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Link: <http://www.americanprogress.org/issues/2009/06/clean_energy.html>
Center for American Progress | Progressive Ideas for a Strong, Just, and
Free America
The Economic Benefits of Investing
in Clean Energy
How the Economic Stimulus Program and New Legislation
Can Boost U.S. Economic Growth and Employment
SOURCE: AP/Alan Diaz
Investing $150 billion in clean energy would create an estimated 1.7 million
new jobs.
By Robert Pollin, James Heintz, Heidi Garrett-Peltier | June 18, 2009
Read the full report (pdf)
<http://www.americanprogress.org/issues/2009/06/pdf/peri_report.pdf>
Download the executive summary (pdf)
<http://www.americanprogress.org/issues/2009/06/pdf/peri_report_execsu...
State fact sheets: Clean Energy Investment Creates Jobs in Every State
<
http://www.americanprogress.org/issues/2009/06/clean_energy_factsheet...
Interactive Map: A State-by-State Look at Clean Energy and Job Creation
<
http://www.americanprogress.org/issues/2009/06/clean_energy_map.html>
The United States in the 21st century faces an enormous
challenge‹successfully managing the transformation from a predominantly
carbon-intensive economy to becoming a predominantly clean energy-based
economy. The reality of global climate change due to rising carbon emissions
makes it imperative that the U.S. economy dramatically cut its consumption
of traditional fossil fuels, the primary source of carbon dioxide (CO2)
delivered into our atmosphere by human activity. Rising levels of CO2 in the
atmosphere is in turn the primary cause of global warming.
This economic transformation will engage a huge range of people and
activities. But there are only three interrelated objectives that will
define the entire enterprise:
* Dramatically increasing energy efficiency.
* Dramatically lowering the cost of supplying energy from such renewable
sources of energy as solar, wind and biomass.
* Mandating limits and then establishing a price on pollution from the
burning of oil, coal, and natural gas.
It is crucial for economic policymakers and the American people to
understand the likely effects of these three overarching objectives as much
as possible. Specifically, we need to gauge our success in curbing CO2
emissions alongside the broader effects on the U.S. economy, particularly on
employment opportunities, economic growth and people¹s incomes.
This paper examines these broader economic considerations‹jobs, incomes, and
economic growth‹through the lens of two government initiatives this year by
the Obama administration and Congress. The first is the set of clean-energy
provisions incorporated within the American Recovery and Reinvestment Act,
initiated by the Obama administration and passed into law by Congress in
February. The second is the proposed American Clean Energy and Security Act,
co-sponsored by Rep. Henry Waxman (D-CA) and Rep. Edward Markey (D-MA),
which is now before Congress.
Our analysis in this paper shows that these two measures operating together
can generate roughly $150 billion per year in new clean-energy investments
in the United States over the next decade. This estimated $150 billion in
new spending annually includes government funding but is notably dominated
by private-sector investments. We estimate this sustained expansion in
clean-energy investments triggered by the economic stimulus program and the
forthcoming American Clean Energy and Security Act can generate a net
increase of about 1.7 million jobs. This expansion in job opportunities can
continue as long as the economy maintains a commitment to clean-energy
investments in the $150 billion per year range. If clean-energy investments
expand still faster, overall job creation will increase correspondingly.
These job gains would be enough‹on their own‹to reduce the unemployment rate
in today¹s economy by about one full percentage point, to 8.4 percent from
current 9.4-percent levels‹even after taking into full account the
inevitable job losses in conventional fossil fuel sectors of the U.S.
economy as they contract. Our detailed analysis, based on robust
economic-modeling methodologies that are explained in detail in the paper
and in Appendix 1, beginning on page 48, calculates that roughly 2.5 million
new jobs will be created overall by spending $150 billion on clean-energy
investments, while close to 800,000 jobs would be lost if conventional
fossil fuel spending were to decline by an equivalent amount. It is not
likely that all $150 billion in new clean-energy investment spending would
come at the expense of reductions in the fossil fuel industry. However, we
present this scenario to establish a high-end estimate for reductions in
conventional fossil fuel spending, and the net gains in employment that will
still result through spending $150 billion per year on clean-energy
investments. In appendix 2, we also present these figures on net job
creation broken down on a state-by-state basis for all 50 states and the
District of Columbia.
The stimulus program enacted in February to help the economy recover from a
deep recession already in its 18th month includes a range of measures to
begin building a clean-energy economy. These measures include:
* $24.4 billion in federal government spending to promote energy
efficiency.
* $23 billion for transportation investments.
* $25.3 billion for renewable energy.
Some of this funding will be in 2010, but a significant amount will also
spark new economic activity between 2011 and 2014.
Congress still must pass the American Clean Energy and Security Act, or
ACESA, and the president must still sign it. But the legislation contains
three broad categories of initiatives that are unlikely to change in
substance:
* Regulations aimed at promoting clean energy.
* A mandated cap on carbon emissions that will be phased in through 2050.
* Measures designed to assist businesses, communities and individuals
successfully manage the transition to a clean-energy economy.
