Cleantech Report June2009

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The Impact on key sectors in Europe. published by CMS Lawyers for Business and Oxford Analytica. Foreword by Cornelius Brandi, Chairman of the CMS Executive Committee.

Text of Cleantech Report June2009

  • 1.Cleantech The Impact on Key Sectors in Europe In association with:

2. Foreword by Cornelius Brandi Chairman of the CMS Executive Committee With Cleantech, we continue our series of reports in Clearly the issues related to Cleantech extend well beyond conjunction with Oxford Analytica on topics of significant Europe and have global implications. At CMS, however, we interest to all commercial enterprises operating in thethink of ourselves very much as citizens of Europe since, of European market. The report provides a commentary from our 2,400 plus lawyers operating from 48 cities around the the CMS team involved in the initiative, as well as theworld, the substantial majority is based in and is offering independent Oxford Analytica study in full.practical legal advice from within Europe. Our main aim,therefore, is to consider the issues with a European focus CMS has chosen Oxford Analytica as its partner for the provenand to assess their likely impact on the future development quality of its research and analysis. We are confident that in of Europe, particularly as they affect the commercial and doing so this and similar reports have the scope and rigourcorporate environment in which all of our clients have to necessary to stimulate a healthy and productive debate withinmanage their own businesses with a view to profitability. your own organisations and possibly more widely. In some areas which are still evolving there will as yet be no right orThis is an economically challenging time worldwide. But wrong answers. In relation to those, we would not be soEurope is well positioned to seize the enormous growth presumptuous as to claim that the views we express or theopportunities afforded by Cleantech, perhaps even more in conclusions we reach are likely to be any more accurate than the midst of profound economic uncertainty. CMS and Oxford your own. However, by creating the framework and forum Analytica hope that this report will offer valuable insights for the debate we hope to be able to educate and perhaps into how businesses in all industries can prepare for the encourage others to find the right solutions.impact of Cleantech by minimising the potential risks andmaximising the unprecedented opportunities it affords. In our commentary, we have intentionally referred to the Cleantech revolution because the drivers behind it are transformational in nature and cut across all continents and all industries. The global magnitude of its impact is underscored by the estimate that by 2015, the Cleantech industry will be worth many trillion Euros. As lawyers, we will naturally be looking at the issues Cornelius Brandi concerned from a legal perspective. Further, our intention Chairman CMS Executive Committee is also to examine and, we hope, throw some light on the T +49 69 717 01-522 broader commercial, regulatory, fiscal and political aspects E cornelius.brandi@cmslegal.com of this important topic. 3. Our Opinion Clean technology: The revolution has begun Cleantech is at the heart of a huge global revolution, drivenDefined as technology which is specifically designed to by many factors. Individually each of these factors is address environment issues (such as remediation of harmful significant but cumulatively they are immensely powerful.emissions) or is designed to lessen the impact on the planet These factors include (1) protection of the environmentof current products or services (for instance renewal energy or (especially environment degradation, resource efficiency and efficient motors and other products), Cleantech is becoming consumption and climate change), (2) energy security,central to many businesses today: waste management, water (3) security of commodities (for instance water, food, scarcemanagement, road transport and consumer goods, to name metals, oil, etc.), (4) financial movement towards just a few (the appendix sets out examples of current internalisation of the external costs of environment clean technologies). CMS believes that over the coming years, degradation, and (5) a global population increasing at a Cleantech will pervade virtually all commercial sectors. This tremendous pace coupled with increasing human longevity. innovative and fast growing industry could be worth manytrillion Euros globally by 2015. Independent reportCMS commissioned Oxford Analytica, an international andbe so in the near future but the US, Japan and China are independent consulting firm, to produce a forward-lookingcatching up fast. report on Cleantech and its impact on key commercial sectors in Europe. We believe that this report can help to frame the Despite the recent economic crisis, Cleantech and more current discussion about the enormous market opportunities stringent environment regulations have remained high on Cleantech provides, the potential risks and structural barriersthe political agenda. We believe that the ongoing economic that it faces and the potential impacts that it will have on other crisis will not dampen the take up of Cleantech any more commercial sectors.than it is dampening other commercial sectors. In fact wesuspect that the economic crisis will stimulate the uptake of Much of the growth in Cleantech is being driven by Cleantech, not only because the policy makers in almost all government policy and legal regulations. The Europeanthe major economies view this sector as a sector of potentially Union (EU) and its Member States have set clear targets forhuge growth but also because business managers will seek instance in clean energy generation, waste managementinnovative Cleantech as a means to help increase efficiency and road transport. The EU is currently, in our opinion, the and control costs. global thought leader in this area and will continue to Cleantech The Impact on Key Sectors in Europe 2 4. Europe at the forefront of CleantechAs Europe is at the forefront of Cleantech innovation, it We believe that if in 20 years time we look back at today, is fitting that CMS takes a closer look at this sector and itswe will say that the end of the first decade of the 21st century impact on other sectors. We are the pre-eminent provider of was the start of a very steeply rising curve of legal and legal services in Europe, with approximately 4,600 employeespolicy change; a change of such transformational economic in 54 offices across Europe, within 28 different jurisdictions. importance that it was akin to at least the IT revolution, if not the industrial revolution. The past two years and the next five or so years will witness significant change in environment and other (especially energy, The general message that we take away from the product design, water and waste) law, policy and technologies.Oxford Analytica report supports this view: massive change These are what might be called bedrock changes. They will in Cleantech and brought about by Cleantech, is on the way. take some time to implement fully but, importantly, they arePolicymakers, corporations and other stakeholders are best setting the platform for further more pervasive and detailedadvised to accept and understand this as inevitable. Only then changes. The European Union remains at the forefront of suchwill they be able to turn this development to their advantage. law and policy, and many companies in many sectors will be impacted by tighter EU regulations. Shaping an opportunity out of the crisis Some commentators have said that investment in Cleantechtechnological innovations which would have otherwise could be endangered because of the current economic crisis. languished. Notably Oxford Analytica sees historical parallels Clearly, tighter budgets and restricted access to capital could to the Great Depression when new technologies those that delay spending on Research and Development (R&D). Private had already been created but had been marginalised were equity could also slow investment in the Cleantech sector commercialised and then helped the recovery to gain over the next several years.momentum. While it cannot be denied that the prevailing negativeBoth the breadth and depth of the current economic crisis business environment causes considerable difficulties, we will be, we believe, a formative experience for an entire think that Cleantech should be viewed from a different, generation of business managers. Much like the Great longer-term perspective. Indeed, we believe that CleantechDepression, this crisis will not be soon forgotten but will is potentially a significant element of necessary solutions likely remain present as a fundamental reference point for to some of the most difficult problems facing the globalmany managers. The pressure on companies to reduce economy today.costs, increase margins, diminish waste and become more efficient will become a permanent feature of the decision- Furthermore, the economic crisis could be a catalystmaking process. Cleantech will be a tool in this regard. for forcing countries and companies to quickly adopt Cleantech The Impact on Key Sectors in Europe 3 5. Implications for new business CMS believes that these trends will create a huge marketAgrichemicals and water management: regulations are opportunity for many businesses both start-up and existingbecoming tighter with respect to greenhouse gas emissions, players right across a wide range of commercial sectors.agrichemicals, soil protection and water management. There are already a variety of nascent clean technologies We believe, as does Oxford Analytica, that there is a huge which all hold promise for future development. Otherpotential for improved efficiency in water management within technologies which have been in commercial use for some the agricultural production process. At the same time, future time are now entering third and fourth generations. It is growth areas will likely be agricultural waste management, often said that the use of nanotechnology within Cleantechbiocomposites, methan