Staying Ahead of the Curve with Climate Legislation

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.