The problem isn’t Obama’s policies – it’s Congress’s
“It’s always important to remind people that under business as usual, we’re losing jobs, including manufacturing jobs, every day. But where we have strong policies to create continued demand, we’re seeing actual job growth,” notes CAP clean energy expert Kate Gordon.
California, which has had the most aggressive and consistent renewable energy target, has seen a big increase in clean energy manufacturing jobs: Between 1995 and 2008, green jobs grew three times faster than the job rate in the state as a whole, and manufacturing jobs were over 20% of all green jobs created.
A recent piece from Dow Jones on green jobs highlighted a key problem in today’s national clean energy market: While the industry has seen a substantial increase in renewable energy projects under development, the number of permanent jobs has been low. But the piece missed the real story.
The article points out that, despite offering billions of dollars in loan guarantees by the Department of Energy to renewable energy project developers, only a few hundred of the 6,000 construction jobs created are permanent.
“Overall, the federal loan guarantees have so far committed $9 billion to power generation from solar, wind, and geothermal developers. These projects are due to create 328 permanent jobs and 6,000 construction jobs, according to the Department of Energy. Manufacturing projects qualified for $1.15 billion and are due to generate more jobs — 2,775 permanent and 3,670 construction jobs — than all the generation projects.”
I can imagine all the political handwringing: a few thousand jobs? Well, these figures don’t reflect the impact of the Treasury Grant program – a mechanism designed to make projects more financeable - which created an estimated 40,000 additional direct and indirect jobs.
Of course, Louisiana Representative John Fleming doesn’t seem to understand this. In an attack on the industry on the House floor yesterday, Fleming scolding the government for putting money “into so-called ‘alternative energy,’ with so-called phony ‘green jobs’ that we’re yet to see being produced. Wind and solar, et cetera.” Watch the video:
Even with tens of thousands of direct and indirect clean energy jobs being created over the last couple of years, uninformed members of Congress continue dragging their feet. This brings us to the root of the problem: Congress itself.
The alternative to the lack of permanent jobs, according to sources in the story, would be to increase manufacturing incentives:
“In addition, some believe that the existing federal programs, even if they were geared more to manufacturing, wouldn’t be sufficient to make manufacturing in the U.S. attractive.”
Curiously, no one in the story mentions the elephant in the room: Congress has still not passed a long-term target for renewable energy. You can offer all the manufacturing tax credits and loan guarantees you want – if you have no national target for clean energy, it’s hard for many companies to justify making the investment. That is the primary reason for the limited increase in manufacturing.
Alan King, the VP of Operations for Canadian Solar, a company with most of its manufacturing in China, summed it up when I spoke to him at a conference last month:
“Well it seems like I hear all the time about the tables being tilted against U.S. manufacturing because of Chinese government support for their industry”¦I think it’s really to the detriment of the U.S. because the U.S. doesn’t have a program to support renewable energy. And as a result industry is forced to move to lower cost manufacturing areas in order to be competitive.”
I asked King what factors would need to be in place for Canadian Solar to invest in U.S. manufacturing. His answer: Greater, more widely-dispersed demand due to the creation of a national target. Without a national target, the company won’t consider it.
In the last 5 years, Congress has debated a renewable energy target 15 times. But political bickering and a lack of vision has stopped any action. It doesn’t look like we’ll see any movement under the current Congress either.
At the same time, with the exception of an 8-year extension of the Investment Tax Credit for solar, Congress has failed to extend long-term tax credits for the wind, hydro, geothermal and bioenergy industries. So the renewable energy industries get stuck with 1-2 year extensions of tax credits while the oil and gas industries enjoy permanent tax credits. (For more on the tax problem, see yesterday’s post: “ExxonMobil pays a lower effective tax rate than you.”)
Without any long-term clarity beyond a year or two, companies simply don’t want to put their eggs in the U.S. basket quite yet.
“Manufacturers need to know there’s consistent demand in order for it to be worthwhile to invest in the capital equipment they need, and to keep parts in stock,” says Kate Gordon, VP of Energy Policy at the Center for American Progress. “If we keep building our markets on a state by state basis through vulnerable RES policies, and on a stop-start basis through time-limited tax credits, we won’t get the manufacturing capacity.”
Gordon points out that in California, which has had the most aggressive and consistent renewable energy target, has seen a big increase in clean energy manufacturing jobs: Between 1995 and 2008, green jobs grew three times faster than the job rate in the state as a whole, and manufacturing jobs were over 20% of all green jobs created.
“It’s always important to remind people that under business as usual, we’re losing jobs, including manufacturing jobs, every day. But where we have strong policies to create continued demand, we’re seeing actual job growth,” she says.
The direct responsibility for a long-term target and tax credit extensions rests at the feet of Congress, not the President. We can offer loan guarantees for projects, but without long-term tax credits and a national target, the permanent jobs won’t rise to their full potential.
Check out the full interview with Canadian Solar’s Alan King on the value of a renewable energy target below.
– Stephen Lacey