1.9 MILLION JOBS IN NEW ENERGY

Clean Energy and Climate Policies Lead to Economic Growth in the United States: New analysis shows that adopting comprehensive clean energy and climate legislation could create up to 1.9 million jobs
David Roland-Holst and Fredrich Kahrl, November 13, 2009 (University of California, Berkeley)

SUMMARY
There is a gathering avalanche of data that verifies Obama administration claims that the redemption of the nation’s “jobless recovery” is in a New Energy economy.

Clean Energy and Climate Policy for U.S. Growth and Job Creation, from researchers at the University of California, Berkeley, the University of Illinois (Urbana-Champaign) and Yale University, concludes that Congressional legislation incentivizing New Energy and Energy Efficiency would drive investment, increase household income and spur economic output that would build job growth.

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According to the report’s findings, a legislative package comparable to the bill passed by the House of Representatives in June and now working its way through the Senate that institutes emissions reduction measures, New Energy incentives and Energy Efficiency drivers would, by 2020, create 918,000-to-1.9 million new jobs, increase annual household income $487-to-$1,175 per year, and boost GDP $39 billion-to-$111 billion, all beyond business-as-usual (BAU) economic growth.

Far from idle claims or wishful thinking, this study was the result of applying Environmental Assessment in GeneraL Equilibrium (EAGLE), a rigorous economic model collaboratively developed by the University of California, Berkeley, the University of Illinois (Urbana-Champaign) and Yale University. It is, therefore, one of the most legitimate studies yet to emerge on the impacts of energy and climate legislation and shows that previous studies from the Environmental Protection Agency (EPA), the Energy Information Administration (EIA) and the Congressional Budget Office (CBO) probably understated the economic benefits of transitioning to a New Energy economy.

(Want more on that avalanche of evidence proving New Energy's economic value? For starters, see CAP&TRADE IS GOOD FOR THE FARMERS…, NEW ENERGY WILL BRING BLUE COLLAR JOBS BACK…, NEW ENERGY EVERYWHERE, CLIMATE FIGHT IS…GOOD FOR THE BOTTOM LINE and LATEST NEW ENERGY JOB TRENDS…. And that's just for starters.)

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COMMENTARY
Key findings about the impacts of energy and climate legislation comparable to the American Clean Energy and Security Act of 2009 (ACES) passed in the House in June:
(1) 24 million new jobs are predicted to emerge in the 2010-to-2020 decade. Energy and climate legislation would add a NET increase over that of 918,000 (moderate-efficiency case) to 1.9 million (high-efficiency case) jobs.
(2) By 2020, average real personal income would be $487-to-$1,175 higher per household per year.
(3) U.S. real Gross Domestic Product would add 0.2% to 0.7% ($39 billion-to-$111 billion) in 2020 to the BAU growth expected between 2010 and 2020. (That's almost a fifth of what the U.S. needs for healthy annual economic growth from just the New Energy sector!)
(4) All 50 states gain economically, regardless of disparities in New Energy resources. Despite claims by politicians hostile to energy and climate legislation, it does not benefit states on the east and west coasts at the expense of the heartland states. Heartland states may gain more from reduced dependence on fossil fuels because (a) the fossil fuel industries provide less full time equivalent (FTE) labor than the New Energies and (b) the cap&trade system built into the legislation will provide quicker rewards to fossil fuel-dependent economies that begin by eliminating low hanging emissions.

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Using the EAGLE economic forecast model, researchers studied 2 scenarios:
(1) A moderate-efficiency case assumed steady but not aggressive Energy Efficiency implementation incentives and New Energy standards and moderate innovation in response;
(2) A high-efficiency case assumed aggressive Energy Efficiency implementation incentives and New Energy standards in most states resulting in the kind of productivity gains actually seen in states that have instituted efficiency policies.

The report cites a recent McKinsey & Company study on energy efficiency potential that determined there are adequate affordable Energy Efficiency opportunities to readily meet either scenario by 2020 and generate revenues doing so.

