clean energy jobs
Like it or not, climate change is now part of the “culture wars.” Like abortion, gun control, and health care, climate change divides conversations along political battle lines of left versus right. But if you listen closely to what is being said, you will find that people are talking past each other, engaged in a debate that has little to do with an evaluation of climate science. Instead, it is a clash about values, beliefs, and worldviews. Opinions are based largely on ideological filters that people use to understand complex issues, influenced strongly by the cultural groups of which they are a part and the opinions of thought-leaders and pundits whom they trust. The arguments are constructed around the frames by which people view the science, not the science itself.
The American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5, Recovery Act, ARRA) is the economic stimulus package passed by Congress on February 13, 2009, and signed by President Obama four days later. As of February 2011, the package was expected to total $821 billion in costs through 2019 delivered through a combination of federal tax cuts, temporary expansion of economic assistance provisions, and domestic spending to advance economic recovery and create new jobs, as well as save existing ones. From advancing smart grid development to supporting appliance rebate programs, the Recovery Act has allowed the United States to make significant headway in building the foundation of its clean energy economy. We recently released an update to our 2009 white paper on the U.S. Department of Energy's (DOE) Recovery Act spending. The publication summarizes DOE ARRA spending, the Recovery Act's effects on employment, and highlights a number of notable projects.
The Midwest Governors Association (MGA) recently held a briefing in Washington for congressional and federal agency staff to highlight key regional developments in clean energy job creation. As the Senate prepares to take up energy legislation this summer, state government officials and representatives from business groups and environmental organizations in the Midwest described the progress they have made promoting renewable energy in order to create jobs, benefit the environment, and increase energy security.
On Friday, March 12, we held a briefing on jobs and opportunities in clean energy markets.
Today, the President signed an Executive Order creating an Export Promotion Cabinet of top officials and an Export Promotion Council, a private-sector advisory body. This Executive Order serves to highlight once again how important American exports and competitiveness are to economic recovery and continued US economic strength. While much hand-wringing has occurred over the potential for climate and energy policy to hurt the ability of U.S. firms to compete in international markets, the opportunity of such policy to enhance the competitiveness of U.S. businesses has received less notice. The irony is that even as the planet warms, the United States may be left standing out in the cold if it doesn’t choose to lead in the development of next-generation energy technologies.
In tackling climate change, a diverse transportation sector can contribute greatly to reducing greenhouse gas (GHG) emissions. In 2008, the transportation sector accounted for 28% of U.S. GHG emissions, according to the EIA. In achieving the goal of reducing emissions, transportation policy must reduce GHG emissions from travel without compromising the mobility of Americans. To that end, electric vehicles provide a much-needed alternative to gasoline and diesel powered cars.
Carmakers are responding to this challenge by designing plug-in electric vehicles (PHEVs) and all electric vehicles (EVs). Nissan’s Leaf, a new electric vehicle, is slated to hit showrooms throughout the U.S in late 2010. One of two Leafs seen in public was on display last week at the Washington Auto Show where the Green Car Journal named the Leaf its 2010 Green Car Vision Award winner.
At first, Nissan will likely place prospective buyers on a waiting list, but it anticipates ramping up Leaf production at a factory it is retooling in Smyrna, Tennessee. The company secured a $1.4 billion loan from the U.S. Department of Energy (DOE) last week to prepare the plant to manufacture the vehicles and the advanced batteries that will power them. DOE points out that the facility will “create up to 1,300 American jobs and conserve up to 65.4 million gallons of gasoline per year.” The 150,000 vehicle-per-year factory positions the U.S. as a leader in the next generation of low-emissions vehicle manufacturing.
At the DC auto show, the Nissan representative shared details about the vehicle along with the company’s program to distribute it worldwide. Nissan is partnering with Better Place, an innovative electric vehicle services provider, to sell the Leaf in Denmark and Israel in 2011. The company intends to make modifications to the Leaf’s chassis to support Better Place’s battery switch stations. The Leaf will also meet SAE’s J1772 standard for electric vehicle charging. Lastly, by laminating the lithium-ion battery packs in order to make them self-cooling, Nissan solved a complex technical problem without using a computer control system. More information about the Leaf is available on Nissan’s website.
