefore, regional, national and EU authorities need to

offer dedicated cluster policies that typically include grants for cluster management activities and specific

149 Sölvell, O., Lindqvist, G., Ketels, C. 2003. The Cluster Initiative Greenbook: http://www.cluster-research.org/greenbook.htm 150 Ecotec (2004) “A Practical Guide to Cluster Development”, a Report to the Department of Trade and Industry and the English RDAs by Ecotec Research & Consulting 151 Dervojeda K. (2011) “Uncovering Excellence in Cluster Management”, PwC Thought Leadership Report, February 2011 152 The concept of clusters and cluster policies and their role for competitiveness and innovation: Main statistical results and lessons learned. The Commission Staff Working Document, SEC (2008) 2637 153 Information asymmetries: In different European countries and overseas, there is insufficient awareness of the market potential of eco-industrial products and services. Potential clients often lack knowledge about the available options there are in a given market. The lack of awareness in the market decreases the competitiveness of these companies. This is especially due to the diversity of applications in the eco industries and the relatively high level of technical complexity. It is not always known which technologies are in reach of a company. From ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 2, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 154 “Eco-innovation and national cluster policies in Europe”, 1 July 2011, the study performed by Greenovate! Europe EEIG for the European Cluster Observatory managed by the Center for Strategy and Competitiveness at the Stockholm School of Economics 155 OECD (2007) “Competitive regional clusters: National policy approaches”, Policy brief, Paris: OECD Observer, 2007


55

collaboration projects. The level of bureaucracy related to application and implementation of cluster policies in

the region needs to be minimised (i.e., complicated management procedures; long approval procedures for


Since eco industry clusters represent highly complex systems with multiple stakeholders involved, cluster policy

measures should not be applied on a solely basis. It is rather a combination of various complementary measures

that need to be applied simultaneously. Those complementary measures go beyond the scope of cluster policies,

and include other fields like education & skills, logistics & infrastructure etc.

Furthermore, at the EU level, in close cooperation with national governments and regions, there is a need to

support the efforts of cluster organisations to improve their performance and reach excellence. The relevant

initiatives among others refer to the maintenance and update of the repository of training materials as

developed by the European Cluster Excellence Initiative and the organisation of further “train-the-trainers”

activities for cluster managers156.

Another initiative at the EU level is establishment of a website called clustercollaboration.eu which can be

consulted by regional cluster managers for several purposes, such as mapping, getting project ideas and

establishing and accessing interactive communities. Up until the publication date of this report 68 cluster

organizations within the EU related to eco industries have been registered at this website157.

Capital region of Denmark: Copenhagen Cleantech Cluster158

Copenhagen Cleantech Cluster is one of the world’s leading cluster organisations, sponsored by two regional authorities

(Capital Region of Denmark and Region Zealand) and the European Union. The cluster initiative has a partner base

representing the entire value chain of Danish Cleantech, and 11 organisations drive activities on behalf of the cluster in a

decentralised organisational setup. The initiative can document concrete results on job creation, inward investments,

gap funding, international cooperation projects etc.

To develop the cluster even further and establish a sustainable cluster organisation, Copenhagen Cleantech Cluster has

been established as a non-profit association that launches new initiatives to foster innovation and green growth.

Over the last years, the cluster organisation in Copenhagen has become a strong alliance partner for the city authorities

in testing out new ways of driving green growth and the “smart city” agenda. The City benefits from the operational and

hands-on approach of the cluster, and the cluster benefits from a visionary City Hall, and a City that is ready to

implement (and procure) new solutions as well as play host to test and demonstration projects.

City authorities can benefit from using the cluster organisation as a neutral meeting place and a competent facilitator

that drives this process. The cluster organisation plays the role of arms-length innovation agent and is a driver of

innovation and concrete action in close collaboration with the City. The cluster organisation’s role is not to be compared

with a consultancy, as the cluster organisation is a non-profit member-based organisation. The cluster organisation has

the necessary partnerships with stakeholders across the triple helix to ensure the cluster remains a driver of innovation,

providing business opportunities to cluster companies.

156 Vienna Cluster Manifesto: Using Excellent Clusters to Strengthen and Restructure EU Industry, European Cluster Conference 2012, April, Vienna 157 http://www.clustercollaboration.eu 158 http://www.iisd.org/pdf/2012/procurement_innovation_green_growth_continues.pdf


56

5.9. Well-functioning technology transfer offices within academic

institutes facilitating the adoption of eco industry solutions

The current framework condition implies the presence of well-functioning Technology Transfer Offices (TTOs)

within academic institutes facilitating the adoption of eco industry solutions.


Technology transfer is the process of transferring scientific findings from one organisation to another for the purpose of further development and commercialisation. Technology transfer process typically includes159:

Identifying new technologies;

Protecting technologies through patents and copyrights;

Forming development and commercialisation strategies such as marketing and licensing to existing

private sector companies or creating new startup companies based on the technology.

TTO refers to the department in a research institution or a separate entity which is responsible for managing

the transfer to a commercial environment of new inventions, creations, discoveries, innovations, processes and

the like which result from scientific research conducted at that research institution (or possibly at several

research institutions)160. Technology is not the only field of knowledge which can be transferred.

Commercialisation and economic impacts are complemented by social, cultural and personal benefits on the

output side, and there are other forms of knowledge transfer than those requiring strong IP protection. The

abovementioned fields are covered by a broader term of “knowledge transfer”161.


Academic and research institutions engage in knowledge and technology transfer for a variety of reasons, such

as162:

Recognition for discoveries made at the institution;

Compliance with regulations;

Attraction and retention of talent;

Local economic development;

Attraction of private funding;

Licensing revenue to support further research and education.

The priority given to each of these factors varies from institution to institution. The ultimate benefits of

technology transfer, however, are the public benefits derived from the products that reach the market and the

jobs that result from the development and sale of products163.

Barriers to technology transfer, such as limited adoption of environmental technologies, insufficient capital

markets for eco industries and inadequate cleantech investment in traditional sectors are reported to be

inhibiting the development of the eco industries supply chain164.

