NEW ENERGY MEANS JOBS (ANOTHER PAPER PROVES IT AGAIN)

Utah Economic Development Study
February 19, 2010 (Utah Clean Energy)
and
Building the Clean Energy Economy: A Study on Jobs and Economic Development of Clean Energy in Utah
Kelly Knutsen, Karen Wikstrom, Marshall Goldberg, Sarah Wright, January 2010, (Utah Clean Energy, Wikstrom Economic and Planning Consultants, Inc., MRG & Associates)

SUMMARY
Universities, think tanks and independent consultants continue to generate research proving that a shift to a New Energy economy is one of the best things the nation can do to deal with its daunting unemployment numbers.

Unfortunately, if the nation makes such a choice to invest in and develop New Energy and Energy Efficiency, it will have to endure improved energy security, cleaner air and water, reduced greenhouse gas emissions and a renewed and expanding economy. But the nation is tough and can take the terrific with the fantastic.

Building the Clean Energy Economy: A Study on Jobs and Economic Development of Clean Energy in Utah demonstrates that the state’s proposals (1) to increase its Energy Efficiency 20% by 2015 and (2) to require 20% of its electricity to come from New Energy sources by 2025 would, by 2020, result in (1) ~7,000 net new permanent Utah jobs, (2) $310 million in net new annual Utah earnings and a $300 million net annual increase in Utah’s gross domestic product by state (GDPS).

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Those rewards are NET, that is, after accounting for losses due to the shift away from the Old Energies. And those rewards don’t include what the state stands to gain if it builds a New Energy economy that brings in national and international trade the way its world-class ski industry does.

The study arrives at its conclusions by comparing an estimate of business-as-usual (the “Reference Scenario”) with an estimate of macroeconomic activity that would come with the proposed Energy Efficiency (EE) and New Energy (NE) policies in place (the “20% Clean Energy Scenario”).

The 20% by 2020 scenario includes 3 times the savings from EE as business-as-usual. The NE would be largely from Utah’s big wind and geothermal assets (with some solar and biomass as well).

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Complete slide presentations: Knutsen, overview,Goldberg, EE&NE, Wright, Methods & Opportunities

COMMENTARY
There is an avalanche of evidence proving New Energy's economic value. For starters, see NEW ENERGY MANUFACTURING CAN MAKE THE MIDWEST ONCE AGAIN MIGHTY, THE STANDARD FOR NEW ENERGY JOBS, NEW ENERGY JOBS FOR THE STATE OF THE UNION…, …HOW NEW ENERGY CAN MAKE THE RUST BELT SHINE, 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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A New Energy economy promises to add $300 million to the Utah's GDPS. In comparison, the state's vaunted ski industry added ~$440 million to the 2008 GDPS. In other words, NE/EE would be comparably productive within a decade by just focusing on its in-state market. If Utah uses its indomitable pioneer spirit and industrious human resources to build a New Energy economy that participates in the anticipated multi-trillion dollar national and international New Energy economy the way it has built a world-class ski industry that brings in national and international visitors and their vacation dollars, it stands to reap a much bigger reward.

The Reference Scenario is based on 2007 Utah utility PacifiCorp resource planning documents through 2020 that project Utah’s growing electricity needs to be met with new natural gas plants, 9% New Energy (largely Wyoming wind) and some EE improvements through utility demand side management (DSM) programs.

The 20% Clean Energy Scenario includes 20% New Energy sources by 2020 and a 20% improvement in Energy Efficiency (through utility DSM programs, building efficiency upgrades and lamp and appliance efficiency standards) by 2015 that reduce electricity needs 3 times more than in business-as-usual. It reduces natural gas consumption much more than coal consumption.

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The ~7,000 net jobs gained in the 20% Clean Energy Scenario will come in the construction and service industries and include high-tech positions for engineers, technicians, installers and electricians.

The $310 million in net annual earnings by 2020 is $140+ million greater than business-as-usual (BAU).

The annual GDPS of ~$300 million by 2020 is an increase over BAU of $20 million per year as the economy shifts from capital intensive investment by utilities in large fossil fuel power plants to the more labor-intensive New Energies.

The 20% Clean Energy Scenario will require an estimated investment of $8.9 billion through 2020, $500 million more than in BAU. 93% will come in up-front capital investments but only 1% will be for fuel.

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The Reference Scenario (BAU) will cost $8.4 billion through 2020. Fuel that is burned up will be 33% of that investment.

Both scenarios invest approximately 6-to-7% in operations and maintenance.

