Obama’s plan: clean energy will help drive a recovery

Even in this era of costly crisis and even more expensive rescue, US$50 billion is still a lot of money. That sum - perhaps even more - is what Congressional leaders and aides to President Barack Obama say he will propose to build new transit lines, weatherise buildings, manufacture clean next-generation vehicles, and create new “green collar” jobs.

Even more crucial than the scale of the spending on clean energy is what the President says it represents to his overall economic development strategy. Clean energy projects are a crucial piece of an estimated US$700 billion to US$1 trillion, two-year stimulus plan to put 3 million people back to work, and the first wave of public investment to transform how America powers itself. Remarkably, it now appears that Obama plans to launch his presidency with a daring idea: To anchor the American economy with energy sources not derived from fossil fuels.

Indeed, the newly elected president is proposing to take the conventional relationship between the economy and the environment and stand it on its head. Instead of the economy overshadowing and marginalising environmental concerns, Obama wants to use environmental principles to help drive economic growth.

“A new energy economy is going to be part of what creates the millions of new jobs that we need,” Obama said during a news conference last month. “That’s why my economic recovery plan is going to be focused on how can we make a series of down payments on things we should have done 10, 20, 30 years ago.”

Obama and his energy and environmental team are convinced that a new era of prosperity can be ushered in by weaning America from the way it has powered its economy for nearly two centuries. During the presidential campaign, he vowed to invest US$150 billion in clean energy projects over 10 years and create 5 million new “green-collar” jobs.

Obama made it clear that this was a top priority, but the ever-deepening economic crisis has only added to the urgency of passing a stimulus program that relies heavily on developing the clean energy and energy efficiency sectors. In recent days, the president and his team have said that their stimulus plan will include US$20 billion in clean energy tax credits, a goal of doubling renewable energy production in three years, and the near-term creation of a half-million jobs in the clean energy sector.

Are Americans really prepared to undertake a transition of the magnitude that Obama envisions, especially with gasoline priced at US$1.85 a gallon, 55 per cent below the peak last July? And will his clean energy transition help produce the employment and prosperity that he claims?

There are strong indications that the answer to the first question is “Yes.” For more than a decade, according to the Center For Transportation Excellence, US voters have approved 70 per cent of public referendums that have called for imposing property or sales taxes for new mass transit systems. Before the credit crisis, sales of full-size SUVs had already begun to slip. Major cities have developed new economic development strategies based on reducing pollution, preserving natural resources, and becoming much more energy efficient. Political opposition to building new coal-fired power plants has been steadily growing.

As for the second question, numerous studies conducted by the government, non-profit groups, and universities conclude that the transition to a clean energy economy will produce millions of jobs. Where will they come from?

A major component of Obama’s stimulus package calls for spending US$25 billion to make schools and other public buildings far more energy efficient, to construct transit systems, and to rebuild roads and bridges. This infrastructure spending, the new administration estimates, will likely generate 1 million jobs. Economists estimate that programs to improve energy efficiency of homes and businesses would create 100,000 on-site jobs and hundreds of thousands of indirect jobs. Obama’s plan will call for sharply increasing weatherisation programs for low-income homeowners, from 140,000 homes a year to 1 million - a move that would expand the number of private sector workers involved in home weatherisation programs from roughly 8,000 today to 78,000. He also intends to make 75 per cent of federal government buildings more energy-efficient.

In addition, perhaps as part of the stimulus package, the Obama administration plans to spend US$10 billion annually to develop biofuels and other forms of renewable energy and to build a modern electrical grid. A decade of such investment, says the transition team, will yield 5 million new green-collar jobs, an estimate supported by studies from the University of Massachusetts, the University of California, and the non-profit Apollo Alliance, a clean energy organisation where I work as communications director. These jobs would include everything from skilled trades and crafts, to managers, to maintenance employees. The new president’s plan also calls for aiding manufacturers of clean energy equipment by establishing an advanced manufacturing fund, modelled on a program in Michigan that identifies and invests in innovative clean energy proposals.

Obama proposes a doubling of loan guarantees - to US$50 billion - to help the auto industry retool to manufacture next-generation vehicles like the Chevy Volt, the new hybrid plug-in that General Motors hopes to introduce next year. The guarantees also will be made available to manufacturers of lithium-ion batteries and other components for electric vehicles. Such investments will produce tens of thousands of jobs and have the potential to stabilise or even reverse job losses in the auto industry.