A Green Industrial Policy Takes Root

When a nearby hospital spilled several gallons of hazardous formaldehyde four years ago, Randy M. Skalla smelled opportunity. Skalla, vice-president of S&S Co. of Georgia Inc., an Albany (Ga.) maker of specialty chemicals, realized that hospitals were spending plenty to haul away spent formaldehyde. So S&S developed a way of chemically transforming the preservative to render it harmless enough to pour down the drain. The method cuts disposal costs in half, but selling it to skeptical towns, water districts, and states has been a Herculean task. "The biggest block has been federal, state, and local government," Skalla says.

As President Clinton might say: Randy, the White House feels your pain. From the moment they took office, Vice-President Al Gore and Presidential science adviser John H. Gibbons promised a "green" industrial policy to promote the development and adoption of innovative environmental technologies. Now, the Administration is beginning to deliver: On July 15, Gore was scheduled to unveil the first stage of the long-awaited initiative. The preliminary plan proposes to sweep away rules that discourage new technologies, to boost export-promotion efforts, and to have Washington certify new methods that work, such as biofriendly solvents, bacteria that eat pollution, and faster ways of identifying contaminants (table). The Administration will also offer more than $100 million over the next two years to help enviro-businesses bring new technologies to market.

The White House hopes the program will help the U.S. environmental-technology industry increase employment. The government would also be a direct beneficiary, gaining the means to clean up its own befouled bomb laboratories and military installations. "Our vision is of long-term economic growth that creates jobs while improving and sustaining the environment," says Gibbons.

Uncle Sam's helping hand couldn't come at a better time. The $140 billion environmental business was created largely by government laws and regulations. But after double-digit annual growth in the 1980s, companies were hit by a double whammy: the recession and a slowdown in federally mandated cleanup programs such as the Superfund. In 1993, industry revenues rose only 2.7%. "Green" mutual funds ranked dead last among the 28 categories tracked by Lipper Analytical Services Inc. Also to blame are varying requirements among states--which administer environmental laws--for technology standards and permits. The patchwork system makes it expensive and hard to market enviro-gear--especially innovative technologies.

WEAPONS MESS. The Administration's initiative won't bring an immediate turnaround. The surest way to assist environmental companies would be to force every industry--and government, too--to spend more on pollution control. But that would be both a drag on the economy and political folly, White House officials say. Beyond that, the Administration's more modest proposals won't aid all 45,000 U.S. enviro-corporations equally. The traditional part of the business is devoted to disposing of waste or cleaning up contaminated sites or pollution-laden factory effluent. But more companies are developing processes that produce little or no pollution in the first place. The Administration's focus on fostering such prevention could undermine the traditional cleanup artists. And Energy Dept. officials worry that the new initiative won't sufficiently encourage the development of the cleanup technologies needed to tackle the mess at the nation's weapons labs.

White House officials counter that such methods won't be neglected. Besides, Administration officials promise that, long before the U.S. is pristine enough to put cleanup companies out of business, export-promotion efforts will have helped open up new markets for them overseas. In fact, the most difficult task facing the Clintonites is to transform the White House's lofty pronouncements into action at the regulatory agencies. "It takes extraordinary effort to get the message down to the staff level--where the chemicals meet the environment," says Washington environmental lawyer William J. Walsh of Pepper, Hamilton & Scheetz.

Witness California's battle with the Environmental Protection Agency over car-emission inspections. California wants to try a new approach that has been successfully tested--supplementing traditional smog-check inspections with curbside remote-sensing devices to detect the worst polluting vehicles. But the EPA insists that the traditional approach of using central facilities to do biennial checks on cars is the best solution. "The White House says: `We need innovative technologies,' but their own bureaucrats are doing everything they can to block those," charges Donald H. Stedman, the University of Denver chemist who developed the remote-sensing device.

OVER THERE. Despite such obstacles, industry executives see the Clinton initiative as a positive. "We're hopeful," says Brian A. Runkel, executive director of the California Environmental Business Council. Since foreign markets are predicted to grow faster than those at home, "we especially like the focus on environmental-technology export promotion," he says. What's more, industry executives have proof that some of Gore's and Gibbons' suggested strategies--notably, the idea of a governmental seal of approval for technologies and products--can give the industry a boost.

Earlier this year, California started a test and certification program that's a model for what the Clintonites propose nationwide. And the first five technologies to win a state seal of approval are already reaping benefits. On Apr. 20, the day the state declared its intent to certify the S&S formaldehyde-disposal system, Kaiser Permanente, a giant health-maintenance organization, announced it would use the product in all of its Northern California facilities. The California certification "gives us a shot in the arm," says Skalla. "It will open doors as far away as Australia." Similarly, Dwight Denham, Southwest regional manager for EnSys Inc., based in Research Triangle Park, N.C., predicts that state approval for its technology--a test that spots polychlorinated biphenyls in contaminated soil--will help the company double its sales over the next year.

The White House plan probably will not create such striking results so quickly. The new strategy won't be complete before yearend, after consultation with industry. After that, it may take months, even years, to set up federal certification programs or make the morass of state and local rules consistent. What's more, say congressional staffers, some of the changes will require legislation or may wither for lack of funding. But even skeptics are giving Clinton credit for trying. And eventually, the plan just might lead to a cleaner and more prosperous America.


By encouraging the development and adoption of innovative environmental technologies, the Clinton Administration hopes to spur the economy, foster pollution prevention, and help tackle the government's own cleanup problems. Here's how:

-- Coordinate green-technology programs in various agencies

-- Test and verify technologies, offering a government stamp of approval for those that work

-- Harmonize conflicting state and local regulations, so that green-tech companies won't have to get individual permits for thousands of locales

-- Make regulation more flexible, so that industry can buy riskier but potentially more effective technologies

-- Spend $100 million over two years helping companies commercialize new technologies

-- Step up efforts to sell U.S. green-tech companies' products overseas

Before it's here, it's on the Bloomberg Terminal.