This article I originally wrote for the Asia-Pacific Business and Technology Report in September 2009. The publisher of that magazine, Dr. Lakhvinder Singh, is a good friend of mine. The article is based on a paper I presented at the International Green Growth Forum sponsored by the Korean Ministry of the Environment.
On the campaign trail, Barack Obama made it clear that the environment and alternative energy would be central pillars of his administration. He has since put great effort into promoting an innovative approach to resolving environmental and energy issues, maintaining a focus on a matrix of innovation and policy reform for lowering emissions and reducing dependency on foreign energy supplies, even in the face of cries to address healthcare and economic growth first. Although inertia and political realities have slowed down some parts of the program, reinventing the United States economy and re-imagining the American economy remain important themes.
Some of these themes can be traced back to a report by John D. Podesta of the Center for American Progress entitled “Capturing the Energy Opportunity: Creating a Low-Carbon Economy” (Nov. 27, 2007) that gave concrete suggestions as to how the auction of carbon permits under a greenhouse gas cap-and-trade program could generate 2 million jobs. The Political Economy Research Institute at the University of Massachusetts, Amherst, released a report entitled “Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy” in September 2008 that set out a concrete game plan for innovation and job creation through the embrace of green economic principles.
The report puts forth the following arguments for making a $100 billion investment in green technology and industry. Specific plans are listed in the report for every single state, making the suggestions as concrete as possible. The basic assumptions underlying the investment are that the United States can create nearly four times more total jobs than spending the same amount of money within the oil industry, and 300,000 more jobs than a similar amount of spending directed toward household consumption. Moreover, it is assumed that this investment will triple the number of good jobs – those that pay at least $16 dollars an hour – as spending the same amount of money within the oil industry.
If all this is true, the unemployment rate will be reduced in construction and manufacturing as a result of this investment. The investment will boost the economy and accelerate the adoption of a comprehensive clean-energy agenda through a $100 billion investment in tax credits and loan guarantees for private businesses with direct public-investment spending.
On the campaign trail then Senators Obama and Joe Biden released a “New Energy for America” plan that claimed that an investment of $150 billion over 10 years would create 5 million new jobs, as well as assuring 25 percent of electricity comes from renewable sources by 2025. Hybrid and electric automotive technology and the development of alternative energy resources form a major section of that argument.
That theme was articulated briefly in President Obama’s inaugural address. He noted, pointedly, “Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.”
Obama presented the use and misuse of energy as a national security issue, with the “moral equivalency of war,” to quote Jimmy Carter. He did so at a time when there was far greater resonance in the population as a whole than met Carter. The desire for innovation, for reimagining the American economy, is real and has overcome many of the conservative forces that would normally undercut a figure like Obama. But the security theme hinted at in the speech is also a means of securing the necessary funding to realize such an immense project by arguing that the issue is that critical.
That speech was soon followed by a January 26 speech bringing together the energy and environment theme.
Obama spoke boldly, with innovation at the heart of his message.
“Now America has arrived at a crossroads. Embedded in American soil, in the wind and the sun, we have the resources to change. Our scientists, businesses and workers have the capacity to move us forward.
“It falls on us to choose whether to risk the peril that comes with our current course or to seize the promise of energy independence. And for the sake of our security, our economy and our planet, we must have the courage and commitment to change.”
By combining the argument for energy independence with the crisis of climate change President Obama presents an overarching vision of a unified America striving for advancement, each individual contributing his or her part.
The American Recovery and Reinvestment Act
The next step at the political level was the promotion of two massive pieces of legislation that would orchestrate this new economic and security vision at the federal and local level: The “American Recovery and Reinvestment Act,” best known as the stimulus package, and the “American Clean Energy and Security Act,” best known as the “Waxman-Markey Bill.” All the recent changes with the executive branch, and the entire debate raging within the government over energy and environment priorities, can be tied back to these two pieces of legislation. As the fate of the latter remains uncertain, the former deserves our full attention.
The stimulus package was signed into law on Feb. 17, 2009 as a complex set of spending proposals worth over $787 billion. Out of that amount, $80 billion was allocated for infrastructure, including large programs in public rail and mass transit improvements. The other large item was energy, with a total of $61.3 billion in funding. The major items in that bill directly related to technology innovation include:
$11 billion for a smart gird that will increase energy efficiency and move renewable energy to urban centers effectively, as well as installing smart meters to cover energy usage.
