There are good jobs to be had in environmentally friendly development, and construction jobs are just the beginning. Thousands of jobs are in products that go into green buildings. The job potential in renewable energy production is even more impressive. The Renewable Energy Policy Project estimates that producing 10 percent of the nation's electricity with renewable sources would create 381,000 jobs producing the component parts of the systems. Already, renewable energy (biomass, solar, wind, geothermal) employ more than 115,000 people directly. These new jobs more than compensate for ongoing job loss in the coal and oil industries as clean forms of energy replace polluting ones.
Renewable energy is labor-intensive. It generates more jobs in construction, manufacturing, and installation per megawatt of power than coal and natural gas. These jobs start with research and development. They produce an array of goods and services from renewable energy itself to products made from high-tech or recycled materials. The majority of the jobs created would be in manufacturing, although there are many in operations and maintenance and in system installation.
These jobs, often called greentech or cleantech, could provide middle-class wages for hundreds of thousands of Americans while reducing our dependence on foreign oil and improving the environment. Producing for export could improve the balance of trade.
That's the potential. The reality is that we're falling behind other countries. Solar power was invented in the United States, but Japan and Germany moved ahead of us in production in the late 1990s and China is not far behind. In wind power capacity, we're behind Germany and Spain. We're also behind on enacting policies to spur the growth of cleantech industries -- and it is public policy that drives research and development, as well as the employment that follows.
Forty-three countries have renewable portfolio standards that require a specified percentage of energy be from renewable sources by a given year. But the U.S. Congress has failed to enact such a standard for our country. Instead, states and cities in the United States are trying to fill the policy vacuum.
States of green
Twenty-three states now have energy portfolio standards. Seventeen states and 61 municipalities have legislation requiring that buildings funded at a given level from capital budgets and/or over a certain square footage meet LEED or other green building standards. These policies drive demand and bring down the unit cost of production.
Manufacturing the inputs to green buildings could help revive the economies of many states that have lost manufacturing employment, particularly if companies establish an export market. But producers have to know that demand is shifting to green products before they'll commit investments. If building products manufacturers are making such advanced products as fiber-optic day-lighting, pollution-removing systems, and goods made from pre- and post-consumer recycled content, the United States could actually lose jobs as contractors look to European and Asian suppliers, which are way ahead of America.
But there are some hopeful signs. In western Pennsylvania, the Green Building Alliance is trying to create a regional center for manufacturing green building products. Pittsburgh is already third in the nation in both the number and square footage of green buildings. The hope is to maintain and add to the area's 68,000 jobs in the building supply industry.
Part of the mission is education. Building green requires a higher degree of mutual planning and coordination among architects, engineers and builders. The Alliance provides technical assistance on how to do it and also works with manufacturers on researching and retooling to make new green products.
In October, the Green Building Alliance received $250,000 from the Heinz Endowments and $1 million from the Ben Franklin Technology Development Authority, Pennsylvania's technology-based economic development program, to promote product and production research and attract green manufacturers to the region. Ben Franklin gave another $1 million to Philadelphia University to lead similar activities in the eastern part of the state. The two organizations are joining forces as the Pennsylvania Green Growth Partnership, a statewide alliance to help companies develop environmentally friendly building products. The project will start by building a Web-based database of products and manufacturers to make it easier for contractors to find and use green products.
Carnegie Mellon University, University of Pennsylvania, and Penn State University have green building research and education programs. They have formed a statewide research and education consortium called INSPIRE, or Investment in Sustainable Practice and Industry via Research and Education. Penn State's architectural engineering department has incorporated LEED certification and green building methods into courses. Students design and build a green building every year. Faculty and students also provide technical assistance to businesses on going green.
More regional green building alliances are needed to provide technical assistance to manufacturers. The industry is geographically dispersed. Because building products are bulky and heavy, manufacturers tend to locate close to their markets. The U.S. Green Building Council has launched a program to establish local chapters, but most of these organizations are understaffed and lack the capacity of the Green Building Alliance.