159 http://www.autm.net/Tech_Transfer.htm 160 Based on “Knowledge sharing in the European Research Area (ERA)” (2008), Report of the ERA Expert Group, available at: http://www.eirma.org/sites/www.eirma.org/files/doc/documents/EU/ERA-consult/eg4-knowledgesharing.pdf 161 EUR 23894 (2009) “Metrics for knowledge transfer from public research organisations in Europe”, Report from the European Commission's expert group on knowledge transfer metrics. Luxembourg: Office for official publications of the European Communities 162 http://www.autm.net/Tech_Transfer.htm 163 http://www.autm.net/Tech_Transfer.htm


57


Policy makers need to promote close cooperation of academia with industry, for example by having students

working in eco companies while engineers from companies engage in projects in universities and research

institutes. In addition, the emergence of joint labs that are on industry premises but shared with universities

and research organisations, as well as improvements in the sharing of expensive equipment and infrastructure

inside and between clusters could be of high benefit.

Furthermore, technology transfer needs to take place not only between firms but also between countries. In this

respect, the heterogeneous implementation of the various regulations at Member State level is reported to be

hindering efficient and effective technology transfer. As mentioned above, the development of a more coherent

Intellectual Property Rights (IPR) policy and legal framework is crucial, not just at the EU, but also at the

international level165.

Capital region of Denmark: Technology Transfer collaboration between Copenhagen Cleantech Cluster and The University of Copenhagen

The Tech Transfer Unit at the University of Copenhagen was established in 2003 as the main link between the world of

research and the world of business. Since 2008 the Tech Transfer Unit has been part of the division of Research &

Innovation. Main tasks are166:

Identification of research results with commercial potential;

Protection of University IP;

Management of University IP portfolio;

Commercialisation of research results;

Facilitation of research collaboration agreements related to University IP.

The University of Copenhagen has a small fund under Copenhagen Cleantech Cluster (CCC) to support development of

promising inventions and research findings within cleantech. The intention is to provide funds for proof-of-concept and

maturing inventions/research findings to a level where existing businesses or investors can evaluate the commercial

possibilities of the invention, and thus equip them to decide to exploit the project commercially167.

The CCC GAP-Fund is open to researchers employed at the University of Copenhagen with projects anchored at the

University. Funding can only be granted to projects where Intellectual Property Rights to inventions/research results

belong to the University - at the time of application, or to pending inventions. Gap-funding may not be awarded to

projects in which companies or other private players have co-ownership of rights168.

Applicants may apply for max 400,000 DKK. Gap-funding resources are primarily for support of research/laboratory

technician time. There is a requirement for 20% co-financing in kind (hours worked). This means that applicants for

400,000 DKK need to put hours of work for 100,000 DKK extra into the project. Copenhagen Cleantech Cluster will also

cover the initial IPR costs for the selected Gap-funding projects (estimated to max 125,000 DKK) so that the total Gap-

funding support amounts to 525,000 DKK169.

164 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 165 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 166 http://fi.ku.dk/english/tech_trans/om_tech_trans/ 167 erhverv.ku.dk/english/ccc/assets/.../Gapfunding_guidelines.doc/ 168 Idem. 169 Idem.


58

6. Growth stage: sustainable

industrial growth


region at the Growth stage, the fourth stage of the industry’s lifecycle. Similar to the previous chapters, we first

address each specific framework condition in detail and then discuss the implications for policy makers at this

stage of industry’s development.

6.1. Introduction

The Growth stage corresponds to the activities that support marketing, commercial and business

development leading to sustainable industrial growth in the region.

The following framework conditions have been identified as relevant for this stage of industry’s development:

Proximity of companies in traditional industries in transition towards environmentally friendly

solutions (market; relevant for all stages);

Critical mass of private consumers of eco industries (market; relevant for all stages);

Social attitude supporting eco industries (cultural; relevant for all stages);

Availability of environment-related R&D subsidies (financial; relevant also for Embryonic and Nurture

stages);

Availability of ‘green’ lending through banks (financial; relevant also for Embryonic and Nurture

stages);

Availability of seed and venture capital for eco-innovative companies (financial; relevant also for

Embryonic and Nurture stages);

Green public procurement (market; relevant also for Embryonic and Nurture stages);

Environmental focus of university research programmes (knowledge; relevant also for Embryonic and

Nurture stages);

Availability of environment-related R&D and other tax measures (regulatory and policy; relevant also

for Embryonic and Nurture stages);

Existence of eco-regulation (regulatory and policy; relevant also for Embryonic and Nurture stages);

Availability of eco-innovative infrastructure (support; relevant also for Embryonic and Nurture stages);

Critical mass of eco-companies (industrial; relevant also for Nurture stage);

Critical mass of supply chain actors (industrial; relevant also for Nurture stage);

Presence of environmental education in the school curricula and vocational training (knowledge;

relevant also for Nurture stage);

Supporting IP conditions related to green technologies (regulatory and policy; relevant also for Nurture

stage);

Policy measures supporting the internationalisation of eco-innovative clusters (regulatory and policy;


Strategy documents and roadmaps for the development of eco-industries in the region (support;


Dedicated cluster organisation (support; relevant also for Nurture stage);

Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco-

industries solutions (support; relevant also for Nurture stage).

It can thus be concluded that the relevant framework conditions are already present at earlier stages of

industry’s development, and at Growth stage, they continue to play a role in further industry’s evolution. To


59

avoid repetition, below we exclusively elaborate on the aspects that are specifically relevant to the Growth stage,

i.e., framework conditions related to the investments in further industry growth. For detailed

descriptions of other relevant framework conditions, the reader is advised to consult Chapters 3-5 of the Report.

6.2. Investments in industry growth

At the Growth stage, more and more investments tend to be oriented towards technological development and

commercialisation of eco innovations, as well as market expansion for existing technologies.


At the Growth stage, consolidation is typically taking place leading to larger firm size and capacity to invest and

attract funding. Companies are merging, and a growing number of companies is listed on the stock exchange.

This larger size and access to capital is likely to give companies a competitive edge over external competitors

given substantial capital needs and investments needed for industry’s further development. Investments are

further triggered by the need to comply with (new) regulations170.


The investment opportunities are reported to be a major driving force for expansion and internationalisation of

the sector and for the development of a level playing field both within the EU and outside171.


This stage of industry’s development is associated with a growing role of public-private partnerships (PPPs).

These partnerships create a platform for extensive knowledge sharing, innovative spin offs and leading-edge

R&D. PPPs help to expand the cluster and keep it competitive in several different ways. First, collaboration in

research and consultancy helps small companies to keep initial costs low and build a strong business case.

