by Raj Salhotra
While President Obama gets hammered by Republicans for his economic policies and criticized by environmental groups for not doing enough to address climate change, former President Clinton weighed in recently on the intersection of both topics: Green jobs.
Clinton wrote an article for Newsweek in which he laid out 14 steps to put Americans back to work. Six of these steps were in some way related to clean energy. Whether it was through loan guarantees, energy efficiency building retrofits, or just painting roofs white to save electricity in the summer, President Clinton, says he believes in the potential of green energy to create jobs.
When I was president, the economy benefited because information technology penetrated every aspect of American life. More than one quarter of our job growth and one third of our income growth came from that. Now the obvious candidate for that role today is changing the way we produce and use energy.
Two specific proposals stick out as providing tremendous opportunities for job creation and economic growth:
Firstly, President Clinton points to the retrofit of the Empire State Building which will reduce electricity usage by “38 percent [and] will enable the costs of the retrofits to be recovered through lower utility bills in less than five years.” The project also “created hundreds of jobs and cut greenhouse-gas emissions substantially.”
Building retrofits have huge job-creating potential; a recent report suggests “retrofitting 40% of the US building stock will create over 600,000 jobs by 2020.” This estimate is very similar to that of President Clinton (retrofitting the entire building stock will create 1,000,000 jobs). Even in the residential sector, retrofits can create “between 600,000 and 1,000,000 jobs by 2025.”
Secondly, Clinton notes that loan guarantees can be a powerful tool to create jobs as they “allow banks to lend money to a business after the federal government guarantees a percentage of the loan amount.” The federal government usually maintains a leverage ratio of 10:1. Approximately 10% of the loan value is kept in a special debt service reserve fund to be tapped only if the company defaults on its loan.
The DOE currently offers a loan-guarantee program to support clean energy projects. Thus far, the DOE has guaranteed 29 projects which have created or saved over 62,000 jobs across 21 states. Yet, because the program’s funding will end in September 2011, many other potentially groundbreaking projects have been placed on hold.
In his FY 2012 budget proposal, President Obama requested $200 million for the loan guarantee program, yet the House Appropriations Committee recently passed its FY 2012 Energy and Water budget with only $160 million appropriated for the program. Based on the number of job-creating clean energy projects placed on hold, it is imperative that the President and Congress appropriate more funds for the DOE loan guarantee program.
Both loan guarantees and commercial and residential building retrofits are policies that, at virtually no cost to the ratepayer or taxpayer, will create jobs, boost the economy, and reduce greenhouse gas emissions.
— Raj Salhotra
[Stephen Lacey: Clinton’s ideas are very consistent with Obama’s goals. While energy efficiency and renewable energy programs are proving effective at creating tens of thousands of jobs, it takes a long time to build up a substantial base of permanent jobs in this industry. We’re talking about overturning a very large number of buildings and energy facilities — many of the green jobs will be created over a period of many years, not overnight. Today, the big issue is whether or not Congress will extend various tax credits to give investors certainty so they can continue supporting the projects that create these jobs.]