More than $9 billion for the weatherization and greening of both low-income homes and federal buildings. Of that total sum, $6.3 billion is for local renewable energy efforts, $600 million for green job training programs and $2 billion in competitive grants for next-generation battery development.
Other incentives for innovation include new demands for efficiency in appliances and automobiles, although many were disappointed that the fuel standards for automobiles were not set higher.
Present national initiatives for innovation in green technologies and job creation
Innovation is a core component of the current effort in green technologies and a strong theme in the stimulus package. That imperative is born of a general sense that the United States is lagging behind Europe, Japan and increasingly China in developing the next generation of environmental technologies. It is also driven by the equation of green technologies with national security in President Obama’s speech, something that has created a new sense of urgency in the project of addressing climate change and reducing dependency on imported resources. Let us consider the specific programs that have resulted from this legislation:
$40 billion of the stimulus package is dedicated to creating what are defined as “green jobs.” The generation of jobs is a critical economic and political issue in the United States and much of the innovation taking place institutionally relates to the creation of new job opportunities in anticipated “green-collar” fields. The Department of Labor has allocated $500 million through the stimulus package for training in green-collar jobs.
Initiatives put forth at the federal level have been followed up by such organizations as “5 Million Green Jobs,” which runs a sophisticated website http://www.5milliongreenjobs.org/ meant to help possible employees obtain the proper training, find green jobs and succeed in a new career. The site uses Twitter, Facebook and Linked In to establish social networks in support of this effort – an innovation in terms of the interactive online experience as well.
But doubts remain as to the actual number of jobs that can be created without a strong commitment overall from the population. John Carey’s article in BusinessWeek titled “Can Obama’s Stimulus Plan Spur Green Jobs in the U.S.?” cites Matthew E. Kahn, an economist at the University of California, Los Angeles, concerning green jobs. Dr. Kahn remarks, “The optimist in me wants to believe it. The cynic in me asks, is this like FDR jobs creation in the guise of green jobs?” Kahn notes that raising taxes on oil and high carbon activities would be the best way to address the issue, but the most difficult politically. Ultimately, we must wonder whether the strongest strategy for building green jobs would be a direct high tax on all fossil fuels that would in turn be used to fund environmental projects.
The essential structural issue that makes the Obama initiatives so difficult is that so much urban (suburban) planning in the United States over the last 50 years has been carried out with an assumption that there would be unlimited, inexpensive petroleum. There are such vast distances between residences, and between residences and shopping areas in many American communities, that it is all but impossible to get around without driving. And to retreat from that approach to settlements would risk a loss of trillions of dollars worth of real estate.
The promotion of green jobs is intimately linked to the promotion of innovation throughout the nation for a green economy. That economy cannot be status-quo, but innovative perforce. Efforts to encourage entrepreneurship include the website “Invent Now” (www.inventnow.org), which is aimed at kids and shows how anyone can invent something new and useful. The point of this imaginative website is to change the very thinking of young people so that they will feel empowered to create a new world.
Such innovation in green technology extends in all directions. For example, Jen Boulden and Heather Stephenson founded a company that provides innovative approaches to protecting the environment and highlights new products in an e-mail newsletter. The Company, “Ideal Bite” (www.idealbite.com) has been most successful in promoting new approaches to daily life. Many articles are aimed at mothers, children and just about anyone and introduce new products like solar ovens and home farming products for the average consumer. The underlying theme is green jobs: the restructuring of daily life in a pro-environment manner.
The Smart Grid
The $11 billion slated for the “smart grid” involves a massive effort to upgrade American infrastructure and leapfrog to a new level of energy conservation by reinventing the process by which electricity is transmitted from the sources of generation to the location of consumption. The smart grid being planned now will employ advanced conductors, such as new composite materials and superconductors, to transmit electricity with minimal energy loss over great distances. Those efficient transmission technologies would be complemented by advanced electric storage systems to make sure that little is lost when electricity is not in use.
