Federal spending on clean energy falls short on jobs, but wind and solar advance
08/13/2012 12:00 AM
08/13/2012 12:53 PM
What has America gotten so far from President Barack Obama’s spending on clean energy, and has it been worth the cost?
The multibillion-dollar outlays of the past four years had equally big goals: putting people to work right away, but also future jobs in a growing global endeavor to cut pollution and the risks from climate disruption.
The federal spending has become an issue in the 2012 campaign. Republicans say the federal government squandered taxpayers’ money, whether it was on $27-a-gallon biofuels for a test of an aircraft carrier battle group last month, subsidies for renewable energy or the taxpayers’ loss of $535 million to the bankrupt solar manufacturer Solyndra.
Four years ago, the Democrats’ promises on clean energy were all about jobs. As Obama took office seeking nearly $1 trillion in spending and tax cuts to boost a free-falling economy, he wanted to include green energy spending and he stressed the job benefits.
“We’ll put nearly half a million people to work building wind turbines and solar panels, constructing fuel-efficient cars and buildings, and developing the new energy technologies that will lead to new jobs,” he said on Jan. 16, 2009, in a speech pitching the stimulus proposal.
On jobs, the promise fell short. The White House said its clean-energy stimulus funds created 224,500 jobs. An independent study this year concluded that 70,000 jobs were added to clean technology industries from 2007 to 2010. That study was done by the Brookings Institution, the Breakthrough Institute and the World Resources Institute.
Obama and his team argued that spending on clean energy would have other benefits. They said it would help the United States get some of the renewable energy manufacturing that otherwise would go to China, where energy technology is subsidized. It also would create jobs in the future and help the environment.
“Whenever the government has been involved in so-called stimulus, it’s really more than stimulus,” said Diane Lim Rogers, the chief economist for the Concord Coalition, a budget watchdog that advocates for fiscal responsibility.
The 2009 stimulus, she said, was aimed at helping people make ends meet, increasing demand for goods and services in order to create jobs, and making a long-term shift in the way resources are used in order to better reflect social values and costs.
In the case of the clean-energy spending, that third part included a way of addressing climate change.
Renewable energy doubled from 2006 to 2011 and prices fell, according to the Brookings-Breakthrough-WRI report.
Construction began on the first nuclear power plant in more than 30 years, and U.S. companies got a share of the market in advanced batteries and vehicles. But nearly all clean-tech industries depend on subsidies or other supports in order to compete with oil and gas.
After spiking to $44.3 billion per year in 2009 with the first year of the stimulus, federal support for clean technology is on track to total $11 billion annually by 2014.
“Judged by the standards of short-term job creation, the energy investments may not have performed brilliantly,” said Mark Muro of Brookings, one of the authors of the report.
“However, over the medium and longer term, these programs will in time be viewed as critical investments in research and development, early-stage deployment and broader scale-up of important new technologies.”
Most of the tax preferences for energy efficiency and renewable energy, which were expanded with the stimulus bill, expired at the end of last year. The wind industry is fighting to keep a production tax credit that will expire at the end of this year unless Congress extends it.
The industry’s trade group, the American Wind Energy Association, says wind-manufacturing jobs in the U.S. increased from 2,500 in 2004 to 30,000 today. Overall, the wind industry employs 78,000 people. The association argues that the tax credit is essential for the growth of wind, and that without it nearly half the jobs would be lost.
To some, taxpayer support means the market isn’t really ready for renewable energy.
David Kreutzer, a research fellow in energy economics at the conservative Heritage Foundation’s Center for Data Analysis, argued that wind and solar industries don’t stimulate growth because they depend on subsidies.
“To the extent you put resources to electricity that make it more expensive than it would be if produced conventionally, that would retard economic growth,” Kreutzer said.
Congress considered a plan in 2009 to attack climate change by making fossil fuels more expensive. When it died in the Senate, the Obama administration turned to clean-energy support instead.
The idea was to help these industries get started so that they could grow and eventually compete with fossil fuels. Part of that strategy was the Department of Energy’s loan-guarantee program.
Besides Solyndra, two other solar companies, out of 33 companies in the loan-guarantee program, filed for bankruptcy.
Abound Solar borrowed about $70 million for solar manufacturing plants in Colorado and Indiana, and taxpayers will be out about $40 million to $60 million after the company is liquidated, the Department of Energy estimated.
Beacon Power Corp. qualified for a $43 million loan guarantee for an energy storage plant in New York. The company had assets that attracted a buyer, and taxpayers received 75 percent of the loan amount back.
Others moved ahead, including a large solar thermal plant in the Mojave Desert where 2,100 workers are building the $2.2 billion facility with parts made in 17 states. A wind farm in Oregon has employed 1,000 construction workers and has purchased components from 15 suppliers in nine states. Half of the planned 338 turbines are built and operating.
Another major way the government is pushing clean energy is with the military.
For example, the Defense Department is working on a plan to find private contractors to build and operate solar, wind, biomass or geothermal plants at military installations.
No additional dollars from Congress would be needed, Katherine Hammack, the assistant secretary of the Army for installations, energy and environment, said last week.
Hammack said the renewable energy plants would save money. The plant operators would sell some energy to the military bases, and any extra energy could be sold off base. The bases would get reduced energy costs in exchange for the use of their land.
The Navy has been pushing the development of biofuels from plants other than food crops as a way of reducing dependence on Middle East oil and the volatile world market price.
In July, in the largest international maritime exercise in the world, a Navy carrier strike group was powered on a blend of petroleum and biofuels made from animal fats and algae.
The government made its biggest biofuel purchase ever for this test: 450,000 gallons for $12 million, or $27 per gallon.
“We’re in a unique position, relative to commercial aviation or shipping, to play a leading catalyst role in the early establishment of the market,” said Thomas Hicks, the deputy assistant secretary of the Navy for energy.
The Navy played the same part when it shifted from sails to coal, and from oil to nuclear power, Hicks said. But alternative fuels will have to become cost-competitive before the military uses them, he said.
The federal government plans to spend $510 million in a partnership with private companies to get a few refineries built to produce biofuels that can be blended with petroleum and used in the same vehicles and military equipment that use oil today.
Sens. John McCain, R-Ariz., and James Inhofe, R-Okla., have led efforts in Congress to block the military from pursuing biofuels, arguing that they’re a waste of money.
Sharon Burke, the assistant secretary of defense for operational energy, acknowledged that it’s impossible to say when the military will have a ready supply of competitively priced biofuels.
But the military thinks decades ahead, she said, when the U.S. could be faced with unfriendly oil suppliers, an end of easy oil or increasing climate problems.
“There will come a day when there won’t be enough petroleum in the global market to meet global demand,” Burke said.
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