Over the past few years, “green jobs” and the “clean economy” have become the growth mantra for a wide variety of energy, climate, and economic policy advocates. Much of this excitement has been productive and justified, but some of it has been misinformed. Few reports have shed more light on this debate than the new study by the Brookings Institution Metropolitan Policy Program, “Sizing the Clean Economy: A National and Regional Green Jobs Assessment.”

The report offers a plethora of data and analysis, and several commentators have already weighed in with various interpretations (see Bryan Walsh at TIME). But one of the key conclusions worth highlighting is that the driving force behind the U.S. “clean economy” over the last decade has been emerging energy technologies –- not in other “green” sectors related to buildings and home weatherization, energy-saving consumer products, or efficient appliances (as some advocates predicted). In other words, emerging energy technologies appear to have the greatest job and export growth potential, and this carries important implications for U.S. policy priorities — a conclusion recently echoed in Google’s energy innovation report.

Brookings defines the “clean economy” as a very broad range of goods and services that provide environmental benefit, including everything from electric vehicle technologies to organic foods and waste management (see list below). As it explains, the report is “the first study of the U.S. clean economy to provide timely information that is both comprehensive enough in its scope and detailed enough in its categorization to inform national, state, and regional leaders on the recent employment dynamics of the U.S. low-carbon and environmental goods and services super-sector…”

According to the data, the highest job growth and export intensity in the overall clean economy between 2003-2010 was primarily in emerging energy technologies. Out of the 39 measured sectors, the top eight with the greatest relative job growth were all energy-related: wave/ocean power, solar thermal, wind, carbon storage and management, solar PV, fuel cells, biofuels, and smart grid.   In terms of export intensity, 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.

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On Friday, the House of Representatives voted on its final version of the 2012 Energy & Water Development Appropriations Bill. In terms of the Advanced Research Projects Agency for Energy (ARPA-E) — the Department of Energy’s flagship energy innovation program — the good news is that advocates were able to boost the budget from $100 to $180 million with a last-minute amendment, which passed by just one vote.

Americans for Energy Leadership was proud to support this effort, joining dozens of universities and high-tech companies in signing a letter supporting ARPA-E. Now we move on to the Senate appropriations bill, where we expect to achieve a larger budget and eventually come out somewhere inbetween the House and Senate version at conference.

Yet even while we “celebrate” salvaging a $180 million budget for ARPA-E in the House, we recognize this amount falls fall short of what ARPA-E needs to achieve its potential.  Indeed, ARPA-E merits a much larger budget for its investments, which can spur the development of entirely new industries and technological breakthroughs, create high-skilled jobs, support small businesses, improve U.S. energy security, and enhance our competitiveness in the advanced energy industry.  As the Information Technology & Innovation Foundation recently concluded in a report, “A Model for Innovation: ARPA-E Merits Full Funding“:

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Screen shot 2011-05-04 at 2.21.44 PMIn the high-stakes federal budget debate, getting the facts right is critical.  That is why the Heritage Foundation’s recent error-riddled report — which proposed a near-dismantling of the U.S. energy innovation system — demanded an immediate response, which Americans for Energy Leadership has provided with our colleagues at the Information Technology & Innovation Foundation (ITIF) and the Breakthrough Institute.

Last week, these three organizations released a point-by-point analysis of the inaccuracies and misrepresentations of Heritage’s proposal.  Today, we are releasing a new report on the fundamental misconceptions of Heritage’s approach.

Download: All About the Fundamentals: Three Misconceptions of the Heritage Foundation’s Deficit/Energy Proposal” [PDF]

The report highlights three major problems with the Heritage proposal:

1. The proposal fails to meaningfully reduce the deficit now or in the future.

Even though the proposal advocates cutting DOE research budgets in the name of deficit reduction, the Department of Energy represents a tiny portion of the federal budget and contributes little to the deficit and national debt. Moreover, the proposal fails to distinguish between government spending and productive public investment in science and technology, which drives innovation and economic growth.

2. Heritage fails to understand where technological innovations come from.

Heritage wrongly assumes that “when it comes to energy policy, the free market works” and is best suited to develop new technologies. In fact, the energy sector is anything but free, and has always been characterized by extensive regulations and subsidies, natural monopolies, and other divergences from the free-market ideal held by Heritage. Moreover, Heritage ignores the long history of public support for innovation and assumes the private sector will invest sufficiently in energy innovation. For decades, the energy sector has consistently underinvested in R&D, and market failures plague the energy innovation process at each stage of development, from lab to market launch. There is a broad expert consensus that public investment and public-private partnerships are essential to moving new, innovative technologies into the marketplace.