The other half of the smart grid is the control system by which electricity is distributed intelligently throughout the nation to reduce waste. By employing advanced smart controls and next-generation computer software and hardware, the United States can assure a nation-wide effective distribution of electricity and at the same time make space for the integration of on-site energy generation from solar and other renewable sources. In effect, the terrible electricity crises of the Enron era caused by inefficient distribution of energy can be addressed in this manner.
The Department of Energy’s “Smart Grid Investment Program” supports this responsive electric grid. Aug. 8, 2009 was the deadline for such massive players as Duke Energy Corporation, Exelon Corporation and CenterPoint Energy. The competition requires that electric companies make it clear to customers the benefits of reduced energy usage, encouraging innovation for all families. Interoperability is also a priority.
Among the research institutes selected to work on the smart grid are the Sandia National Laboratories and the Pacific National Laboratory who have been granted $2.43 million dollars for the mathematical analysis required for this effort. Both build on the work by NIST (National Institute of Standards and Technology) to identify and develop the standards critical to achieving a reliable Smart Grid.
A large part of the Obama Administration’s focus has been on renewable energy, particularly since the general perception is that the United States is lagging so far behind other nations in this field. The department of Energy and the Department of the Treasury offer direct payments and loan guarantees for renewable energy projects under the stimulus package. All these projects were presented as part of an effort to promote U.S. competitiveness, reduce energy dependency and address climate change.
For example, $11.8 million has been awarded to projects in Connecticut, Florida, New Jersey and Oregon for solar energy grid integration systems (SEGIS). Such funding has made it far easier than ever before to move from the plan to the application.
Similarly, the Environmental Protection Agency has set up a “Green Power Partnership” of organizations generating their own renewable energy (with a combined 736 million kilowatt-hours per year). The EPA named the top 20 of these partners in special recognition of their achievements. For example, the Los Angeles County Sanitation Districts were specially designated in recognition of their recovery of methane from wastewater treatment.
Solar power is a big part of the renewable puzzle, and the focus for innovation efforts. The massive Sonaran Solar Energy Project undertaken by the energy giant NextEra Energy Resources is a massive project in Arizona’s Sonaran desert that is expected to generate some 35 megawatts of electricity. The local and federal governments have teamed up to fast-track this project, promising to have 13 commercial-scale solar power plants under construction by the end of next year. The stimulus package will pay for one third of the total cost of the construction of this project, but the condition is that construction start in 2010. The remaining concern is that the water usage involved in the project may be damaging to the local ecology.
Some of the most impressive projects involving solar energy are taking place at the local level in California and Texas. For example, the University of California system has recently awarded multi-campus grants for research aimed at bringing together experts at multiple institutions to focus on important issues. That approach in itself is noteworthy.
Among the projects selected by the University of California is one headed by physicist Roland Winston of the University of California, Merced, a pioneer in solar energy who will head a new initiative entitled the California Advanced Solar Technologies Institutes. A team of researchers will use the funding to develop new solar cell materials and methods for cooling and heating that take advantage of recent developments in nanotechnology and non-imaging optics. The emphasis in the program is the rapid commercialization of products and the training of graduate students.
The city of Austin, Texas has been a major center for solar power with a supportive political environment, a city-owned energy utility, and a well-informed citizenry including the local business community. The University of Texas, Austin’s campus has a Clean Energy Technologies group in its engineering school and a strong program in its technology transfer at its legendary IC² Institute. Financial incentives for locally produced solar panels are in place. Already in 1999, the Austin City Council passed a renewable-energy resolution that required the city’s electric utility Austin Energy (AE) to obtain 5 percent of its energy from renewable resources by the end of 2004. Austin adopted an ambitious renewable portfolio standard, which has targeted 30 percent by 2020 with a required increase in energy efficiency of 15 percent.
AE announced it would develop 15 megawatts of solar-energy generating capacity by 2007 (100 megawatts by 2020). AE presented the highest solar-energy rebate, $5 a watt for solar panels. But the cost remains four times that of natural gas and there are worries that nanosolar technologies will make these projects outdated.
Austin also has a Clean Energy Incubator run by the Austin Technology Incubator at the University of Texas and the U.S. Department of Energy’s National Renewable Energy Laboratory. This incubator gives technical assistance to smaller environmental firms.