Clean energy jobs are growing much faster than the rest of the economy; state policies are at the center of that growth

Authors: Lewis Milford, Jessica Morey, Clean Energy Group | Projects: Clean Energy Innovation, Clean Energy States Alliance

Brookings 2011 jobs report coverLast week, our friends at the Brookings Institution Metropolitan Policy Program released an important report assessing the size and growth of the clean economy, “Sizing the Clean Economy: A National and Regional Green Jobs Assessment.” The research in this report provides an excellent start toward gathering the data on jobs, growth trends and geography needed to develop effective clean energy economic development policies.

While the authors’ definition of the “clean economy” goes far beyond renewable energy, the report does a great service to provide, for the first time, a detailed breakdown of specific clean energy sectors and growth trends.

The Brookings team found that today the total “clean economy” in the U.S.- defined as all industries that produce goods and services with an environmental benefit- makes up 2.7 million jobs. The renewable energy sector makes up only 5% of those jobs- but they followed similar and in many cases more impressive trends than the total clean economy. They are fast-growing, manufacturing- and export-intensive, and offer better-than-average pay to workers with modest education.

A key conclusion of the report is that these new energy sectors have had the highest growth rates over the past decade- higher than the rest of the clean economy and far greater than the economy as a whole – albeit from relatively low bases.

According to the report, from 2003 to 2010

“four of the five fastest-growing segments [of the clean economy] were in renewable energy. Solar thermal grew at a torrid pace, expanding by 18.4 percent annually over the seven years and adding 3,700 jobs. The wind power industry added 15,000 jobs, growing 14.9 percent per year. Solar PV added 12,286 jobs with 10.7 percent average annual growth. Moreover, biofuels, another renewable segment, added 9,300 jobs with 8.9 percent growth each year over the period.

Young, technology-heavy segments were also adding jobs at elevated rates each year over the period. For example, establishments involved in fuel cell production created roughly 3,500 jobs while those working in smart grid added 7,000, with annual growth of 10.3 and 8.6 percent respectively.

The takeaway: emerging, new companies in the clean economy had a substantially greater job creation impacts than their “non-clean” peers in the national economy.”

The clean energy sector is also more export intensive- seven of the top eight sectors were energy technologies: biofuels/biomass, electric vehicle technology, battery technology, wind, solar PV, and fuel cells. The most export-intensive “category” of sectors was renewable energy technologies, at $64,884 in exports per job, compared to only $20,129 for the aggregate clean economy.

The report also begins to look at why certain regions have seen such high growth- what policies are most important?

A key take away here (no surprise to us) is that state policy has been leading the way. And in the energy sector in particular, a number of state clean energy fund programs are highlighted as case studies.

  • The New York state Energy Research and Development Agency’s (NYSERDA) energy and environmental technology energy incubator, iCLEAN, is noted for its success at driving the clean tech industry in the state.
  • The California Energy Commission’s Alternative and Renewable Fuel and Vehicle Technology Program, is also highlighted as a model for its loan guarantees and other financial instruments.
  • Boston, home to the Massachusetts Clean Energy Center, also ranked seventh among the 100 largest metro areas for employment in the alternative energy industry, with nearly 4,300 alternative energy jobs.

The report offers three overarching policy recommendations:

  1. Foster demand for a vibrant domestic market
  2. Ensure the availability of adequate finance
  3. Promote innovation

These recommendations are a great start to thinking about clean energy in a new way – as an economic development opportunity. The key is to develop new and dedicated economic development programs, which go beyond funding individual projects.

Here at Clean Energy Group and the Clean Energy States Alliance, we are starting to work with states to share experiences with their new economic development programs in the clean energy space.

But that’s only a beginning. A new, national effort to bring together all the economic development and clean energy practitioners to work toward better and smarter policies is the next important step.

Offshore Wind and Economic Development: How Utility Law Could Help

Author: Lewis Milford, Clean Energy Group | Projects: Clean Energy Finance, Offshore Wind Accelerator Project

blogphoto-Offshore-Wind-FarmIt is hard to imagine a new angle on the beleaguered Cape Wind project. Everything from its rich opponents, to the Kennedys, to the local Indian tribes has been the subject of endless news stories.

But there is one item that deserves some attention – jobs and what the Massachusetts utility regulator’s decision to approve the project means for how any new energy technology can be built.

After an interminable struggle, the state’s utility commission approved part of the future power output from the project a few months ago. But in the press around the approval, the important rationale for the approval did not get nearly enough attention.  It is never too late to point out an important point, so here goes.