Second, free provision of services like IP lawyers and accountants, by, for example, universities, also helps to

keep costs for start-ups low. Third, incubation of start-ups and spinoffs helps start-ups to build a strong

business case in a protected environment. This business case can be built using the knowledge base at

universities, IP licensing and support in development of new products and services. Companies that have

surpassed the stage of start-up can also still benefit from knowledge at research institutes through the

connection that has been established between regional companies and knowledge bases present in higher

educational communities172. All these conditions allow for further growth of eco industries in the region.

Therefore, strengthening of PPPs needs to be a core priority of research and innovation policies at this stage.

Specifically, there is a need to advance the rules applicable to the consortia agreements (including the IP rules).

Secondly, it is crucial to ensure that such partnerships are driven by the industry to enable bringing the results

of research efforts to industrialisation and to the market.

170 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 171 ECORYS Netherlands and IDEA Consult (2009) “Study on the Competitiveness of the EU eco-industry”, Study within the Framework Contract of Sectoral Competitiveness Studies – ENTR/06/054 for DG ENTR of the European Commission, Final Report – Part 1, available at http://ec.europa.eu/enterprise/newsroom/cf/_getdocument.cfm?doc_id=5416 172 Marston L., Shanmugalingam S., and Westlake S. (2010) “Chips with everything: Lessons for effective government support for clusters from the South West semiconductors industry”, NESTA, available at: http://www.nesta.org.uk/library/documents/Semiconductorsv10.pdf


60

7. Survey on industry specific framework conditions

This chapter presents and discusses the survey responses amongst stakeholders with a helicopter view on the

emergence of eco industries in the region.

Whereas in the previous chapters we have discussed relevant framework conditions for industry

emergence, the objective of this analysis is to develop a snapshot picture of the presence of the analysed

framework conditions in eco industries. Such an analysis enables policy makers to assess gaps between

relevant framework conditions and the presence of these conditions in the region.

The data for the analysis has been collected by means of an online survey amongst 15 stakeholders within the

regions of the Capital region of Denmark (5), Provence-Alpes-Côte d'Azur (5) and Lombardy (5). The collected

data was used for comparisons between regions within one industry category (cross-regional). The survey

results were analysed and compared across and between the regions. As a result the eco industries represented

in the survey can be characterised by the relative presence of framework conditions.

7.1. Cross-regional comparison of general framework conditions

The chosen method for analysing and comparing the presence of framework conditions in the regions was

performed per category of framework conditions. In order to compare the responses across the regions, we first

averaged the results per individual framework condition and subsequently averaged the results per type of

framework condition. This computation was performed at the regional level. Figure 7-1 presents the results as a

spider diagram.

FIGURE 7-1: Presence of framework conditions in the selected regions for eco industries


61

The selected regions each show a rather different presence of framework conditions. Overall, we can

observe a particular presence of support, knowledge and cultural framework conditions.

Nevertheless, substantial variations between the regions can be observed. Whereas the Lombardy region shows

a relatively high presence in knowledge framework conditions, the PACA region shows a relatively high

presence in support framework conditions. Moreover, the stakeholders from the Capital region of Denmark

suggest an overall high presence of framework conditions in their region compared to what is observed in the

other regions. These differences will be further explored in the sections below.

The eco industries are therefore best characterised by a relatively high presence of support, knowledge

and cultural framework conditions. Table 7-1 presents the averages per type of framework condition for

each of the regions.

TABLE 7-1: Mean values for framework conditions per region

Type of framework condition Capital region of Denmark

PACA (FR) Lombardy (IT)

Financial 5.53 5.87 5.47

Industrial 7.20 5.50 5.80

Market 6.93 5.87 5.60

Cultural 8.00 6.20 5.80

Knowledge 7.10 6.50 6.60

Regulatory 6.85 5.60 5.65

Support 7.00 7.10 5.95

Regional observations

On the basis of the results discussed above, a number of observations can also be made with regard to the

specific regions. Each region showcases a (slightly) different pattern in the presence of framework conditions,

which is further explored below.

The Capital region of Denmark showcases a larger presence for almost all of the framework conditions when

compared to the average across the selected regions. Especially the cultural framework conditions were

perceived to be highly present in the region. Furthermore, stakeholders noted a particular presence of the

market, regulatory, industrial and support framework conditions. The financial framework conditions were

perceived to be present in the region to a lesser extent. The latter, however, corresponds with the average across

the regions. The Capital region of Denmark is therefore best characterised as having a high presence of

cultural, industrial and market framework conditions, followed by a presence of regulatory,

knowledge and support framework conditions. Financial framework conditions relatively lack presence.

The presence of the framework conditions in the PACA region follows a more distinctive pattern than the

industry average. Similar to the Capital region of Denmark, there is a relatively high presence of support

framework conditions. This is consistent with both the hypothesised importance of these framework conditions

for eco industries to emerge and, to some extent, the average across the regions. Particularly the industrial,

cultural and regulatory framework conditions, however, were perceived to be present to a lesser extent in the

region. Based on the survey results, the PACA region is best characterised as having a relatively high

presence of support and financial framework conditions, followed closely by the presence of market

and knowledge framework conditions. The regulatory, cultural and industrial framework conditions were

perceived to be present in the region to a lesser extent.


62

Overall, stakeholders from the Lombardy region noted a relatively high presence of the knowledge framework

conditions. Moreover, they on average rated all framework conditions to be present to a lesser degree than what

we observe across the regions. It is especially striking to see a relative lack of presence of the support framework

conditions, as this contrasts with our earlier findings for the Capital region of Denmark and PACA region.

Furthermore, the cultural framework conditions were also perceived to be relatively less present in the region

compared to the other framework conditions. The Lombardy region is therefore best characterised by a

relatively higher presence of knowledge, financial and industrial framework conditions,

followed by presence of regulatory, market, support and cultural framework conditions.

7.2. Industry specific framework conditions

Underlying the general framework condition categories are a set of industry specific sub-level framework

conditions. To get a better grasp of the presence of these industry specific framework conditions, it is

worthwhile to consider the results of each of these conditions in more detail. Table 7-2 presents the detailed

summary statistics of the survey responses for each of the sub-level framework conditions across the regions173.

