Will “Green” Mean Greenbacks for Government Contractors?


report released yesterday by the United Nations Environment Program (at the G20 Summit) shows the U.S. lagging behind other key countries in the percentage of stimulus dollars spent on green initiatives.  The report examines the various economic stimulus plans of key nations and the percentage of dollars spent for green programs. 

According to the findings, the U.S. has allocated 12% of total stimulus dollars to “greening the economy.”  This compares to 79% for the Republic of Korea and 34% for China (the green market for China has recently been estimated to be $1 trillion).  Mexico has allocated 10%. 

Even with the allocation, criticism is rising regarding the pace of green spending.  A post on ProPublica’s site points out that most of the 16 states surveyed by the General Accounting Office have not yet started on their Weatherization Assistance Programs (WAP), a $5 billion program for assisting low-income families in lowering utility bills by making their homes more energy efficient.  Similar delays have been reported for public housing according to the article. 

The U.N. report also concludes that only 3% of global green funds have actually been spent.  The bulk of these expenditures will occur in 2010 and 2011.

IMPLICATIONS

For certain government contractors, green initiatives are likely to provide attractive market potential in the areas of clean technologies, renewable energies, water services, green transportation, waste management, green buildings (both new and retrofit) and sustainable agriculture.  Don’t let the U.S.’s smaller relative percentage allocation fool you–substantial dollars are coming for this. 

The challenge from a contractor’s perspective will be in achieving differentiation as flowing money will bring “green contractors” out of the woodwork.  Much of this will go to mega-projects such as high-speed rail, but there should also be substantial opportunity at the SMB level for the right vendors. 

It appears to us that “green” is moving from a passing social fad to a significant global business opportunity.

-Lorin

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