The general thrust of this forthcoming legislation and the clean-energy
provisions within the economic stimulus program is to promote energy
efficiency and renewable energy. Yet as an economic stimulus program, ARRA
operates through direct government spending and financial incentives to
promote private investments in clean energy. In contrast, ACESA will boost
clean-energy investments mostly by private businesses, investors and
households through new regulations that encourage the clean and efficient
use of energy and discourage the use of high-carbon fuels. Many of the
regulatory initiatives proposed within the ACESA are not fully fleshed out
within the legislation itself. As such, it is more difficult to estimate
their effects on overall clean-energy investments than is true with the
spending initiatives advanced by the ARRA.
In the following pages, this paper first examines the basic clean-energy
features of the economic stimulus program and the proposed ACESA.
Specifically, we will detail the distinct features of both measures and the
ways in which they would operate in concert to encourage investments in
clean energy and energy efficiency as well as discourage spending on
conventional high-carbon fuels.
We will then explain how ARRA and ACESA operating in tandem would create new
employment opportunities across the United States by spurring $150 billion a
year over the next decade in new clean-energy investments. Understanding how
we calculated these investment levels over 10 years requires an
understanding of the different economic models available to analysts and why
we chose a simple but reliable method for estimating employment effects
based on data generated by the U.S. Commerce Department¹s industrial census.
We explain the reasons for our analytical decisions on pages 1520,
beginning with how we estimated the effects on jobs of shifting spending in
the U.S. economy away from high-carbon fuels and toward clean-energy
investments. We will show why our simple approach offers a robust framework
for understanding how a shift in spending from conventional fossil fuels to
clean energy generates a net expansion of employment that will be sustained
as long as the U.S. economy maintains its commitment to clean-energy
investments.
We then present our detailed employment estimates. Our key finding is that
clean-energy investments generate roughly three times more jobs than an
equivalent amount of money spent on carbon-based fuels. We consider some of
the implications of this result, including how a large-scale shift from
conventional fossil fuels to clean-energy investments‹on the order of $150
billion a year‹would affect conditions in the U.S. labor market.
Our paper then turns to the various economic models used to estimate the
impact of a carbon cap on the long-run growth trajectory of the U.S.
economy. Our key finding: All of the models, without exception, forecast
that a carbon cap, such as that proposed in ACESA, would have, at worst, a
minimally negative impact on the U.S. economy¹s long-term growth path.
Moreover, these models generate this basic finding without considering some
of the major ways in which clean-energy policies can stimulate economic
growth. These include the expansion of employment opportunities itself, a
reduction in the trade deficit, promoting technological improvements and
thus falling prices in renewable energy sources, and reducing the negative
impacts on economic activity of greenhouse gas emissions and unmitigated
global warming.
To be sure, any economic modeling effort that estimates changes in
employment growth, economic growth, and income growth will result in
forecasts that are problematic by nature. We make this clear in our paper
wherever we rely on our own economic models and those employed by others.
But we also take pains to examine the relative strengths and weaknesses of
all the modeling approaches‹including our own. This enables us to cross
check our own conclusions with those of other researchers to reach the most
reliable possible understanding of the overall impact of advancing a
clean-energy agenda within the U.S. economy.
For more information, see:
* State fact sheets: Clean Energy Investment Creates Jobs in Every State
<http://www.americanprogress.org/issues/2009/06/clean_energy_factsheet...
* Interactive Map: A State-by-State Look at Clean Energy and Job Creation
<
http://www.americanprogress.org/issues/2009/06/clean_energy_map.html>
Learn about the effects of clean-energy jobs on improving opportunities for
low-income families by reading "Green Prosperity: How Clean Energy Policies
Can Fight Poverty and Raise Standards of Living in the United States,"
<http://www.greenforall.org/report> a new report from Green For All
<http://www.greenforall.org/report> and the Natural Resources Defense
Council <http://www.nrdc.org/greenjobs>
To speak with our experts on this topic, please contact:
For print and radio, John Neurohr, Deputy Press Secretary
202.481.8182 or jneur...@americanprogress.org
For TV, Andrea Purse, Deputy Director of Media Strategy
202.446.8429 or apu...@americanprogress.org
For web, Erin Lindsay, Online Marketing Manager
202.741.6397 or elind...@americanprogress.org
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The Green Bank 101
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So Long, Lake Wobegon?, by Morgaen L. Donaldson
Also by Robert Pollin
Clean Energy Investment Creates Jobs in Every State, June 17, 2009
Green Investments and Jobs: A Response to a Second Heritage Foundation
Critique, November 13, 2008
Green Investments and Jobs: A Response to the Heritage Foundation, November
7, 2008
Also by James Heintz
Clean Energy Investment Creates Jobs in Every State, June 17, 2009
Un Cuento Raro Desde España, May 8, 2009
Tall Tales from Spain, May 7, 2009
Also by Heidi Garrett-Peltier
Clean Energy Investment Creates Jobs in Every State, June 17, 2009
© Center for American Progress
Taking Global Warming Seriously
By Nick Anderson
<http://www.americanprogress.org/cartoons/>
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