TABLE 7-2: Detailed summary statistics of survey responses for the eco industries

Framework conditions n Mean Std. dev. Min Max

1. Financial framework conditions

- Availability of environment-related R&D subsidies 15 6.87 2.10 3 10

- Availability of ‘green’ lending through banks 15 4.40 1.84 2 7

- Availability of seed and venture capital for eco-innovative companies 15 5.60 1.76 3 8

2. Industrial framework conditions

- Critical mass of eco-companies 15 6.00 2.04 3 10

- Critical mass of supply chain actors 15 6.33 1.45 4 8

3. Market framework conditions

- Proximity of companies in traditional industries in transition towards environmentally friendly solutions

15 6.13 1.64 3 8

- Critical mass of private consumers of eco-industries 15 6.40 1.64 4 9

- Green public procurement 15 5.87 1.96 2 9

4. Cultural framework conditions

- Social attitude supporting eco-innovation 15 6.67 2.41 1 10

5. Knowledge framework conditions

- Environmental focus of university research programmes 15 7.33 1.68 4 9

- Presence of environmental education in the school curricula and vocational training

15 6.13 1.77 3 9

6. Regulatory framework conditions

- Availability of environment-related R&D and other tax measures 15 5.60 1.72 2 9

- Existence of eco-regulation 15 6.60 2.06 2 9

- Supporting IP conditions related to green technologies 15 5.33 2.09 1 10

- Policy measures supporting the internationalisation of eco-innovative clusters

15 6.60 2.29 2 10

7. Support framework conditions

- Availability of eco-innovative infrastructure 15 6.60 2.38 1 10

173 For this analysis we have chosen to aggregate the results as this increases the explanatory power by having more observations available to us.


63

- Strategy documents and roadmaps for the development of eco-industries in the region

15 6.93 1.83 3 10

- Dedicated cluster organisation (cluster manager or similar) to coordinate the development of eco-industries in the region

15 7.13 2.20 2 10

- Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco-industries solutions

15 6.07 2.19 2 10

From Table 7-2 follows that the specific framework conditions relating to eco innovation are not perceived to be

highly present in the regions. Across the various categories of framework conditions, it can be observed that

particularly the availability of “green” lending, green public procurement, and environment-related R&D and

other tax measures relatively lack presence in the regions. In contrast to the latter, environment-related R&D

subsidies were perceived to be relatively more present in the regions.

Furthermore, the support framework conditions generally show a relatively high presence in the regions.

Nevertheless, well-functioning technology transfer offices that facilitate the adoption of eco-industries solutions

were noted to lack relative presence in the regions. The regions are, however, characterised by a relatively high

presence of dedicated cluster organisations and the presence of strategy documents and roadmaps, both

supporting the development of eco-industries in the region.

Finally, the knowledge framework conditions showcase an interesting contrast. Whereas

stakeholders commended the environmental focus of university research programmes in the regions, they

noted a relative lack of presence of environmental education in the school curricula and vocational training. In

other words, whereas some university research programmes are perceived to have an environmental focus,

there is relatively less focus on specific education within the field.


64

8. Conclusions and Policy

recommendations

In the current chapter, we elaborate on specific recommendations with regard to how policy makers can

support the development of eco industries in European regions at each stage of industry’s development. We

begin by mapping the identified framework conditions based on the stage of industry’s development these

framework conditions refer to.

8.1. Key conclusions from case study analysis

The current case study analysis was built on the notion of the dynamic nature of emerging industries, i.e., a

continuous evolution of an industry and its periodical transitions from one stage to another. The analysis

confirmed that the role and importance of the relevant framework conditions changes with new stages of the

industry’s life cycle. However, all identified framework conditions prove to have a long-term impact and are

relevant for more than one stage. Figure 8-1 presents the result of the mapping exercise of the analysed

framework conditions for eco industries.

FIGURE 8-1: Mapping of identified framework conditions for eco industries


65

8.2. Policy recommendations

In this sub-section, we elaborate on specific recommendations for regional, and, whenever relevant, national

and EU policy makers on how to support the development of eco industries in European regions. We continue

building on the dynamic approach forming the core of our methodology, and tailor the relevant

supporting measures to the specific stages of the industry’s life cycle. In all cases, the proposed

measures are relevant for more than one stage, which is specified in the description of the measures below.

Policy recommendations for Precursor stage

The Precursor stage is the first stage in the industry’s lifecycle implying the first interest in the emerging

industry in the region. While in practice, the first initiatives introducing eco industries to the region often come

from the private sector, the role of policy makers at this initial stage should not be underestimated. Policy

makers can stimulate the development of eco industries at the Precursor stage in the following ways:

1) Stimulating the transition of traditional industries of the region towards environmentally

friendly solutions (and thus creating a demand for the products and services of eco industries) by means

of eco-friendly regulations and standards;

2) Influencing the engagement of traditional industries with eco industries by implementing

policies that incentivise joint networks and multi-stakeholder research platforms; such


applied;

3) Organising social marketing and advertising campaigns promoting eco industries and green

products in the region, as well as incentivising the purchase of eco products (e.g., financial

benefits for the users of solar panels).

Policy recommendations for Embryonic stage

The Embryonic stage is the second stage in the industry’s lifecycle implying the activities that support the

improvement of the reliability and performance of technology and services to a point where it can be

demonstrated in a market environment. Specifically, this stage implies activities that help to demonstrate the

commercial potential of technology and services in the region through revenue generation. This stage is

associated with an even higher role of policy makers than during the Precursor stage. Policy makers can

stimulate the development of eco industries by ensuring:

1) Availability of environment-related R&D subsidies:

a) R&D subsidies, either through direct government funding of R&D or through tax credits for private

R&D activity, can help raise private R&D levels to a socially desirable level;

b) While R&D subsidies address market failures in the invention of new technologies, they do not provide

incentives to adopt new technologies;

c) When setting the level of R&D subsidies, policy makers need to consider the opportunity cost of

additional R&D since ignoring the costs of reducing these R&D efforts would result in overly generous

subsidies for eco R&D, and could have negative impacts on the economy as a whole.

2) Availability of ‘green’ lending through banks:

a) Policy makers can use two main options to induce a change within eco industries regarding their

emergence and access to “green” financing options: direct access to capital through Public Investment

Banks; and preferential credit;

b) Public Investment Banks should aim at giving SMEs better access to credit, supporting entrepreneurs

at all stages of their project, helping enterprises to expand their market and their export activities;

c) Low-cost credit lines and partial risk guarantees can incentivise banks to invest in higher risk-bearing

projects.


