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Illinois Issues
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State of the State: To Get the Most Out of the Green Jobs Market, Politicans Need Do More Than Spend

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mattpenning.com 2014
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WUIS/Illinois Issues

As Illinois and the nation struggle to recover after the recent recession, leaders are looking to the “green” industry — not only for environmental benefits but for its potential for job creation and economic growth. 

President Barack Obama has pointed to sustainable energy as an important area for economic recovery, as well as a necessity for America to secure its place on the global stage. 

In his 2009 State of the Union address, Obama issued a call to action to a country that was falling behind in the clean energy market. “We have known for decades that our survival depends on finding new sources of energy. Yet we import more oil today than ever before. … We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea. Well, I do not accept a future where the jobs and industries of tomorrow take root beyond our borders — and I know you don’t either. It is time for America to lead again.”

But after two years and about $90 billion in stimulus funds and tax breaks — to promote renewable energy development, green job training, energy efficiency upgrades and high-speed rail projects — some economists say America is still lagging behind. 

“We’re doing terrible. Oh, no, we really suck,” says Don Fullerton a professor of economics at the University of Illinois Urbana-Champaign. “The main reason is that there isn’t much incentive to do it.” Fullerton says such incentives must be more than grants and tax breaks. He notes that countries that are leading in renewable energy innovation and green job creation are doing so in part out of necessity because fossil fuels, such as gasoline, are much pricier than they are here.

In that same 2009 speech, Obama called for a cap-and-trade program that would require anyone who crosses a set threshold for carbon pollution to pay for their emissions, making the cost of now-cheap energy generated from fossil fuels reflect the costs in terms of the environment and public health. “But to truly transform our economy, protect our security and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America,” Obama said. 

In his 2010 State of the Union address, Obama used the connection between clean energy and economic might as an incentive for skeptics of climate change to support a push toward renewable energy sources. “I know that there are those who disagree with the overwhelming scientific evidence on climate change. But here’s the thing — even if you doubt the evidence, providing incentives for energy-efficiency and clean energy are the right thing to do for our future — because the nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation.”

The U.S. House approved a cap-and-trade bill in 2009, but any push for federal legislation to attach a cost to carbon emissions has been declared dead for the time being by politicians and industry experts. 

Those who decry spending to help get renewables off the ground should be reminded that their government gives billions in tax breaks to the oil industry, and the price they pay at the pump does not reflect the true cost of gasoline. “We say we want clean energy, but let’s not kid ourselves: The policies we have in place in the United States today are still incredibly pro-carbon. If nothing else, perhaps the Gulf oil spill will remind us that fossil fuels can appear cheap but have high social costs that are seldom reflected in the price,” Lew Hay, a member of Obama’s Council on Jobs and Competitiveness and chairman and chief operating officer of Florida-based Next Era Energy, wrote in a 2010 opinion piece for the Utility Shareholders of Florida. 

If the government decides to invest money with an eye toward job growth, renewable energy is not the worst place to do it. According to economics professor Robert Pollin, co-director of the Political Economy Research Institute at the University of Massachusetts, every $1 million in government spending on renewable resources creates 17 jobs, while the same amount of spending in the oil or coal industries creates 5.5 jobs. Pollin explains why in a column he wrote on green investment and economic recovery for The Nation. “The main reasons for this disparity have nothing to do with whether the investments are green. Rather, there are two primary factors at play. The first is the higher ‘labor intensity’ of spending on green projects — more money is spent on hiring people and less on machines, supplies and consuming energy. This becomes obvious if we imagine hiring construction workers to retrofit buildings or install solar panels, or bus drivers to expand public transportation offerings, as opposed to drilling for oil off the coasts of Florida, California and Alaska.” Pollin said the second factor is that the government can direct such green investments toward American companies, while money given to oil companies, for the most part, goes overseas. 

In his 2011 State of the Union address, Obama called for a reduction in oil subsidies to fund what he calls a “clean energy revolution.” “We need to get behind this innovation. And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. … I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.”

Illinois felt a positive economic impact from stimulus spending in the green sector. The state saw an increase in jobs in both the solar and wind energy industries last year. A recent survey from Environment Illinois found that more than 1,000 businesses in Illinois provide products or services related to energy efficiency. Argonne National Laboratory broke ground in June on a new $95 million Energy Sciences building, which will be used for energy research, including alternative fuel sources for vehicles. According to the Chicago Sun-Times, the project will create 1,700 construction jobs and 2,000 support staff positions. 

But experts agree that those gains will likely be short-lived if policy changes do not follow the money being spent. “You can’t just keep handing money out all the time. We have a horrendous deficit problem,” Fullerton said. “You can’t just use the carrots, especially if you can’t afford the carrots. You have to use a combination of carrots and sticks.”

There have been recent calls for increasing the federal gasoline tax, which has been 18.4 cents a gallon since 1993. Those include one from Dan Akerson, chief executive officer at General Motors, who said he would prefer an increase in the tax to encourage people to buy fuel-efficient vehicles instead of raising required efficiency standards, which he said could increase the cost of production by thousands of dollars per vehicle. “People will start buying more Cruzes, and they will start buying less Suburbans,” Akerson told the Detroit News. He said an increase in efficiency standards now could cost jobs in an industry struggling to recover after its collapse. 

Fullerton also supports an increase in the gasoline tax. He says a higher tax does not have to equal government growth, but the revenue, along with money brought in by a cap-and-trade program, could be used for a number of things, such as payroll and corporate income tax breaks, subsidies to help struggling individuals deal with increased costs associated with more expensive gasoline and paying down the deficit. He says even if the government gave people subsides to offset some of the expense of more costly gas, the tax increase would lead many to use less and eventually seek alternatives. 

Hay backs a cap-and-trade program, national energy infrastructure upgrades and a national requirement that utilities purchase a set percentage of their power from renewable sources, much like the Illinois Renewable Electricity Standard, which currently requires that by 2025, renewables must make up 25 percent of power purchased by utilities in the state.

“Nobody was banging at our door, nobody was listening to our phone calls for quite a while when selling more renewable power. The fourth quarter of last year, we picked up a lot of orders, and we’re seeing that momentum continue so far this year. So we’re cautiously optimistic about that, but we’re still nowhere near the rate that we were hoping to be at, at this point in time,” Hay said at a recent meeting of the Council on Jobs and Competitiveness. 

Fullerton says a change in energy policy could mark a transition from an “old economy to a new economy” that will not be an easy one. He says it can be done with the guidance of government programs, but progress is held back by politicians’ tendency to throw money at their goals in lieu of casting difficult and potentially unpopular votes. “Everybody sort of wants the benefits without the costs.”

He adds that all the media attention the government has drawn to the need for an energy shift — and the potential for new jobs that could be a benefit — has gone a long way toward educating the public. However, he says without any reason to change their consumption patterns, most people won’t. “You can’t just disseminate the information. … People hear that and they go ‘yeah, yeah,’ and they do whatever they want.”

If leaders truly believe that our economic recovery hinges on growth in the green sector they have to do more than just dole out cash and lip service. They are going to have to put their policy decisions where their mouths are.

 

 Illinois felt a positive economic impact from stimulus spending in the green sector. The state saw an increase in jobs in both the solar and wind energy industries last year.

Illinois Issues, July/August 2011

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