Is the green jobs movement kaput?
Faltering commitment and bad PR have given the green jobs movement a bad name. But the basic tenets of the plan - austerity and environmental preservation - could cut costs and add jobs across the country. Will U.S. politicians ever catch up with the realities of scarcity?
The White House Blog
The idea of green jobs — that economic development can take place through the preservation and enhancement of our environment — seems to be completely dead. Locally, recent bad press for Seattle’s Community Power Works program and the failure of the hailed Solyndra solar venture have fueled skepticism, allegedly proving that green jobs programs just don’t work. But a closer look at the facts should lean to a different conclusion. After all, what part of saving energy costs is a bad thing? Unfortunately, the basic and rather conservative idea of creating jobs through energy efficiency has become the latest casualty of our ongoing political war over the role of government in our economy.
When I was at Sightline Institute I read, thought, and wrote quite a bit about green jobs. I began my research at the height of stimulus fever, 2009. The basic theory behind green jobs is that by investing money in things that improve the environment and reduce our dependence on fossil fuels we can generate more economic activity. Blend in some Keynesian demand-side economics, social and economic justice and you’ve got a winning idea, right?
When I talked around the state in 2010 in favor of Referendum 52, a ballot measure that would have spent money on making schools more energy efficient, I would often explain that, “Insulation doesn’t install itself.” Spending a half billion to reduce energy spending and lengthen the life of school buildings, for example, would require lots of workers.
In fact measures to tighten up school buildings are often as basic as “Turn out the lights when you leave a room,” or “Don’t be wasteful.” And here’s the thing: Schools already borrow and spend money on energy efficiencies that save real money. One small school district in the state, Burlington-Edison, realized a savings on energy costs of $32,000 annually, by completing lighting, water, and ventilation retrofits at the High School, Westview Elementary, and the District Office Building. That savings is about what it costs to hire a new teacher. And their experience is common across the country.
An extensive study of the topic of energy efficiency by McKinsey and Company found that implementing basic improvements to energy use and performance at scale across the country could generate as many as 1.7 million new jobs, save $1.2 trillion by 2020, and reduce greenhouse gas emissions associated with climate change by 1.1 gigatons during the same period. McKinsey also found that such measures could reduce energy demand by 9.1 quadrillion BTUs or 23 percent. You’d think politicians would be pursuing these savings, especially during a massive economic downturn.
But the term “green jobs” has become synonymous with “boondoggle”: Lots of money spent and no jobs created. I’ll agree that the last round of economic stimulus didn’t work, but not for the reasons generally put forward. It was not a fundamentally bad idea. We simply didn’t go far enough. Now debt fear has gripped the country, making spending more money now on large-scale capital improvements for energy efficiency a non-starter. Politicians have strangely started to focus on austerity, when spending is what we need. Of course, Paul Krugman makes this case much more strongly than I do.
Make no mistake — I’m no fan of Obama's economic policies; they have only made things worse with the economy. Attaching the Obama “magic” to green jobs was a terrible mistake.
It is also true that local programs to save energy have proved dissappointing. One of the big problems with Community Power Works was that the city budget office staff blocked access to low-interest bonds called Qualified Energy Conservation Bonds. They claimed to be protecting Seattle’s bond rating, but critical time was lost while debt hawks hid the city’s credit card. Now the skeptics heckle from the sidelines about the fact that the program hasn’t taken off.
The truth about green jobs is pretty simple. First, private companies and government agencies have been borrowing and spending money for decades on energy efficiencies, and paying for the debt they incur with the money they save from those efficiencies (see the State of Washington’s LOCAL program, for example). That will continue without any interruption and there are lots of private companies, big and small, like McKinstry, which make lots of money and employ lots of people doing this work.
Second, energy prices will go up. And when they do, the energy efficiency industry will be there, ready to make money and create jobs doing massive retrofits. Politicians have danced with the fossil fuel devil for the last 60 years, but eventually the music will stop and there will be a reckoning. When political pressure and foreign intervention fail and plain scarcity sets it, the economy will shift and the market will begin to reward conservation. Magic or no magic, when energy prices start to pinch profits and bank accounts, we’ll see a sudden resurgence in the principles behind the green jobs movement.