That approval was a big deal because the cost of power (about 18 cents per kWh) is quite a bit more than the average cost of electricity in the state. To justify the purchase, there had to be compensating benefits. And that is why this decision is so important.

Under Massachusetts law, employment benefits are an explicit element to be used in rate case decision making. In this multi-hundred page decision, start at page 200 and read for about twenty pages to see how this is analyzed. You will see there were numerous studies showing job benefits and various other quantified and unquantified benefits—the analysis was used to offset the higher costs of the project as compared to commodity priced power. It’s very interesting to see how utility decision making is about much more than prices, it is now about jobs, environmental benefits, system reliability and regional impacts. Higher costs can be justified by economic development benefits.

Like the Cape Wind offshore wind project, any new technologies that might cost more to build—like marine power, or carbon capture and storage—state utility regulators will have to approve the higher costs. To do that, they must have good reasons to say yes.

In Massachusetts, that means jobs, as well as other factors. Like many states, a regulator must consider “employment benefits” when looking to approve or disapprove a new energy project. It is a little known part of utility law in most states.

In the Cape Wind case, the commission found that hundreds of new jobs in construction, maintenance and other areas would result from the project. And with this jobs creation justification, among others, approved the project and electricity rate.

This is an area that needs a great deal more work in the clean energy space. To get built, state regulators will have to approve emerging clean energy technologies, whose electricity output is likely to cost more in the early stages. To do that, they will need evidence to show that the countervailing benefits outweigh those higher costs. In addition to jobs, this could include environmental benefits, system reliability and regional economic impacts. Clean energy advocates should build the rate case, like in Cape Wind, with economic evidence.

Economic development benefits—new jobs—are likely to be the key to the approval of new clean energy technologies—at least in the near term.

Lighting Africa: A model that should be replicated in other clean energy technologies

Authors: Lewis Milford, Jessica Morey, Clean Energy Group | Projects: Clean Energy Innovation, Clean Energy Finance

LA logoClean Energy Group has been advocating for new innovation strategies to accelerate clean energy technologies and markets for many years now (see “Moving Climate Innovation into the 21st Century: Emerging Lessons from other Sectors and Options for a New Climate Innovation Initiative“).   We’re happy to report that one program, Lighting Africa, a joint International Finance Corporation-World Bank initiative, is demonstrating the successful application of these new innovation systems approaches to one of the most persistent energy access issues in the developing world: off-grid lighting. (See Lighting Africa case study in Clean Energy Group’s “Accelerating Climate Technologies” report for more information.)

Lighting Africa (LA) started with the simple goal: to catalyze the market for clean off-grid lighting, without providing subsidies for the technologies. Subsidies have a history of running out at crucial moments—and have in many cases actually undermined markets for new technologies. Instead, the LA team aimed to use public dollars strategically to incentivize private-sector innovation—to develop products that people wanted and could afford to buy without public support.

To do this, LA took a systems-analysis approach and identified a series of market gaps for off-grid lighting products that the private sector was unable to overcome:

  • Lack of market information and consumer knowledge of products
  • Low quality products spoiling the market
  • Lack of low-cost consumer and business finance
  • Policy and regulatory constraints

The team then created a series of targeted interventions to overcome these barriers. LA provides detailed market analysis to private lighting companies, product testing and certification, access to finance for consumers through local banks, and an online virtual network to link manufacturers and distributors.  Lighting Africa acts as “bridge” or “matchmaker” for entrepreneurs and local and international businesses along the supply chain.

Early results are impressive. In the past 18 months, LA has spent less than US$9 million on its off-the-grid efforts, which have already brought better light to 950,000 people. Eight products have so far passed LA quality tests and are available in the African market, retailing between US$22 and US$97. Two hundred and fifty (250) retailers are now selling these quality approved products—up from 30 in less than a year.

With this rapid progress, reaching Lighting Africa’s initial goal of providing 2.5 million people with access to cleaner lighting by December 2012 is on track.

After the program’s early success piloting its approach in Kenya and Ghana, LA has expanded to eight additional countries in Sub-Saharan Africa and India. LA’s quality assurance approach is already being implemented internationally.

Lighting Africa is now spinning out some of its work to a newly formed independent organization:  the Global Off-Grid Lighting Stakeholder’s Association. The Association represents a unified industry voice dedicated to the development of clean off-grid lighting solutions.  The association will support the expansion of off-grid lighting markets in developing countries outside of Africa. The association is an important first step in moving the Lighting Africa program towards a self-sustaining operation, and provides an “exit strategy” for the World Bank Group, which has served to jump-start the off-grid lighting industry.