The L.A. Time reports Nissan hints at a sticker price of less than $30,000, before accounting for the $7,500 federal tax credit for plug-in hybrid vehicles and electric vehicles provided in the Recovery Act. No pricing information was available at the auto show.
The three most important issues to Americans today are the economy, jobs, and terrorism according to the Pew Research Center for the People & the Press. If one makes the logical connection between protecting against terrorism and promoting energy security, Nissan is timely in releasing the Leaf in 2010. With the Leaf, the company will create American jobs to manufacture an affordable vehicle that lowers U.S. dependence on foreign oil.
Nick Nigro is a Solutions Fellow
Shortly before the new year, Vice President Biden issued a memo summarizing the federal government’s progress in promoting “clean energy,” primarily via the 2009 stimulus bill (the American Recovery and Reinvestment Act, or ARRA). The Dec. 15 memo highlights significant incentives provided for efficiency, renewable electricity, biofuels, plug-in hybrid-electric vehicles, carbon capture and storage, and other low-carbon technologies. It summarizes where things stood one year ago (e.g., in terms of generating capacity, number of homes with smart meters) and where things are expected to be in the next few years.
The memo notes that ARRA provides $80 billion for clean energy investments. In terms of impacts, Vice President Biden claims, for example, that ARRA and other policies put the United States on track to double by 2012 non-hydro renewable electricity generation capacity compared to the level at the beginning of 2009. The memo says the rate of home energy efficiency retrofits will increase by an order of magnitude from 2009 to 2012 (to one million per year). While there are currently no commercial-scale carbon capture and storage projects in operation, the memo projects that there will be five by 2015. There are also evaluations of vehicle fuel economy, biofuels, nuclear power, electric vehicles, smart grid, and clean energy manufacturing.
While the clean energy advances touted by the Vice President are undoubtedly positive developments, the key policy for significantly reducing U.S. greenhouse gas emissions—i.e., putting a price on carbon—is still being debated in Congress. The House passed a climate and energy bill that included a greenhouse gas cap-and-trade program in June, and the Senate continues deliberations on a similar bill.
In considering efforts to transition to a low-carbon future, it’s helpful to remember that climate change is a “tale of two market failures.” First, and most importantly, businesses and households do not face any price associated with emitting greenhouse gases despite the social costs (e.g., costs of damage to coastal communities from sea level rise, increase in costs due to reduction in water resources) associated with their contribution to dangerous climate change. Thus businesses and households lack a key financial incentive to invest in efficiency or lower-carbon energy sources. Second, while intellectual property protections help firms profit from their investments in new technology, the nature of innovation is such that the gains to society (i.e., to other businesses and consumers) from a single company’s investments in innovation generally exceed the returns to that company. Thus businesses tend to under-invest in innovation.
With respect to fostering innovation, a summary from Harvard’s Belfer Center of U.S. Department of Energy research, development, and demonstration (RD&D) funding over time illustrates that the $7.5 billion in energy-related RD&D funding in ARRA is more than half as much as DOE received, cumulatively, in the five years from FY2005 through FY2009.
We know that a combination of a market-based climate policy that puts a price on carbon (e.g., via a greenhouse gas cap-and-trade program) to “pull” a portfolio of low-carbon technologies into the market coupled with incentives for low-carbon technology research, development, demonstration, and deployment (RDD&D)—i.e., policies to “push” low-carbon technologies into the market—make reducing greenhouse gas emissions less costly overall than a reliance on only “push” or “pull” policies alone.
The efforts outlined in the Vice President’s progress report are providing a much needed “push” for clean energy—such as government funding and loan guarantees to leverage private-sector investment in commercial-scale demonstrations of carbon capture and storage. But, ultimately, the United States will not make the required significant, absolute reductions in emissions without the market “pull” created by an economy-wide carbon price.