Finally, we are entering a dark phase for Keynesian economic principles. Just listen to the Republican Presidential debates. But debt and taxes can do good things. Government’s job is to take debt and taxes and use them well; making investments that will pay off. But governments, like individuals, sometimes do stupid things with their credit and their money. The problem with green jobs is not making the investment in efficiency and renewables, but not investing enough and learning from mistakes along the way.
The combination of increased energy prices, decreased consumption through efficiencies and higher standards for buildings, can lead to jobs for people who will make those efficiencies happen. The worst thing we can do now is give up; we must keep advocating for policies that will make these things happen. The basic idea of creating jobs by saving energy will stand the test of time and weather the austerity storm.
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Comments:
Posted Fri, Sep 16, 3:53 a.m. Inappropriate
The unanswered question on many of these installations is the return-on-investment. It's not important what something individually costs, or saves, but the ratio between the two. Somethings have a good return, some a poor. By the way, $32,000 is about half the total annual cost of a teacher.
Firms like McKinstry do indeed make a business out of saving energy, and would do a good job, and do more jobs, if there was a creatively new source of financing for this. I suspect that, like many things in government, this is going to require a hybrid form of investment to take off. That might be something like a public-private investment, where the public agency is the user and a private source like an investment partnership provides the money, splitting the upside. With public financing rates down at three and four percent, this would still leave a return of six or seven percent for the investor if the overall project produces a 10 percent return-on-investment. This is a fair return on investment for the private sector investor, and that overall rate of 10 percent is probably a good threshold for vetting worthwhile projects.
Rod Stevens
Bainbridge Island
Posted Fri, Sep 16, 7 a.m. Inappropriate
At our house, we installed new windows (before any type of tax breaks by the way) in the areas that lost the most heat in the winter and that required the most cooling in the summer. Those areas are now more usable and we are glad we have the windows, but the return on investment purely on saving heating and cooling costs (fans, there was no air conditioning) would be pathetically low. It is very hard to evaluate just how much savings there would be per month, but my guess is if we divided the annual savings into the cost of the windows, we'd be talking decades. In other words, the windows will probably require replacing before they would pay back the initial investment.
There are some schools where retrofits are technically feasible and where the energy savings could pay off. Then there are others where, if the energy - efficient windows are installed, the interior air quality will decrease, requiring ventilation systems to be installed as well. If there's a ventilation system, then the roof needs to be redone because there's not room in the attic for the piping. If the roof needs to be redone, then the walls need to be strengthened. Pretty soon we're at the point where knocking the building down and starting over is cheaper, not to mention likely to result in a building facility more conducive to learning.
Posted Fri, Sep 16, 7:41 a.m. Inappropriate
Excellent article. I agree with Roger that the solution lies with the private sector. But there is one thing the government can do (though I don't expect it to happen) . . . slap a huge tax on fossil fuels. (Use the tax revenues to pay for all sorts of things we've already bought but haven't paid for, but that's another story.) Sure, $8-a-gallon gas at the pump will wreak havoc in the near term (though that's already it's cost in much of the world), but it will end the notion that it's cheaper to let heated air escape from a leaky window than it is to put in a tighter window.
Posted Fri, Sep 16, 7:54 a.m. Inappropriate
"Faltering commitment and bad PR have given the green jobs movement a bad name."
So has political cronyism, corruption and incompetence. Which the author has been part of. Here he is advocating on behalf of Referendum 52. Judge for yourself whether he was honest with the public.
http://www.tvw.org/media/mediaplayer.cfm?evid=2010090081&TYPE;=V&CFID;=7908435&CFTOKEN;=53296278&bhcp;=1
Posted Fri, Sep 16, 10:56 a.m. Inappropriate
"Now debt fear has gripped the country,..paying for the debt they incur with the money they save from those efficiencies"
That the concept of credit and interest that has been the basis of Western economics for centuries and of yesterday's global finance is no longer certain is one very healthy reason for what the author puts down as "debt fear."
Although the author's timing is off, he is at least barking up the right tree, which is more than can be said for both political parties and most brands of economics. The crisis he threatens is here. The world as we knew it will not return and there are few clues as to what will.