The energy savings from Energy Efficiency measures create the vast majority of the jobs in the 20% Clean Energy Scenario. This is the result of direct impacts (building and purchasing products to improve the EE infrastructure ) and indirect impacts (the spending of all the money saved on energy).

Job creation at NE facilities is similar to what would be expected under BAU at new natural gas plants and from increased drilling.

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The net new jobs from the 20% Clean Energy Scenario will come from: Agriculture & Food, Wholesale and Retail Trade, Manufacturing, Government, Finance, and Insurance/Real Estate. Decreases come in Transportation & Communication and Utility (electric and natural gas).

The oil, gas and coal sectors are expected to remain essentially constant.

The average annual salary of the total created jobs is roughly $58,000. The weighted average annual salary of the jobs created from EE is $52,000 and $51,000 for the jobs created from NE investments.

Without the 20% EE standard, EE will have only a small and negative impact on Utah’s 2020 GDPS. With it, though EE expands 3-to-6 times, there is still not a big impact on the 2020 GDPS unless Utah expands its NE and EE infrastructure manufacturing capacity.

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Utah has the potential to expand NE and EE infrastructure manufacturing capacity and make 50% of its own wind turbine blades, 75% of its wind turbine towers and 50% of its solar panels.

The report concludes with a list of next steps:
(1) Accelerate Energy Efficiency Retrofits and New High Performance Building (with a comprehensive energy retrofit program using federal and utility incentives to retrofit at least 50% of the state’s homes and buildings by 2015 and an upgrade for new buildings to the most current energy code, the International Energy Conservation Code 2009).
(2) Demonstrate Government Leadership (with leaders who demonstrate commitment to NE and EE policies and investments).
(3) Remove Regulatory and Policy Barriers (to proactively create a business-friendly environment without alienating consumers or the utilities).
(4) Train Utah’s Clean Energy Workforce (through training, certification, and educational forums and programs).
(5) Expand Public Education and Outreach (to expand public education efforts and make EE and NE part of mainstream consumer awareness and alter the public's habits).
(6) Adopt Competitive Incentives and Policies (such as financial payments, tax credits, utility rebates, feed-in-tariffs, firm clean energy portfolio standards, expedited permitting and model ordinances, and property tax parity with other energy resources).
(7) Enable Innovative Financing (to make high up-front capital investments easier so that long-term fuel costs can be eliminated through third party financing for large-scale NE projects, lease options for distributed generation, longer-term financing for industrial EE implementation and municipal-level property assessed clean energy financing for the residential and commercial sectors).
(8) Proactively recruit and develop NE and EE industries and projects.

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The Utah study’s macroeconomic conclusions are derived from the IMPLAN Social Accounting & Impact Analysis Model, which calculates a ratio of the total change in economic activity in the region against final demand changes in one or more sectors. The methodology is described in detail in the report.

QUOTES
- From the Utah report: “Energy efficiency and renewable energy are the new frontiers of the clean energy economy. With Utah’s pioneering spirit, our State embodies the resourcefulness and innovation needed to thrive and prosper in this new frontier. These emerging market opportunities are increasingly important as we seek means to spur economic development, diversification and job creation.”

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- From the report: “Utah’s energy efficiency and renewable energy technical resource potential is well beyond what is needed to achieve the state’s adopted goals. Energy efficiency is a resource that can be “mined and developed” in every new (and most existing) commercial building, home, industrial operation, and government facility. Every new construction project or retrofit has the potential to increase efficiency over standard practices, which helps Utah citizens and businesses save energy and money today and into the future. These savings are reinvested into the economy and lead to more job creation and economic development. Renewable energy resources complement and help diversify Utah’s existing electricity resources while creating new opportunities for jobs and economic development, especially in Utah’s rural communities. The renewable energy resources modeled in this study are predominantly wind and geothermal, with some solar and biomass resources.”

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- From the report’s conclusion: “…For a similar level of investment, the 20% Clean Energy Scenario results in a net increase of 4,100 jobs, $140 million of annual earnings and a $20 million annual increase in GDPS…The increase in jobs is due to the investments in renewable energy resources, designing, building and retrofitting energy efficient homes and businesses, and an increase in local spending as a result of energy bill savings. Furthermore, the 20% Clean Energy Scenario provides a hedge against volatile fuel costs and future risks and uncertainties in a rapidly changing energy market. This study presents a modest share of Utah’s potential for new clean energy development…[I]nnovation, leadership and aggressive programs and policies to advance energy efficiency and renewable energy will help make Utah a leader in the new clean energy economy, while generating new high-quality jobs and economic development in Utah’s rural and urban areas.”