Funding organizations like the Green Building Alliance is a good economic development strategy for states. But other state policies are needed to support green building as well. Pennsylvania is not one of the 17 states that require some level of green status (such as LEED silver certification) for state buildings or buildings that receive state funding. Green building requirements are needed to create a higher level of demand for green building products, making it less of a risk for manufacturers to shift to producing them. But legislation that would require all of Pennsylvania's state-funded buildings and renovations to be green and offer state tax credits for such building has been stalled in the Legislature.
However, Pennsylvania has acted on the renewable energy front. The Pennsylvania Energy Harvest program allocates about $5 million a year in grants to companies to encourage investment in renewable energy sources, energy-saving production processes, and alternative energy production. The Pennsylvania Energy Development Authority (PEDA) can float up to $1 billion in tax-free bonds to finance construction of energy projects. These programs are supported by a portfolio standard that requires 18 percent of electricity generation to be from renewable sources by 2020. Governor Ed Rendell needs to lead the way in this arena as he has on alternative energy. Many legislatures are skeptical because they are unfamiliar with the whole concept of green building standards and the multiple standards in use.
California stands out among the states in promoting both green building and renewable energy. It leads the nation in setting energy standards and in both venture and public capital investment in cleantech. If California were a separate country, it would rank third in the world in solar energy production, behind Japan and Germany.
This achievement reflects deliberate -- and bipartisan -- government policy. In 2000 then-Governor Gray Davis signed an executive order to increase green building, and created the Sustainable Building Task Force to implement the program. The task force reports that energy performance standards have been in place in well over $2 billion worth of state construction and renovation, including city and state buildings, public schools and universities.
In 2004, Governor Schwarzenegger signed an executive order requiring LEED silver or higher certification on all state-owned facilities paid for with state funds. It also requires reducing grid-based energy purchases for state-owned buildings by 20 percent by 2015. California's renewable portfolio standard mandates that state utilities produce 20 percent of their power from renewable sources by 2010 and 33 percent by 2020.
Investment is following policy. California State Treasurer Phil Angelides, also in 2004, launched the Green Wave environmental investment initiative, which commits two of the state's public pension funds (California Public Employees' Retirement System and State Teachers' Retirement System) to investing $1.5 billion in green companies and technology. As the first and third largest pension funds in the nation, the funds can prod companies to reduce their environmental impact. To date, CalPERS has placed $200 million and CalSTRS $250 million with venture capitalists investing in green technology firms, particularly renewable energy. The pensions will also invest $200 million and $250 million, respectively, directly in environmentally screened companies. And both committed to reducing energy consumption by 20 percent by 2009 in their real-estate holdings.
The Golden State's Public Interest Energy Research (PIER) program also invests in energy technology to the tune of $62 million per year. Funding is targeted to the early development of companies producing alternative energy to position them as attractive investments to venture capitalists. Three other funds to support renewable energy projects top off the mix.
Policy initiatives are also responsible for California's third-in-the-world position in solar energy production. The state's Million Solar Roofs Initiative, passed in August 2006, is a 10-year, $3.2 billion incentive program that will spur the development of the solar industry and is projected to create 15,000 jobs. By guaranteeing 1 million installations, the initiative reduces the risk and cost of production for solar system manufacturers. The initiative, funded through a surcharge on electric bills, provides incentives to homeowners and businesses to install solar photovoltaic (PV) systems and requires utilities to buy back up to 2.5 percent of excess electricity generated by rooftop solar systems. Large home builders are required to offer solar systems as an option to buyers and to provide information on them. The initiative could create solar capacity equivalent to the output of 60 peaking power plants.
California is leading in production of thermal solar energy as well. In 2005, Stirling Energy Systems signed two 20-year power purchase agreements to develop a 500-megawatt solar installation in the Mojave Desert northeast of Los Angeles and a 300-megawatt installation in the San Diego area. Both may be expanded. The installations will have 20,000 and 12,000, respectively, curved dish mirrors that convert solar energy to grid-delivered electricity. The mirrors concentrate the sun's rays on the receiver end of a Stirling engine the size of an oil barrel. The process requires no water and is emissions-free. About 800 workers will be employed during construction and about 200 permanent employees will be phased in during construction for each project. Most will be employed in maintenance as “dish” washers, although a few skilled electricians, electronics and mechanical engineers, and engine mechanics will be hired as well.
