August 4, 2011

How can the Clean Economy be fostered and what is the potential?

Green Trends

How can the Clean Economy be fostered and what is the potential?

In the midst of the ideological divergence and posturing in Washington, it is refreshing to see some clear numbers that point to positive impactful investment and jobs in the green economy. The Metropolitan Policy Program at the Brookings Institute recently published their report “Sizing the Clean Economy” which ask and answers “The question before us: at a time of economic uncertainty and federal polarization, can America’s cities and metropolitan areas lead the nation to a clean economy—to create jobs in the near term and retool and restructure our economy for the long haul?”

This report discussed three important findings. First, the clean economy is a significant emerging market in the U.S. Second, metropolitan areas are the innovators of the clean economy. Third, to fulfill the potential of the emerging clean economy, the entrepreneurial energy and dynamism of these metropolitan engines must be liberated.

First Finding. The clean economy is a significant emerging market in the U.S.

The Sizing the Clean Economy report tells us that in 2010, global private investment had reached $154 billion, an increase of more than 600% since 2004. Most businesses are thinking about clean economy investment; three quarters of the major global corporations reportedly project increasing their “cleantech” budgets in the next few years.

There are 2.7 million clean economy jobs in the United States, more than in fossil fuel industries. This is twice as many as in the bioscience sector, and is greater than half of the 4.8 million jobs in the Information Technology sector. There are 5 discernible clean economy categories (also known as “green jobs” by the Bureau of Labor Statistics): Renewable Energy; Energy and Resource Efficiency; Greenhouse Gas Reduction; Environmental Management, and Recycling; Agricultural and Natural Resources Conservation; and Education and Compliance.

Not only is the clean economy creating jobs, these are export intensive. Reportedly clean economy exports totaled over $53 billion in 2009, about twice as much exports come from this sector as come from the average domestic US job. And these jobs are primarily manufacturing and goods producing; this production in turn drives innovation. Two thirds of solar and wind energy jobs are in manufacturing. Segments such as appliances, water efficient products, and electric vehicle technologies have more than 90 percent of their jobs in manufacturing. And the jobs in the clean economy are for a wide array of skills and offer various wages.

The report makes the finding that there are low barriers to entry for employees in the clean economy, a phenomena that is in contrast to what we at Redfish see recruiting at the executive level. According to the report, overall 45 percent of all clean jobs are held by workers with a high school diploma or less, compared to only 37 percent of U.S. jobs. Training is more available here than in the general economy, and wages are higher, with the median wage for the average occupation in the clean economy at nearly $44,000, as compared to the national equivalent of just over $38,000.

Second Finding. Metropolitan areas are the innovators of the clean economy.

The top 100 metro areas constituted more than 60% of the clean economy jobs, and over 70% of cleantech industry jobs (especially in solar photovoltaic, battery technologies, smart grid, and wind energy).

  • The four main metropolitan areas driving the clean economy are New York with over 150,000 clean economy jobs and Los Angeles, Chicago and Washington, with over 70,000 each.
  • Other major players include: Philadelphia, San Francisco, Atlanta, Boston, Houston and Dallas, with over 38,000 jobs apiece.

Third Finding. To fulfill the potential of the emerging clean economy, the entrepreneurial energy and dynamism of these metropolitan engines must be liberated.

The report writes the following prescriptions:

  1. Scale-up markets
  2. Drive innovation
  3. Catalyze finance
  4. Align with cities and metros

“Scale-up markets by catalyzing demand for clean economy goods and services.”  A national clean energy standard (CES) must be enacted with a consistent long-term commitment to alternative energy sources. As an example, California’s aggressive renewable portfolio standard of 33 percent renewable energy by 2020 has created a platform for strong consumer adoption. As one consequence, San Jose and other cities and counties are doing are streamlining or even eliminating building permitting for solar panels.

“Drive innovation by investing in advanced R&D at scale, over a sustained period and via new distributed networks.” The American Energy Innovation Council, led by Bill Gates, Jeff Immelt, and others, has called on the U.S. government to invest $16 billion annually in clean energy research and development in private-public partnerships. The report cites Wisconsin’s creation of the School of Freshwater Sciences at the University of Wisconsin-Milwaukee which is leveraging the area’s growing position in the blue economy to further the aim of becoming the global hub for freshwater research, firm creation, and business expansion.

“Catalyze finance to produce and deploy more of what we invent.” A “Green Bank” needs to be created for to finance homegrown technology ideas and ensure the products born of national ideas, are made in America. This requires rationalization and reform of the multitude of inconsistent and confusing tax provisions and incentives that are currently in place. A state level example is given: Connecticut’s recently created Clean Energy Finance and Investment Authority that has been capitalized with approximately $50 million annually to accelerate the generation, transmission, and adoption of alternative energy. Another example given is at the municipal level: New York City has capitalized an Energy Efficiency Corporation for financing energy efficiency activities in the building sector.

“Align with cities and metros to realize the synergies of clustering and place.” Clean/green innovation clusters in metropolitan areas need to be seeded and funded to build various industry sectors. The report cites the Puget Sound Regional Council’s business plan to ensure that metro’s natural position as an energy efficiency building technology hub.

 
Learn more!

Sizing the Clean Economy (PDF) – Brookings Institute

Interactive web site to further research, policy and practice

Sizing the Clean Economy, Mark Muro on YouTube

Breaking Into Green – Greg Schreiner

Transitioning from High Tech to Green Tech - Redfish Technology

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