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ACES, written by Representative Henry Waxman (D-CA), Chair of the Energy and Commerce Committee, and Representative Ed Markey (D-MA), Chair of the Energy Subcommittee, was the template for the Clean Energy, Jobs and American Security Act of 2009, the Senate legislation written by Senator Barbara Boxer (D-CA), Chair of the Environment and Public Works Committee, and Senator John Kerry (D-MA), Chair of the Foreign Relations Committee, that just passed out of its first committee fight. Both bills, and any final law that emerges from Congress for the President’s signature, is expected to have 4 key provisions:

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(1) A cap&trade system aimed at capping U.S. greenhouse gas emissions (GhGs) 17%-to-20% below 2005 levels by 2020 and 80%-to-83% below by 2050 with an emissions trading market to facilitate the transition to a capped economy;
(2) A national Renewable Electricity Standard (RES) requiring regulated utilities to obtain 15%-to-20% of their power from New Energy sources or institute Energy Efficiencies by 2020;
(3) Increased Energy Efficiency standards for buildings, appliances and vehicles;
(4) Substantial funding (in the hundreds of billions of dollars) for New Energy and Energy Efficiency infrastructure and research, development and deployment (RD&D), obtained from revenues generated by the auction of emissions allowances created by the cap&trade system.

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The study looked at 5 sets of policies:
(1) Cap& trade systems to cut GhGs,
(2) Vehicle fuel efficiency policies mandating (a) adjustments in fuels toward lower emissions and/or renewable fuels and (b) adjustments in transport toward Battery Electric Vehicles (BEVs),
(3) Electricity generation shifts to (a) getting 25% of U.S. power from New energy sources by 2030 and/or (b) introducing Carbon Capture and Sequestration (CCS, or “clean” coal),
(4) Residential and commercial building efficiency implementations that cut building energy consumption 15%-to-30% by 2030, and
(5) Sequestration and offsets through land, forest, livestock and landfill management.

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Just as the study’s conclusions come from a highly sophisticated and accurate economic modeling tool, its data comes from equally unimpeachable sources. Its CO2 statistics come from EPA and EIA databases. Its economic statistics come from IMPLAN, a 500-sector, 50-state federal economics supply, demand and resource data base.

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A last word on definitions:
(1) Employment: Measured as average full-time equivalent (FTE) jobs per year.(i.e, 2 part time jobs = 1 FTE).
(2) Household income: Measured in wage and dividend income per household (2008
Dollars).
(3) Real Gross Domestic Product (GDP) or Gross State Product (GSP): Measured in dollar value added to the private sector (inflation-adjusted net income to workers, enterprises, and equity investors, a widely used but highly misleading statistic).

With CAP (click to enlarge)
Under BAU (click to enlarge)

QUOTES
- From the report: “By aggressively promoting efficiency on the demand side of energy markets, alternative fuel and renewable technology development on the supply side can be combined with carbon pollution reduction to yield economic growth and net job creation. Indeed, a central finding of this research is that the stronger the federal climate policy, the greater the economic reward.”
- From the report: “The results of our EAGLE assessment send an even stronger message about demand side opportunities…[T]he greater the initial level of CO2 intensity in overall state demand, the larger will be the employment dividend to that state from adopting a comprehensive package of national climate policies. This is true because demand side policies make a bigger difference for them, and carbon reduction opportunities represent riper and lower hanging fruit for investments in efficiency and renewable energy…”

With CAP (click to enlarge)
Under BAU (click to enlarge)

- From the University of California press release about the paper: By reducing our dependence on imported energy, the American Clean Energy and Security Act (ACES) will free us to commit more of our resources to domestic job creation while reducing our vulnerability to volatile oil prices, climate damage, and other threats to our national security. Moving from dirty to clean sources of energy will unleash a wave of more efficient technologies and drive innovation that will create new industries…The cost reductions…will boost our economy. The reason is simple: energy efficiency reduces costs for transportation and energy and thereby saves households and businesses money -- money they can spend on domestic goods and services, which will create jobs…”
- From the University of California press release about the paper: “The results are clear: The U.S. can improve its economy and the environment at the same time. A new energy economy will be less polluting, more efficient, more competitive, and provide more jobs. The United States can enjoy a cleaner, more prosperous future by passing comprehensive clean energy, energy security, and climate legislation.”