All of these efforts have made California an attractive site for venture capital. The state receives more venture capital investment in cleantech than any other state. The National Resources Defense Council estimates that over the past five years California has received $2 billion in cleantech venture capital investment, creating 124 new start-ups. Their analysis of venture capital investment in cleantech suggests 52,000 to 114,000 new jobs can be created in California by 2010.
On the opposite coast, Massachusetts attracted $247 million in cleantech venture capital investment in 2005. Venture capital has started up 119 companies in the northeast in the past five years. The Massachusetts Renewable Energy Trust was established in 1998 to provide support for development and commercialization of renewable energy companies. Its $62 million in annual revenue is funded through a surcharge on utility bills. The trust has two main investment initiatives, the $15 million Mass Green Energy Fund, a venture capital fund and the Sustainable Energy Economic Development (SEED) Initiative, which offers $50,000 to $500,000 loans for companies developing new products. seed invests in companies in the research stage before they can attract venture capital. Since 2004, seed has invested about $2.2 million in seven renewable energy companies. Although these programs are relatively small in scale, Massachusetts is able to capitalize on its university-based research infrastructure.
The trust's $2.5 million investment in Evergreen Solar in Marlborough in 2001 is paying off nicely. Evergreen Solar makes solar cells using string ribbon technology, which uses considerably less of the very expensive silicon used in most cells. The plant employs about 319 people, with 200 in manufacturing, 60 in science and engineering, and the rest in finance and administration. Most of the manufacturing jobs require only a high school diploma, or in some cases an associate's degree and a few years of experience. An agreement struck in October will have Evergreen shipping about $100 million of solar cells to Mainstream Energy. Further, a joint venture, EverQ, with a German company will increase Evergreen's production capacity even more.
Nationally, venture capital investment in cleantech startups totaled $1.4 billion in 2005, making it the sixth largest venture investment sector. According to a report by E2 Environmental Entrepreneurs and Cleantech Venture Network LLC, every $100 million in venture investment in cleantech start-ups creates 2,700 direct jobs and $500 million in annual revenue over 20 years, with many more indirect jobs.
Elsewhere, the Environmental Law and Policy Center developed a plan, Repowering the Midwest in 2001. Implemented, it would create almost 200,000 jobs and $20 billion in investment by 2020 among the 10 states in the region. The plan sets goals for phasing in renewable energy production, particularly wind and biomass. Of the total, 36,800 net new jobs would be created in the production of renewable energy and 141,000 around introducing energy efficiency measures. In addition to energy efficiency investment funds like those in California and Massachusetts, the states would need to establish renewable portfolio standards to drive the job growth. But to date, only four of the states have done so and two of them are voluntary.
The missing feds
What's needed, of course, is a federal renewable portfolio standard and a huge increase of public funds. A standard of 20 percent by 2020 based on wind, solar, biomass, geothermal, and landfill gas would create extensive new demand for renewable energy and stimulate new technologies, products, and jobs.
If ever passed, the Clean EDGE Act introduced in Congress in May 2006 would require half of new vehicles be gas-ethanol capable by 2020 and that 10 percent of the nation's electricity be produced from renewable sources by 2020. Further, it requires reducing national petroleum consumption by 40 percent by 2020. According to the Economic Policy Institute, the associated $49 billion investment to achieve these goals would create about 530,000 jobs. Most of these would be manufacturing jobs, about half in wind energy.
The Apollo Alliance advocates a $300 billion federal investment over 10 years in energy conservation and renewable energy to create 459,000 jobs in renewable energy and 3.3 million in all related jobs. Instead, Daniel Kammen at the University of California, Berkeley, reports in Scientific American that all U.S. energy research-and-development spending declined from its peak of 10 percent in 1980 to 2 percent by 2005. “Annual public R&D funding for energy sank from $8 to $3 billion (in 2002 dollars); private R&D plummeted from $4 billion to $1 billion.” This compares to public R&D spending of $70 billion for military purposes, $11 billion for the space program, and $2 billion for agricultural purposes.