66

3) Availability of seed and venture capital for eco-innovative companies:

a) By providing targeted and increased support to the industry from EU Community Budget, the

European Investment Fund and European Investment Bank, private investments could be triggered.

b) This support from EU government bodies can take the form of providing a package of financial

instruments to cover different company sizes and structures (e.g., loans, guarantees, grants and tax

incentives) aimed at increasing the attractiveness for the private sector to invest in European eco

industry product development activities.

4) Green public procurement:

a) Regional authorities should put green public procurement on the political agenda of the region;

b) Regional authorities should set clear targets (e.g., developing green public procurement action plans

focussing on: certain product groups and due dates for these products; certain types of public

organisations and due dates for these organisations etc.);

c) Regional authorities should create green public procurement knowledge base (e.g., linked databases,

websites containing information on “green” criteria, specifications, best practices, eco-labels etc. on

products and procurement procedures, including legal information, procurement regulation);

d) Regional authorities should offer training opportunities for the purchasers of green public

procurement.

5) Environmental focus of university research programmes:

a) Regional authorities should introduce programmes that provide financial support for conducting

collaborative research within the environment-related disciplines (including multidisciplinary research

addressing complex issues, problem-solving research; international cooperation; addressing global and

local challenges; dissemination of knowledge and research results);

b) Regional authorities should introduce programmes dedicated to strengthening the innovative capacity

of SMEs by providing financial support for outsourcing research critical to their core business activities;

c) Regional authorities should introduce programmes that stimulate industry-academia partnerships in

order to stimulate research collaboration between public research organisations and private

commercial enterprises, including SMEs;

d) Regional authorities should introduce programmes that offer initial training of researchers, lifelong

training and career development, and international fellowships;

e) Regional authorities should create a dedicated helpdesk that would inform cluster members about calls

for proposals for the relevant EU subsidies and grants and assist cluster members with preparing

proposals.

6) Availability of environment-related R&D and other tax measures:

a) To influence the consumer’s behaviour and thereby trigger the demand for eco products in the region,

direct fiscal incentives can take a form of a subsidy or rebate provided after the purchase of an eco

product or paid directly at the check-out, in some cases delivered in case of replacement of the old

appliance etc.;

b) The environment-related R&D tax credit can be an effective tool for boosting innovation,

competitiveness and creating high-wage employment in the region.

7) Adoption of eco-regulation:

a) There is a need to create an environmental policy regime that is consistent with an industrial policy

focusing on innovations with sufficiently large international selling opportunities.

b) For the EU eco industries to be able to successfully develop in the future, a long-term stable policy

framework with greater harmonisation or coordination across the Member States, together with

simplification of national regulations is needed;

c) The development of a more coherent intellectual property rights (IPR) policy and legal framework is

crucial, not just within the EU, but also at the international level.


67

8) Availability of environmental and research & innovation infrastructure:

a) Besides large investments in the environmental infrastructure of the region, the role of policy makers is

to support the concept of public-private partnerships vital for the development of research & innovation

infrastructure.

The abovementioned policy actions are relevant also for the next two stages of industry’s development: Nurture

and Growth stage.

Policy recommendations for Nurture stage

The Nurture stage corresponds to the activities that help to improve the price and performance of applications

to a point where sustainable business potential can be demonstrated. Specifically, this stage implies developing

a market with mass growth potential. Also at the Nurture stage, the role of policy makers is of fundamental

importance. Policy makers can stimulate the development of eco industries at this stage by ensuring/supporting

the presence of:

1) Critical mass of eco-companies:

a) The key task of policy makers is to create an environment favourable for setting up and expanding

businesses in the region.

b) The relevant measures should among others aim at ensuring easier access to funding, making

legislation clearer and more effective and developing an entrepreneurial culture and support networks

for businesses.

2) Critical mass of supply chain actors:

a) A specific role in supporting the establishment of a structured eco industries supply chain belongs to

dedicated cluster initiatives.

b) Policy makers need to promote and support cluster initiatives in their regions by financing the creation

of cluster organisations and the associated cluster-level initiatives (e.g., networking events, match-

making etc.).

3) Environmental education in the school curricula and vocational training:

a) Policy makers should include the groups targeted as beneficiaries in the programme development

process (NGOs, associations of teachers, network of environment education, etc.);

b) Policy makers should include environmental education and sustainable development experts in the

programme development process;

c) Policy makers should provide capacity-building in environmental education issues to the programme

management authorities at all levels;

d) Policy makers should ensure shorter payment periods, pre-financing possibilities and negotiating

assured national co-financing;

e) Policy makers should support organisations in developing the project proposals and managing the

projects;

f) Policy makers should inform potential project promoters of funding opportunities and coordinating

exchange of experiences between existing projects.

4) Supporting IP conditions related to green technologies:

a) There is a clear need for a unitary patent system. Unitary patent protection would foster scientific and

technological advances and the functioning of the internal market by making access to the patent

system easier, less costly and legally secure.

b) For the national and EU R&D funding programmes, more clear and streamlined rules for IP and access

rights need to be defined, and the necessary measures need to be taken to ensure their implementation.

c) This may be achieved through mandatory Consortium Agreement templates that may depend on the

type of project and the phase of the innovation cycle, with which the participants will be acquainted in


68

advance, and which will avoid spending disproportionate amounts of time and efforts for preparing the

Consortium Agreements of publicly-funded projects.

5) Policy measures supporting the internationalisation of eco-innovative clusters:

a) Examples of the policy measures supporting internationalisation include regional support in

representing the cluster abroad; regional support for inward investment activities; removal of custom

duties on green products, as well as training and coaching etc.

b) Policy makers can develop a knowledge sharing system in which eco-companies, traditional companies

and research institutes can exchange information (inter)nationally and possibly collaborate on project

for international markets.

6) Strategy documents and roadmaps for the development of eco-industries in the region:

a) Strategy documents and roadmaps should target companies of all sizes in the region, not only SMEs, as


chain.

b) Objectives set in strategy documents and roadmaps need to be continuously monitored and periodically



c) Interest in the actions set in strategy documents and roadmaps from the company side is crucial for




d) There is a constant need to adjust the strategic direction due to changes in the interests of the partners



7) Dedicated cluster organisation:

a) Regional, national and EU authorities need to offer dedicated cluster policies that typically include

grants for cluster management activities and specific collaboration projects.

b) The level of bureaucracy related to application and implementation of cluster policies in the region

needs to be minimised (i.e., complicated management procedures; long approval procedures for


c) Since eco industry clusters represent highly complex systems with multiple stakeholders involved,

cluster policy measures should not be applied on a solely basis. It is rather a combination of various

complementary measures that need to be applied simultaneously (e.g., education & skills, logistics &

infrastructure etc.).

d) At the EU level, in close cooperation with national governments and regions, there is a need to support

the efforts of cluster organisations to improve their performance and reach excellence (e.g., European

Cluster Excellence Initiative and the organisation of further “train-the-trainers” activities for cluster

managers).