Steve Caldwell is a Technology and Policy Fellow
Throughout testimony presented by several witnesses before the Senate Environment and Public Works Committee (EPW) last week, one theme consistently resurfaced – cap and trade will spur investments in clean technology and increase jobs in certain sectors by putting a price on carbon. It is a simple formula: a price on carbon will create certainty, certainty will lead to increased investments in clean energy technology, and increased investments will lead to a larger share of the clean technology market.
As Kate Gordon, Senior Policy Advisor of the Apollo Alliance, testified, the United States is already losing ground on the international front. Clean energy investments are the key to our new economy and have been growing even in the face of inconsistent federal incentives, but without true federal commitment, clean energy technologies will not reach their full potential. According to the UN Environment Program, investments in renewable energy technologies in 2008 increased by 2 percent in Europe to $49.7 billion, decreased in North America by 8 percent to $30.1 billion, and grew by 27 percent in developing countries to $36.6 billion. Specifically, investments in China grew by 18 percent to $15.6 billion and in India by 12 percent to $4.1 billion.
Members of the business community also stressed how important federal regulation is in creating price certainty for carbon, which would increase clean technology investments domestically and therefore clean energy jobs. J. Stephan Dolezalek, Managing Director of VantagePoint Venture Partners, testified “a growing number of the Fortune 500 community has signaled that establishing a price certainty with respect to carbon is far better for business than a continued uncertainty in the face of certainty elsewhere in the globe.” As the percentage of global capital invested in clean energy industries continues to increase, the United States will need price certainty to attract investment and thereby create jobs.
How does this clean economy market affect the domestic job market? The truth of the matter is that given the size of the U.S. economy, new jobs are constantly created while existing jobs are lost. Even though sentiments from both sides were reflected in the testimonies, this process will continue regardless of the specific legislation that will be passed. This is little consolation for those losing their jobs, but legislation can be written to include transitional assistance and training to adversely affected workers, as is done in both the Waxman-Markey bill passed by the House in June and the recently introduced Kerry-Boxer bill in the Senate. In the case of clean energy jobs, if the U.S. creates a favorable investment environment at home, American jobs using existing as well as new skills will be created, no matter where a given company is headquartered. The value chains for many clean energy technologies and products are extensive, and even a Chinese wind manufacturer will have to hire American workers if it wants to market turbines in the United States. Philadelphia’s mayor, the Honorable Michael Nutter, summed it up well: “These new, green collar jobs require building science, carpentry, electrical, plumbing, sales, and communications skills. These jobs include: insulators, carpenters, heating technicians, energy auditors, and educators, as well as support services, sales, and manufacturing. The good news is that these jobs are a perfect fit for Philadelphia’s workforce, and are not transferable overseas.”
The potential for job growth is welcome news as the U.S. economy continues to climb out of the recession. In opening statements of the final day of hearings, the Senators happily noted the Commerce Department’s announcement of the first increase in real GDP since the third quarter of 2007. Testimony on behalf of businesses and workers at the EPW hearings last week took this welcome news a step further by explaining how comprehensive climate legislation could further expand the economy and increase jobs.
Earlier this week, the Midwestern Governors Association (MGA) convened key regional stakeholders and leaders from around the world for its Jobs and Energy Forum and announced a hopeful, forward-looking economic and environmental vision. The setting could not have been better suited to highlight the urgency with which these new initiatives are needed by both the Midwest and the nation as a whole. Detroit has been hit as hard as anywhere by the economic slump; according to the U.S. Bureau of Labor Statistics, unemployment in the greater Detroit metropolitan area hit 17 percent in August, and Michigan Governor Jennifer Granholm, in her remarks, noted that Michigan has lost close to a million jobs in a little less than a decade. Against this backdrop, many of the participants discussed the need for a new energy paradigm that addresses our economic, security, and environmental concerns. Even as the U.S. Senate prepares to tackle energy and climate legislation this fall, the Midwest made clear this week that it intends to move forward regardless of what happens in D.C.