3. The proposal ignores the immediacy and enormity of U.S. energy challenges.

While Heritage pays lip service to energy security, its recommendations would undermine many of the best efforts underway to achieve it. The Department of Defense has recognized the critical role that innovative clean energy technologies will play in enhancing their strategic and tactical abilities, as well as the nation’s energy security. DOD also views the DOE as a strategic partner in its effort to reduce its own vulnerability from relying on fossil fuels. If Heritage had it their way, DOD would lose a key partner in the long-term effort for greater force effectiveness and security through better energy management.

Download the full report here.

Download the point-by-point rebuttal here.

A New Approach to Passenger Rail

a new approach to passenger railFlorida’s rejection of $2.4 billion of federal rail money last week brings to light a new truth of federal projects: the federal government cannot simply act like a charitable foundation. Under such a foundation model, in which states choose whether or not to compete for grants and governors can pull out at a whim, we may end up with one high-speed rail line connecting Los Angeles to San Francisco and another connecting New York City to Buffalo. It’s difficult, however, to see how this system will produce a national passenger rail system. Luckily, there are a score of other strategies to pursue.

Eisenhower’s aspirations of building an interstate highway system were in some ways similar to Obama’s current rail aspirations. The interstate highway system was a huge investment spread over multiple decades. Like a national passenger rail system, our highway system would be much less useful if it only went through states with pro-infrastructure governors. Also on par with current rail proposals, the federal government fronted about 90% of our highway system’s cost, while states funded the remaining 10%, as stipulated in the Federal Highway Act of 1956.  Florida’s $2.4 billion of rail funds would have required matching funds of $280 million, or 10.4% of the projected total cost.

Unlike current passenger rail projects, however, there is little indication that individual governors attempted to send back federal funds or otherwise resist the construction of highways in their states. This may be in part because the interstate highway system was understood as important to national security. It may also be true that infrastructure investment was, in the 1950’s, seen as patriotic in a way it no longer is today. Prevailing economic theory has also shifted in the past half-century. These and a dozen other factors point to the conclusion that a plan to simply dish out federal funding, while it may have been successful in 1956, will not work today.  Seeing a national passenger rail network through to completion requires that we understand why the foundation model is no longer appropriate, and what the possible alternatives look like.

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China’s President Hu Jintao recently ended his 4 day visit to the United States, leaving many questions as to the future of Chinese, American relations over clean energy and climate change mitigation.  The U.S. and China have numerous public and private partnerships on energy issues, but a recent complaint to the Word Trade Organization filed by the U.S. Trade Representative (USTR) against China could stall progress.

In September, the United Steelworkers Union (USW) filed a 5,800 page complaint with the US Trade Representative against China. The USW argued that China’s renewable energy policies violated international trade agreements by favoring domestic manufacturers.  The USW released a statement saying:

“These practices include discriminatory laws and regulations, technology transfer requirements, restrictions on access to critical materials, and massive subsidies that have caused serious prejudice to U.S. interests. Together, these practices have given Chinese producers an upper hand in accessing investment, technology, raw materials and markets, while foreclosing these same opportunities to U.S.producers.”

The USTR investigated the USW’s claims and in December filed an official complaint with the World Trade Organization against China’s wind power subsidies. The complaint lodged by the USTR specifically refers to China’s “Special Fund for Wind Power Manufacturing.” Under this program grants are available to Chinese manufacturers of wind turbines and manufacturers of parts and components for wind turbines ranging from $6.7 million and $22.5 million. Recipients can receive multiple grants as the size of the wind turbine model increases and the USTR estimates that since 2008 the grants awarded under this program could total several hundred million dollars. The USTR claims this program violates WTO regulations because the grants awarded are dependent upon Chinese wind power equipment manufactures using components made in China as opposed to foreign products.

China’s Commerce Ministry responded by saying:

“All countries are developing new energy sources to deal with the climate changes. China’s measures on wind power development help save energy, reduce emission, and protect environment, which are important measures for sustainable development, and comply with WTO rules. China show grave concern on U.S. request , and will make serious study of it., and deal with the request based on WTO rules, and also reserves her relevant rights.”

