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Con: 'Green energy' is the best route to profitable public investment

The best investment route

Posted: January 13, 2012 - 1:08am

BLOOMINGTON, Ind. — The Obama administration’s investments in the green energy economy have already produced a great number of jobs in a sector with significant potential for additional growth. It would be a serious mistake to undercut the initiative just as it’s contributing to the recovery.

While estimates vary on exactly how many jobs the American Recovery and Reinvestment Act created, several experts have put the number at 2 million or more. Separate studies by Daniel J. Wilson of the Federal Reserve Bank of San Francisco, economists James Feyrer and Bruce Sacerdote of Dartmouth College and the Congressional Budget Office also conclude that government spending on infrastructure, goods and services produces one of the highest jobs-per-dollar ratios of all spending alternatives.

Included in this category of government spending is support of green energy programs such as weatherization, smart grids and the Department of Energy’s loans for innovative technologies.

A study conducted in 2011 by the BlueGreen Alliance and the Economic Policy Institute confirmed the jobs benefits of green energy policies. It found that the stimulus created or saved 997,000 green jobs — including jobs in the energy sector — through the end of 2010. One can view some of these jobs online via the website Recovery.gov, although these are only the “direct” jobs reported by project contractors and do not include “induced” jobs, such as those devoted to the production of the steel needed to make wind turbines.

Even more of these jobs can be viewed at the Department of Energy’s Loan Program Office website (https://lpo.energy.gov/).

Although critics lambaste the Loan Program Office and the Recovery Act in general because of the Solyndra scandal, far more projects have successfully used Recovery Act money through these loans to create a total of 50,000 jobs — not counting indirect employment.

Some argue that these green jobs destroy other jobs in the fossil fuel industries, such coal mining. But University of California at Berkeley researchers addressed this topic in 2010 and concluded that green and low-carbon energy investment produces significantly more jobs than are lost in fossil fuel industries. In fact, solar photovoltaic energy creates the most employment of all the energy sources the researchers studied. The researchers ultimately determined that increased energy efficiency and a high renewable portfolio standard target — along with nuclear energy and carbon capture and storage technology — would yield millions of full-time equivalent jobs.

Nor should anyone accuse the Obama administration of using government funds to prop up a sector best left in private hands. The Council of Economic Advisors finds that $46 billion in Recovery Act funds will leverage over $150 billion in clean energy financing by private investors. Such leverage includes assistance for building renewable energy facilities and developing smart grids.

Further, green energy represents not only a high-return investment for the federal government but a competitive world market in which America has arguably fallen behind despite years of continued growth in wind power and other sectors..

Princeton University economist and New York Times columnist Paul Krugman recently cautioned against only counting jobs gained while ignoring jobs lost. Of course, there were still 13.1 million unemployed Americans when last measured. But given the success and potential of Obama’s green energy policies, the real question is not whether his administration has hindered private sector growth. Rather, in light of research conducted by University of California and elsewhere, we should ask if the administration’s policies should be taken further, potentially along with the enactment of a clean energy standard or other national-level energy policies that target both energy and economic development.

• Carley is an assistant professor at Indiana University’s School of Public and Environmental Affairs from which Hyman is a graduate.

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