8) Well-functioning technology transfer offices within academic institutes facilitating the

adoption of eco-industries solutions:

a) Policy makers need to promote close cooperation of academia with industry, for example by having

students working in eco companies while engineers from companies engage in projects in universities

and research institutes.

b) The emergence of joint labs that are on industry premises but shared with universities and research

organisations, as well as improvements in the sharing of expensive equipment and infrastructure inside

and between clusters could be of high benefit.

The abovementioned policy actions are relevant also for the Growth stage.


69

Policy recommendations for Growth stage

Finally, besides the measures already mentioned above, the key measures to be taken by policy makers at the

Growth stage include:

1) Making strengthening of PPPs a core priority of research and innovation policies at this stage;

2) Advancing the rules applicable to the consortia agreements (including the IP rules);

3) Ensuring that PPPs are driven by the industry to enable bringing the results of research efforts to

industrialisation and to the market.

Concluding remarks

The current case study analysis has shown that policy makers play a vital role in the development of eco

industries from the very beginning of industry’s emergence in the region. However, as mentioned before, eco

industry clusters represent highly complex phenomena consisting of multiple other stakeholder groups besides

policy makers (i.e., small and large firms from both core and connected industries; academic institutions;

various supporting structures including cluster organisations; investors etc.). All these stakeholder groups are

crucial for the development of eco industries in the region. Nevertheless, while favourable policy

measures cannot solve all the challenges on their own, their presence can significantly

accelerate the development of eco industry clusters.

There is no generic ‘silver bullet’ across all eco industry clusters in terms of policy measures that have to be

applied. The list of measures above provides a general overview of the relevant measures that are reported to be

favourable for the development of eco industries. However, what works in one region does not necessarily have

to work in another one, as myriads of contextual factors (including historical, economic, demographic, cultural

and other developments) determine the success of the applied policy measures. In this respect, policy makers

and cluster organisations play a particularly fundamental role. It is crucial to make sure that the specific

activities of cluster initiatives are aligned with the unique set of challenges and opportunities the cluster is

facing. The critical task is to ensure that policy interventions first support an effective process

of identifying the action priorities and then provide the right tools to address whatever those

priorities are. Examples of such priorities include specific business environment dimensions to upgrade, the

need to address specific weaknesses in company development, specific market opportunities to leverage

through collaboration etc.174.

Finally, policy interventions supporting industry development should always be discussed with local companies,

and designed in a way that captures the interest of those companies. Consequently, industry’s involvement in

policy making is crucial from the very early stages, including the design stage of a policy intervention (joint

objective setting), but also its monitoring and evaluation.

174 Dervojeda K. (2013) “Towards sustainable chemical clusters: The role of policy interventions. Chemical Industry Digest, February 2013 Issue


70

Annex A: Questionnaire

Introduction

Welcome to the online survey on the industry-specific framework conditions for the world-class clusters in emerging industries. Framework conditions here refer to factors that are vital for cluster development.

The survey aims to collect inputs for the evidence-based policy recommendations that would allow regional, national and European policy makers to develop effective measures in order to create, expand and keep the European clusters in emerging industries competitive.

The survey is conducted in the context of the “Extension of the European Cluster Observatory: Promoting better policies to develop world-class clusters in Europe” carried out by PwC for Enterprise and Industry Directorate General of the European Commission.

We highly appreciate your participation and we would like to thank you in advance for your time and inputs.

Please click on the “Next” button to start the survey.

1 General information

Item Response

1.1 First Name

1.2 Last Name

1.3 Position

1.4 Organisation

1.5 Type of stakeholder Cluster manager or similar

Policy maker (regional/national)

Industry association

Chamber of commerce or similar Other (please specify)

1.6 Please indicate the industry you represent.

Options (drop down menu)

Creative industries

Eco-industries

Mobile services industries


71

1.7 Please indicate the region you represent.

Options (drop down menu)

Capital region of Denmark (Denmark)

Provence-Alpes-Côte d'Azur (France)

Lombardia (Italy)

The remainder of the survey focuses on seven types of framework conditions in your region: (1) financial; (2) industrial; (3) market; (4) cultural; (5) knowledge; (6) regulatory and policy; and (7) support.

2 Financial framework conditions

Please indicate to what extent the following financial framework conditions are applicable to

your region (1 = the condition is hardly applicable to the region; 5 = the condition is to some

extent applicable to the region; and 10 = the condition is highly applicable to the region).

2.1 Availability of environment-related R&D subsidies

1 2 3 4 5 6 7 8 9 10

2.2 If relevant, please provide an example of a good practice from your region (i.e., specific tools, programmes, measures etc. that aim to support this framework condition).

[open question]

2.3 Availability of ‘green’ lending through banks [pop up text: e.g., interest rate on environmentally-friendly investments]

1 2 3 4 5 6 7 8 9 10


[open question]

2.5 Availability of seed and venture capital for eco-innovative companies

1 2 3 4 5 6 7 8 9 10


72


[open question]

3 Industrial framework conditions

Please indicate to what extent the following industrial framework conditions are applicable to



3.1 Critical mass of eco-companies [pop up text: e.g., companies in air pollution control, cleaner technologies and processes (CTP), energy management, monitoring and instrumentation, landscape services, marine pollution control, noise and vibration control, recovery and recycling, renewable energy, transport pollution control, waste management, water and wastewater treatment etc.)]

1 2 3 4 5 6 7 8 9 10


[open question]

3.3 Critical mass of supply chain actors [pop up text: presence of eco-innovation consultancy services, presence of research centres for eco-innovation, presence of equipment suppliers, presence of utility companies]

1 2 3 4 5 6 7 8 9 10


[open question]


73

4 Market framework conditions

Please indicate to what extent the following market framework condition is applicable to your

region (1 = the condition is hardly applicable to the region; 5 = the condition is to some extent

applicable to the region; and 10 = the condition is highly applicable to the region).