After a complaint is lodged with the WTO, the two parties have 60 days to resolve the dispute on their own. If the two parties do not come to a mutually agreeable resolution on their own, the WTO will review both parties’ arguments before making a ruling. The WTO panel’s review process can take anywhere from a year to 15 months. Should the WTO side with the U.S., then the U.S. would be allowed to impose penalty tariffs on Chinese goods to make up for lost revenue. On the other hand, should the WTO find that China’s wind grant program is not in violation of international trade agreements; it could be an embarrassment for the U.S., not to mention a waste of resources and time. (more…)

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US-China Energy Cooperation: The Case of CODA Automotive

Coda Automotives Kevin Czinger (left) discusses electric-car batteries in Tianjin, China, with U.S. Commerce Secretary Gary Locke (middle).

Coda Automotive's Kevin Czinger (left) discusses electric-car batteries in Tianjin, China, with U.S. Commerce Secretary Gary Locke (middle).

Much of the dialogue surrounding Chinese President Hu’s visit this week, at least from a media reporting perspective, has centered around Sino-U.S. energy deals—including players like Boeing, GE, Duke Energy, who launched China partnership announcements timed to coincide with Hu’s visit and the Brookings U.S.-China Strategic Forum on Clean Energy Cooperation. While there is much to cheer in these agreements, especially when it comes to job creation, there is also much to question as we move forward.

These energy agreements pose some rather obvious risks, in that U.S. companies will be sharing intellectual property with Chinese firms—and that any collaboration with China in an industry integral to U.S. national security presents some level of risk. But the deals also represent a laudable, long-awaited step forward in the Sino-U.S. relationship, affording market access and substantive China learning opportunities to U.S. firms.

While welcoming the collaboration that these announcements represent, it is perhaps important to recognize that the US-China narrative is multilayered—that these well-trumpeted corporate announcements come in the midst of some thought-provoking setbacks for some notable US-based energy companies which extended China operations over the past few months.

One of these companies is CODA Automotive, a US electric car company based in Santa Monica. CODA has been an intriguing story for journalists. The company was formed in 2009; that fall, CODA representatives came to Beijing to participate in the U.S. Department of Energy’s first US-China Electric Vehicles Forum, spearheaded by DOE Assistant Secretary for Policy and International Affairs, David Sandalow.

As you might imagine, CODA’s vision seemed especially apropos to Americans in Beijing in late 2009: China’s Chery Automobile was producing new models left and right, and China’s BYD (which has since experienced some notable setbacks) had announced its investment from Warren Buffet’s Berkshire Hathaway a little over 6 months prior. At that time, Americans in the region were left looking for a leader on the other side of the Pacific.

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The Hidden and Not-So-Hidden Benefits of Rail

A Chinese high-speed rail station in Tianjin.

The energy and emissions savings associated with better fuel economy are large and obvious, as I covered in my last piece, but driving more efficiently is not synonymous with reducing our nation’s transportation fuel consumption.  In addition to promoting more efficient cars, we should create transportation options that enable Americans to drive less altogether.

According to a report from the U.S Department of Transportation, transportation currently accounts for 29% of America’s greenhouse gas emissions.  Similarly, transportation accounts for about 27% of America’s energy consumption.  Given that our country’s population will grow about 35% to an estimated 420 million by 2050, lowering or even maintaining our transportation emissions is going to involve more than just modest technology upgrades.

Rather than just pursuing marginal advances in fuel efficiency and alternative power sources for cars, in the next four decades we will need to rethink the assumptions underlying our transportation infrastructure.  After all, the structure of our transportation not only affects the amount and type of energy we use for transit, but also shapes our metropolitan areas.  If private vehicles and airplanes are still the hegemons of both intra- and inter-regional transportation by 2050, it will be difficult to curb not just transit emissions but the crippling affects of sprawl as well.

Evolving our transportation systems and moving away from the car is always a politically charged matter, and seems to have emerged as even more of a poignant sort of culture war in recent months.  Anti-cyclist angst seems to be on the rise and, of course, the new governors of Wisconsin and Ohio recently sent back about $1.2 billion in federal rail funding.  The stated reasons for canceling these rail plans were that the passenger rail projects would have been costly and weren’t expected to turn profits in their initial years.  Indeed, many have referenced the “hidden” and “not-so-hidden” costs of passenger rail as cause for worry.  To be sure, revamping America’s transit infrastructure is a large undertaking, and we should be frank about the level of investment it will require.  But why don’t we also talk about the hidden and not-so-hidden costs of not investing in rail?  What about the hidden costs of driving, such as car maintenance, congestion, and the missed opportunity cost of the valuable urban real-estate we devote to parking?  Certainly these matters deserve consideration as well.  Below I’ll outline what many see as some of the “hidden” or “not-so-hidden” economic benefits of a more advanced American rail system.