Rod Stevens and sjenner correctly note above that "efficiencies" are generally even more elusive than future surplus income with which to pay back the loan. If there is such a thing as a normal "Great Recession," this is not one of them. The passing peak extractions of far more necessities than oil is studiously avoided because credit depends upon perpetual economic expansion, i.e., developmentality, green or otherwise.
I don't know much about Islamic banking, which according to an editorial in today's IBD, rejects "the cornerstone of Western finance: credit and interest rates." From that somewhat rabid editorial, I get the feeling that I am about to learn, or at least, Bloomberg LP and Fox News Corp are interested in seeing that I do. Strange world.
http://www.investors.com/NewsAndAnalysis/Article/585010/201109151844/Muslim-Brotherhood-Channel.aspx
Posted Fri, Sep 16, 2:33 p.m. Inappropriate
Many very expensive green schools now use MORE electricity.
Progressives are crowing about the tear down of a 20 megawatt hydroelectric dam, which incidentally will require the use of coal powered electricity to replace, or imported power from Vancouver Island, at another net loss of US capital.
Progressives brag about turning food into fuel where nearly as much diesel is used to grow the crop as ethanol is made from the crop. But never fear, the money is in the taxpayer funded subsidies per gallon, plus tax credits, plus agricultural subsidies. Don't worry that it requires more fertilizer, pesticide, herbicide and irrigation, with resultant runoff into aquifers, rivers and the ocean.
Posted Sat, Sep 17, 5:58 p.m. Inappropriate
SEPTEMBER 16, 2011 http://blogs.the-american-interest.com/wrm/
"The Real Green Economy Of The Future
Despite what you might conclude from reading the news (and sometimes this blog), green energy companies can be eco-friendly and profitable. The Economist reports:
'A new study by the World Economic Forum (WEF) and the Boston Consulting Group (BCG) identifies 16 emerging-market firms that they say are turning eco-consciousness into a source of competitive advantage. These highly profitable companies (which the study dubs “the new sustainability champions”) are using greenery to reduce costs, motivate workers and forge relationships.'
Many of these companies were not trying to “go green”. They were working with limited energy resources and developed new techniques for increasing production with what they had:
'India’s Shree Cement, which has long suffered from water shortages, developed the world’s most water-efficient method for making cement, in part by using air-cooling rather than water-cooling. Manila Water, a utility in the Philippines, reduced the amount of water it was losing, through wastage and illegal tapping, from 63% in 1997 to 12% in 2010 by making water affordable for the poor. Broad Group, a Chinese maker of air conditioners, taps the waste heat from buildings to power its machines. Zhangzidao Fishery Group, a Chinese aquaculture company, recycles uneaten fish feed to fertilise crops.'
Environmental sustainability won’t come from international treaties setting emission standards. It will come from lots of bottom up initiatives from families looking to save money on their energy consumption and from companies that find ways to reduce their energy consumption and provide their goods and services at lower prices than the competition.
The real heroes of the environmental movement aren’t celebrity activists protesting about pipelines in front of the White House. They are people working to improve video calling technology so fewer businesses will schedule as much travel, people developing software and management practices that make more companies more willing to let more of their workers spend more time telecommuting, and people figuring out how to replace water-cooling with air-cooling when making cement."
Posted Sun, Sep 18, 3:44 p.m. Inappropriate
Our experience with new windows is similar to sjenner's but there is something satisfying about reducing recurring monthly expenses (call it the Micawber principal). The trouble is that petroleum, water power and natural gas are all too cheap to justify the silly windmills and (so far) photovoltaic power generation. I would be in favor of a crude oil tax but that is not going to affect buildings which normally rely much more on electric and natural gas power sources. There are not many oil fired generators on the electric grid
Posted Mon, Sep 19, 1:39 p.m. Inappropriate
The total impact of various proposals is really hard to assess. For example, the windows are often made of oil-based products, and therefore a carbon tax would actually increase the cost of them. I wondered how many GHG emissions occurred during the fabrication of the windows, and what the payback time was as measured by GHG, especially in situations where the heating is electric and therefore there are not too many GHG savings. Definitely though the windows do make the house more comfortable.
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