4.1 Proximity of companies in traditional industries in transition towards environmentally friendly solutions (i.e. critical mass of business consumers of eco-industries)

1 2 3 4 5 6 7 8 9 10


[open question]

4.3 Critical mass of private consumers of eco-industries

1 2 3 4 5 6 7 8 9 10


[open question]

4.5 Green public procurement [pop up text: e.g., public authorities use their purchasing power to support goods and services with lower impact on the environment]

1 2 3 4 5 6 7 8 9 10


[open question]


74

5 Cultural framework conditions

Please indicate to what extent the following cultural framework conditions are applicable to



5.1 Social attitude supporting eco-innovation [pop up text: e.g., attitude of citizens towards environment, public awareness of environmental problems, perception of green brands by consumers, perception of eco-innovation by business]

1 2 3 4 5 6 7 8 9 10


[open question]

6 Knowledge framework conditions

Please indicate to what extent the following knowledge framework conditions are applicable to



6.1 Environmental focus of university research programmes

1 2 3 4 5 6 7 8 9 10


[open question]

6.3 Presence of environmental education in the school curricula and vocational training

1 2 3 4 5 6 7 8 9 10


[open question]


75

7 Regulatory and policy framework conditions

Please indicate to what extent the following regulatory and policy framework conditions are

applicable to your region (1 = the condition is hardly applicable to the region; 5 = the condition

is to some extent applicable to the region; and 10 = the condition is highly applicable to the

region).

7.1 Availability of environment-related R&D and other tax measures

1 2 3 4 5 6 7 8 9 10

7.2 If relevant, please provide an example of a good practice from your region (i.e., specific tools, programmes, measures etc.).

[open question]

7.3 Existence of eco-regulation [pop up text: e.g., rules and regulations prescribing eco-efficient standards such as green procurement]

1 2 3 4 5 6 7 8 9 10


[open question]

Please indicate to what extent the following regulatory and policy framework conditions are

applicable to your region (1 = the condition is hardly applicable to the region; 5 = the condition

is to some extent applicable to the region; and 10 = the condition is highly applicable to the

region).

7.5 Supporting IP conditions related to green technologies [pop up text: e.g., accelerated examination process for patent applications relating to green technologies; green patent database and other green patent tools]

1 2 3 4 5 6 7 8 9 10


[open question]


76

7.7 Policy measures supporting the internationalisation of eco-innovative clusters [pop up text: e.g., regional support in representing the cluster abroad; regional support for inward investment activities; removal of custom duties on green products]

1 2 3 4 5 6 7 8 9 10


[open question]

8 Support framework conditions

Please indicate to what extent the following support framework conditions are applicable to



8.1 Availability of eco-innovative infrastructure [pop up text: e.g., new fuelling systems, sophisticated traffic control, diffused energy distribution systems]

1 2 3 4 5 6 7 8 9 10


[open question]

8.3 Strategy documents and roadmaps for the development of eco-industries in the region

1 2 3 4 5 6 7 8 9 10


[open question]


77

Please indicate to what extent the following support framework conditions are applicable to



8.5 Dedicated cluster organisation (cluster manager or similar) to coordinate the development of eco-industries in the region

1 2 3 4 5 6 7 8 9 10


[open question]

8.7 Well-functioning technology transfer offices within academic institutes facilitating the adoption of eco-industries solutions

1 2 3 4 5 6 7 8 9 10


[open question]

9 Additional framework conditions

9.1 Please indicate the framework conditions that were not mentioned in this survey but that you find vital for the development of the emerging industry in your region.

Whenever possible, please accompany your remarks with examples from your region of good practices supporting those framework conditions.

[open question]


78

Annex B: Sample of analysed

regions

Based on the empirical analysis within WP3, the following three regions were selected for detailed case study

descriptions for eco industries:

(1) Capital Region of Denmark;

(2) Provence-Alpes-Côte d'Azur (France);

(3) Lombardy (Italy).

Below we provide concise descriptions of each of the three regions.

Criteria Data

Region name 1 Capital region of Denmark

Short description The Copenhagen metropolitan area – the Capital Region – is among the richest

regions in Europe and is one of the leading regions with regards to

innovation and economic performance. Nevertheless, compared to other similar

metropolitan regions for instance Stockholm, Helsinki or Amsterdam, the Capital Region

is losing ground on important parameters such as growth in labour

productivity and educational level. Most notably, the Capital Region experienced

a decreasing growth in labour productivity over the last decade. Therefore, the main

challenge for the Capital Region is to ensure that the good framework conditions for

innovation manifest itself in a better innovation performance in the coming years175.

Relevant cluster(s) Copenhagen Cleantech Cluster

Picture

176

Website http://www.cphcleantech.com

Establishment year of the cluster

A dedicated cluster initiative was launched in spring 2010 in cooperation with public

authorities and research institutions, to ensure growth, innovation and collaboration

among Danish cleantech companies.

Size of the cluster About 750 companies and about 47,000 employees working in eco industries177

Main areas of activity The cluster focuses on the activities which develop (including consultancy and research),

produce or implement new or improved processes or products, that contribute to178:

Production of renewable energy or sustainable materials;

Reduction of the use of natural resources by exploiting the resources or energy

more efficiently;

Reduction of the harm caused by fossil fuels;

Reduction of pollution problems through products, processes and/or

consultation.

175 “Regional Innovation Monitor: Regional Innovation Report (Danish Capital Region)”, 22 August 2011, prepared by a consortium led by Technopolis Group for the European Commission Enterprise and Industry Directorate-General Directorate D – Industrial Innovation and Mobility Industries 176 http://www.internationalcleantechnetwork.com/partners/partners/copenhagen-cleantech-cluster-(ccc),-denmark.aspx 177 Monitor Copenhagen Cleantech Cluster 2012 178 http://www.cphcleantech.com/about/what-is-cleantech


79

Criteria Data

Noteworthy A unique set of actors stand up behind Copenhagen Cleantech Cluster -

including Copenhagen Capacity, Scion DTU, Confederation of Danish Industry

(DI), Risø DTU and the University of Copenhagen as well as companies like

Vestas, Dong Energy, Haldor Topsøe, Novozymes and Better Place. The broad

foundation of partners ensures that the initiative embraces the entire value

chain to benefit cleantech companies, researchers and entrepreneurs in

Denmark179.