The federal government does provide production tax credits and ethanol tax credits, and funding for some research into renewable energy. But the tax credits have been offered inconsistently, and haven't created the secure environment needed to spur private investment in research and innovation.
Compare this to the European Union, which requires 12 percent renewable electricity production by 2010, in addition to standards in place in all 25 countries. Germany's standard sets a goal of 20 percent of electricity from renewable sources by 2020. The German Electricity Feed Law requires that most utilities pay 90 percent of the retail residential price for electricity produced from renewable sources. And the government provides subsidies for wind production based on electricity output or capital costs.
German national banks offer loans at 1 percent to 2 percent below market for the first 70 percent of project costs for renewable production initiatives. These programs were fine-tuned in the early 1990s because concentration of wind energy in the northern part of the country (with higher winds) overburdened utilities there. Germany has been the world's largest producer of wind energy in the world since 1997, producing three times the wind energy as the United States with less wind capacity than North Dakota alone.
It's the same story in solar. Germany and Japan's solar “feed-in” initiatives require utility grids to buy excess solar power from individual producers. The two countries now have a 70 percent share of global production and are industry leaders in solar electricity equipment. Japan produces about 45 percent of global solar PV production, the EU 24 percent, and the United States only 21 percent (2003 figures). The Joint Global Change Research Institute reports that from a base of a few thousand jobs in the early 1990s, German employment in renewable energy jumped to 50,000 in 1998 and then more than doubled to its current level of about 120,000.
Germany will have to move into export markets to maintain, let alone expand, employment. It's not that the United States has no production incentive policies in place. The problem is that no single program is funded at a level to have the kind of impact needed to dramatically increase production, and thus employment. So, the United States is way behind in renewable energy production. If we want to create export markets for production equipment, we will need to develop capacity quickly. Kammen notes that only one of the world's top ten solar PV module producers is a U.S. company.
Maximizing the job potential
In the end, what is the overall job creation potential for the green economy? There are at least a dozen major studies that reach quite different conclusions. Some critics caution that a lot of “greenwash” is going on -- claiming credit for jobs that would have been generated anyway or that merely replace old-economy jobs. We need more precise calculations of job growth opportunities.
A 2006 report by the Economic Roundtable, “Jobs in LA's Green Energy Technology Sector,” illustrates the challenge. Among the industries named are water and sewer systems, waste collection, legal services, and animal processing. While the report acknowledges that these industries could supply green goods and services, the processes involved in producing them may or may not be green. Specific policies are needed to optimize the potential.
Part of the challenge is connecting jobs to training for new technologies. Many cities and communities are using green development as a new pathway to creating good jobs for residents of low-income communities. State governments need to work with their community colleges to plan ahead for developing curricula around cleantech jobs.
Many of the manufacturing jobs should be able to reemploy displaced workers or hire high school graduates with some technical training. Initiatives in Los Angeles, San Francisco, and New York are linking new green building projects and retrofits in low-income neighborhoods with apprenticeships or other job training programs in construction or other building trades. These are just the beginnings of needed programs in which green building projects in low-income neighborhoods are linked to apprenticeships or other job training programs.
The San Francisco area's solar system installation companies report difficulty finding qualified installers for photovoltaic and other facilities. But training an electrician to install a solar system only takes a couple of days. Some shortages may be due to the industry's reluctance to hire union electricians for these jobs. The International Brotherhood of Electrical Workers has established training programs for solar installation in New York and the Boston area that are adequate to meet demand.
There is a need for all levels of government to coordinate training policies, energy and environment policies, and economic-development strategies. This will be a big challenge, given a political tradition that disdains economic planning. But if we fail, America will have squandered a huge, win-win opportunity.
Joan Fitzgerald, author of Moving Up in the New Economy, directs the graduate program on law, policy, and society at Northeastern University.