Greentech Lead America: The U.S. market on energy, environment and sustainability initiatives will grow from $34.6 billion in 2012 to $43.6 billion in 2017, says a new report from Verdantix.
The spending in this sector by large corporations will grow at 5 percent per annum until 2017, the report said.
The study was based on interviews with 500 energy and sustainability budget-holders and an analysis of more than 1,000 corporate initiatives.
“Large corporations in the US have no financial incentive to increase their investment in energy and sustainability beyond annual increases of 5 percent,” said Patty Satkiewicz, Verdantix industry analyst and author of the report.
“Policy on renewable energy, energy efficiency, GHG reporting and environmental compliance will not change. And low natural gas prices will keep downward pressure on electricity prices during the forecast period. CFO interest in energy management will not see an uptick. Suppliers into the corporate energy and environment market such as ABB, Eaton and SAIC need to plan for mid single digit organic growth over the next four years,” Satkiewicz added.
According to the study, in 2013 the oil and gas, utilities and retail sectors will account for 42 percent of total spend by US corporations on energy, EH&S and sustainability initiatives representing $15.4 billion. Technology, industrial engineering and pharmaceuticals are all $2 billion markets.
Energy management is the largest category of spend. According to the report, U.S. corporations will spend $13.9 billion on all aspects of energy management in 2013, compared with $13.1 billion on EH&S management, and $5.3 billion on sustainability strategy, branding and risk management.
Hidden spend on employees tops $12 billion. Cash-strapped firms are keeping a lot of activity in-house resulting in a $12.1 billion wage bill for energy, environment and sustainability management. The consulting market represents $6.8 billion and program management $102 billion.
Few industries will increase spend above 5 percent. Compound annual growth rates for virtually all industries are trapped in a 4 percent to 5 percent bracket for the 2012-2017 period. Only automotive (7 percent), food and beverage (6 percent) and chemicals (6 percent) will grow above the overall trend.
“CEOs love to talk about their commitments to sustainability, environmental protection and energy efficiency, but press releases are not followed up with extra cash commitments,” says David Metcalfe, Verdantix CEO.
“Weather impacts in 2012 like Hurricane Sandy and the drought in the mid-West were wake up calls without being cash calls,” Metcalfe added. “For spending growth to reach double-digits the US economy would need to expand at more than 4 percent per annum, Congress would need to pass new regulations on energy efficiency and environmental compliance, and corporations would need to compete more intensively on sustainability innovation. We do not forecast that will happen.”
By Verdantix