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A Renewable Interior

The use of public lands to spur the development of clean energy industries in China has been a contentious issue in recent months. While China’s aggressive growth in renewable energy manufacturing capacity has caused consternation over this lost American opportunity, few would argue that the Federal government should mirror the Chinese state and leverage federally managed lands to attract manufacturers (and the accompanying industrial waste). However, public lands overseen by the Bureau of Land Management can help drive domestic deployment of renewables and will be a critical proving ground for the next generation of energy technology.

Although reports on China’s efforts to nurture cleantech industries can be dismaying, such as the work by AEL’s Daniel Goldfarb on Chinese land hand-outs for manufacturing and contributor Leigh Ewbank additional commentary on the emerging Chinese, American trade dispute, it is important to note that America has not yet lost the renewable energy deployment battle. While growth in the Chinese wind market surpassed the US by almost 4,000 MW in 2009, America leads the world in wind power capacity by almost 10,000 MW (China is currently #2). Similarly, while China is investing heavily in renewable energy generation, Chinese solar power capacity stood at only 150 MW in 2008 compared to an EIA estimate of ~540 MW of in the United States. As is the case for wind, China is moving to aggressively increase solar capacity, targeting 2,000 MW by 2011. Geothermal appears to be a lonely bright-spot: America is far and away the world leader in geothermal generation, with more than 3,000 MW of existing capacity and an additional 4,500 MW in the pipeline. China ranks 17th, with less than 100 MW of geothermal capacity.

While the Race for Megawatts captivates the public, deployment is much more than a matter of national pride. Deployment drives both innovation, reducing technology cost through ‘learning-by-doing’, and economic growth, not only creating jobs through project development but rippling through ecosystem of suppliers, distributors, and manufacturers. A clear path to deployment is also critical if entrepreneurs are expected to invest the time and capital necessary to bring a new technology to market. As can clearly be seen in China (or Germany, Spain, and Japan), strong state support is the single most important factor currently driving the introduction of renewable energy onto the grid.

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Guest contribution by Leigh Ewbank

On the heels of filing a complaint with the WTO against China’s subsidies for its domestic wind turbine manufacturers, President Obama signed an appropriations law that requires the Department of Defense to purchase American-made solar panels. The move appears to be the first instance of America leveraging its WTO complaint to boost its clean technology industry, and shows that the US is beginning to take clean energy competitiveness seriously.

Some will argue that the ‘buy American’ provision smacks of hypocrisy—that the administration is as guilty of the same behavior it has criticized China for. Others will argue that the measure counters the Chinese subsidies and is a legitimate way to bolster the US clean energy sector in an uneven playing field. Regardless of your position on the matter, the move shines a spotlight on the role of military procurement.

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Speculation over when gasoline will reach $5 per gallon seems to be a major theme of the new year.  Although the group pushing this story is primarily interested in leveraging America’s emotional attachment to cheap gasoline to push an offshore drilling agenda, a wiser response to the prospect of rising oil costs might be a serious conversation on fuel economy.  The American auto industry faces a number of hurdles in its pursuit to achieve new federal fuel standards, but, smart policy could aid this key industry while acting as a boon for America’s economy and efforts to reduce greenhouse gas emissions.

It is fitting that the first week of 2011 ushered in a new series of federal fuel standards, meaning passenger cars sold this year must achieve at least 30.2 miles per gallon.  This alone is nothing big: the previous standard for passenger cars was 27.5 MPG, it had been on the books since 1985, and the Obama administration’s 2011 standards are even slightly less ambitious than those the Bush administration had been toying around with in 2008.  Far more significant is that the 2011 standards kick-start an annual progression that will bring us to passenger car averages of 39.5 MPH by 2016.  With light trucks required to improve their fuel economy from 24.1 MPG this year to 29.8 by 2016, industry-wide averages five years from now should exceed 35.5 MPG.  The Union of Concerned Scientists calculates that these standards will “reduce U.S. oil consumption by 1.2 million barrels per day by 2020, more petroleum than the United States presently imports from Saudi Arabia and Kuwait combined,” and in terms of carbon emissions will represent “the equivalent of taking nearly 31 million of today’s cars and light trucks off the road” over the next ten years.

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