Today the long-term goal for Danish energy policy is as follows: the entire

energy supply – electricity, heating, industry and transport – is to be

covered by renewable energy by 2050180.

To complete this green transition, Denmark has passed one of the world’s

most ambitious energy agreements, encompassing a number of targets to

be achieved already by 2020181:

o more than 35 % of the final energy consumption will be renewable;

o approx. 50 % of electricity consumption is to be supplied by wind

power;

o greenhouse gas emissions will be 34 % lower than in 1990;

o by 2025, Copenhagen aims to be the first carbon neutral

capital in the world.

Region name 2 Provence-Alpes-Côte d'Azur (France)

Short description The Provence-Alpes-Côte d’Azur (PACA) region is one of the three leading

economic regions in France and is also the leading region for business creation,

besides the region of Ile de France. The strong economic attractiveness resulted in the

PACA region having one of the largest resources consisting of diverse

knowledge and technologies. Two operations which are of national interest are

located in the PACA region. The PACA region has also been chosen as the location for the

ITER (nuclear fusion power plant) project182.

Relevant cluster(s) Capenergies: is a cluster organisation which has more than 500 members, who work

on projects that aim to create innovative opportunities for the energy industry.

Picture

183 184

Website http://www.capenergies.fr/


The Capenergies cluster was certified by the French government in 2005.

179 http://www.stateofgreen.com/en/Profiles/Copenhagen-Cleantech-Cluster 180 http://www.copcap.com/BusinessOpportunities/Cleantech/Background 181 Ibid. 182 http://www.invest-in-france.org/us/why-choose-france/provence--alpes-cote-d-azur.html 183 http://www.capenergies.fr 184 http://tinyurl.com/cy9up55

http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=6l1yO86mwXiWuM&tbnid=s5I-szF-pnobJM:&ved=0CAUQjRw&url=http://www.capenergies.fr/index.php?Coordonnees&ei=vwVTUaOTOMPA0QXRlYGQDg&bvm=bv.44342787,d.d2k&psig=AFQjCNFy-xIH_0VbfhURBw79xp7otj5oYw&ust=1364481827866416

http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=xO88jt7aWW9-1M&tbnid=-gIDxV7rP-WZyM:&ved=0CAUQjRw&url=http://www.les-ecos-de-capenergies.fr/&ei=1wVTUazRN4Kb0wWR94GICQ&bvm=bv.44342787,d.d2k&psig=AFQjCNFy-xIH_0VbfhURBw79xp7otj5oYw&ust=1364481827866416


80

Criteria Data

Size of the cluster Capenergies is the cluster for all future energy related businesses and counts

approximately 536 members and 50,000 employees185. The members are

categorised as the following:

317 Companies

87 R&D centres

30 Member associations

15 Finance institutions

55 Institutional partners

19 Professional training organisations

13 Training and research organisations

Main areas of activity Capenergies focusses on energies of the future and provides its members with the

possibility of setting up joint projects and provides them full access to all information

and knowledge. Capenergies also has a financers committee, which helps companies

prepare their fund raising campaign, enabling them to go through a fast track to

investors.

To stimulate innovation and experimentation, there are also 6 industrial

and R&D hubs. These cover all 6 areas regarding green energies, such as, smart grids,

nuclear fusion, solar energy and hydrogen storage186.

Noteworthy This cluster has attracted large multinationals as well as several organisations

targeting certain intrinsic aspects of businesses operations within the eco industries.

Therefore they are able to assess various projects and play an important role in whether

projects receive public funding187.

Region name 3 Lombardy (Italy)

Short description Lombardy has the second highest GDP among European regions188. Nationally,

Lombardy alone contributes 20.6% to the national added value, being

number one in Italy.

Lombardy is among the four most advanced European regions, with approximately

800,000 businesses, spread over 16 industrial districts. This also makes Lombardy

one of the four Motors of Europe, also being known as the ideal location for further

growth, for small and medium sized firms189.

However, the Lombardy region does have some challenges to overcome to sustain its

strong position within the European Union. The demand for globalisation and

greater competition requires the implementation of a better infrastructure,

so that further growth is not hindered, as well as the continuation of transforming

towards value-added industries.

Relevant cluster(s) Energy Cluster: an industrial cluster which is supported by firms which are leaders in

the energy industry.

Website

190 191

185 http://www.capenergies.fr/index.php?Polechiffresclefs 186 http://www.capenergies.fr/fichiers/anglais/gbv5.pdf 187 http://www.capenergies.fr/fichiers/anglais/gbv5.pdf 188 http://www.investinlombardy.com/LOMBARDY_REGION/103 189 http://www.worldreport-ind.com/lombardy/introduction.htm 190 http://www.energycluster.it

http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=6cbh5qLGJP2PGM&tbnid=ytuI2ZrLOBvh0M:&ved=0CAUQjRw&url=http://www.clustercollaboration.eu/web/lombardy-energy-cluster&ei=hhBUUcuTGIqt0QXf0IDQDA&bvm=bv.44442042,d.d2k&psig=AFQjCNFLLWyymJfwn6knpK7fxqv9RufloA&ust=1364550132367099

http://www.google.nl/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=jErQJ-J8OAOHEM&tbnid=aWf6ioc74_v2LM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/Lombardia_(wine)&ei=PBhUUdziKefG0QXE74GoCQ&bvm=bv.44442042,d.d2k&psig=AFQjCNFiuc5j5Q95ktY44m_2IJ2tvoNa_g&ust=1364552117858734


81

Criteria Data


Website: www.energycluster.it

Size of the cluster Officially considered a cleantech cluster from 2009 onwards.192

Main areas of activity Energy Cluster Lombardy counts more than 100 companies and has 8 university

and research centres along with 10 public sector organisations which

operate on a non-profit basis. A total of approximately 20,390 people are employed

under the cluster193.

Noteworthy The Energy Cluster is there to support its members in order to become more

competitive. It helps its members in gaining international exposure,

increasing market knowledge for national and international markets. Since

there is a variety of companies in the cluster, the cluster aims to streamline effective

synergies in order to improve product quality and efficiency194.

191 http://en.wikipedia.org/wiki/Lombardia_(wine) 192 http://www.internationalcleantechnetwork.com/partners/partners.aspx 193 http://www.energycluster.it/eng/default.aspx 194 http://www.energycluster.it/eng/default.aspx