The Lighting Africa example demonstrates that individual firms cannot and should not “go it alone” to commercialize climate technologies in developing countries. The program underscores the need for an international public partnership to serve as a neutral broker to identify and fill gaps across the value chain, share international knowledge, enable relationship building, and respond to evolving market needs—actions that individual countries and private-sector developers cannot do on their own.

The model should be replicated for other clean energy technologies.

Extreme Weather and Power Outages: Distributed Clean Power Can Meet Emergency Needs

Authors: Lewis Milford, Jessica Morey, Clean Energy Group | Projects: Clean Energy Innovation, Resilient Power Project

blogphoto-Power-GridThe tornadoes in the South and Midwest this spring, the recent unprecedented fires in the Southwest and the floods across the country once again showed how fragile our electric grid is and how dependent we are on it for our basic services. After the tornadoes in the South millions of homes and businesses were without electric power- transmission lines were down and the Tennessee Valley Authority shut down three nuclear reactors when power was cut to run the plants cooling system.  The Arizona fire threatened major transmission wires that supply power to hundreds of thousands of people- damage to these wires would have meant rolling black out across the Southwest and Texas.

Power outages have serious impacts beyond individual inconveniences – the loss of electricity from severe weather disrupts emergency and communications systems of all kinds — 911 call centers, cell phone service, as well as at shelters, police stations, hospitals and laboratories.

After the Alabama tornadoes, there were also reports of major gas shortages- not because stations couldn’t get gas but because they didn’t have power to pump the gas.

Right now, most electrical power comes from large central plants –nuclear, coal, oil or gas–delivered through miles of lines and above-ground poles. Tornadoes, hurricanes, flooding and other disasters can easily interrupt these vulnerable distribution and transmission networks, as happened across the South.

It doesn’t have to be this way. Distributed renewable energy systems can often withstand severe weather events and continue to operate when the grid is down- systems like solar panels and fuel cells. As far back as 1999, NREL recommended the widespread use of solar for emergency backup power, including gas stations.

Japan has been using solar in gas stations as backup for emergencies since the mid 1990s.

After a series of hard hurricane seasons in 2004 and 2005, when many communities were without power – and gas and supermarkets- for weeks. (Federal and state agencies spent millions distributing water and ice to residents.)  Florida passed a law requiring gas stations to have backup power for the pumps and the cash registers.

It appears Alabama does not have a similar law.

Disaster relief experts have written about these solutions for years, but officials have been slow to act. Despite numerous examples of distributed renewable systems saving the day (and centralized conventional energy failing massively), when it comes to existing, central generation energy systems with their long lines, poles and transformers, most propose simply to rebuild them and hope for the best next time.

Hoping against Mother Nature is not a wise energy protection strategy. A more creative approach should be on the table: energy technologies that are smaller in scale, modern, cleaner and more reliable to power critical electrical needs.

Because this is about public safety and the protection of life, government should step in forcefully with a solution. After all these tragedies, it’s about time that federal and state government require these resilient, smaller technologies for key public safety power needs.

Some states are beginning to see these technologies as a basic foundation for emergency management and public safety. The NYPD Central Park Police Station is powered by an on-site fuel cell that kept the lights on during the 2003 blackout. A fuel cell at the Saint Francis Hospital in Hartford, Connecticut provides emergency power for some operating rooms. On-site renewable energy projects are in place at schools that serve as emergency shelters. The Governor’s residence in Pennsylvania uses photovoltaic for emergency backup power for critical state government communications. Other states have these technologies at mobile emergency command centers and wastewater treatment facilities.

But these small examples are not enough. Most federal and state government buildings have no such additional emergency power protection.

These new mandates can be tailored and flexible. They would cover only certain emergency power needs in critical facilities such as communications, information systems and emergency lighting, not entire buildings. They also should provide incentives for the private sector to increase power security in mission critical buildings like laboratories and hospitals. Homeowners too deserve financial support. New markets for these technologies could develop from these requirements, as well as new jobs for installers and others to maintain them.

The human and economic costs of depending solely on the energy status quo during times of natural emergencies are now painfully unacceptable. In the future, we should not rely on the same old energy systems that continue to fail when we need them most.

If states and the federal government take these necessary steps, stronger emergency management and homeland security with more resilient, cleaner energy might be one of the few good things to come out of these recurring natural tragedies.