[February 12, 2010 / No. 1065]

Green Jobs, Foreign Cash and Manufacturing

I've written before that one byproduct of investment in renewable energy is that it creates more jobs than fossil-fuel resources per kWh installed.

I didn't pull these numbers out of a steam turbine -- they are supported by two studies from UC Berkeley's Renewable and Appropriate Energy Laboratory that survey the landscape of "green jobs" studies. The most recent Berkeley study, released in January, looks at 15 different green-job studies.

The Berkeley study found that over the life of the facility, natural gas and coal power plants create about one job per average MW installed. Wind-power plants, however, create one to two jobs per MW; solar thermal one to three jobs; and solar photovoltaics two to 12 jobs, depending on which study one examines.

The study can be found at http://rael.berkeley.edu/sites/default/files/WeiPatadiaKammen_CleanEnergyJobs_EPolicy2010.pdf.

Some politicians and citizens are lately asking when we will realize all the economic benefits of renewable energy -- in particular the "green jobs" -- as we deal with 10 percent unemployment nationally and 12.4 percent in California. Adding fuel to the angst is the fracas over federal stimulus funds going to foreign companies that manufacture wind and solar equipment.

The Watchdog Institute, a San Diego-based journalism nonprofit, released a report in October showing that 80 percent of the $1 billion in federal stimulus grants for green energy given up to that time went to foreign companies that dominate the wind industry. The report was produced in conjunction with the Investigative Reporting Workshop of American University in Washington, D.C., and ABC News. The groups issued a follow-up report in January.

Of the grants the reports listed, many of the funds went to companies investing in U.S. wind farms, but which did not build manufacturing facilities here. On the jobs front, this should be a concern -- according to the Watchdog report, as much as 70 percent of economic activity from investing in wind power comes from manufacturing turbines.

The report cited several examples of the foreign flight of stimulus funds, including a project from Cannon Power Group of San Diego. Cannon received more than $19 million to expand a wind farm in Klickitat County, Wash. The money, in the form of a cash grant from the federal government to underwrite 30 percent of project costs, went to add 26 turbines to the Windy Point/Windy Flats facility, bringing total power production to 262 MW. Approximately 50 percent of the stimulus funds went to construction loans, which were supplied by Siemens Financial Services, according to Gary Hartke, managing director of Cannon Power. Siemens also supplied turbines for the project, as the two biggest domestic manufacturers -- General Electric and Clipper Windpower -- were either sold out of the turbines Cannon needed, or else the turbines were not the right size or fit for the project, according to Hartke.

In some ways, there's been too much focus on jobs. Cannon stressed that its $20 million grant created about 300 construction jobs and 20 to 30 in operations and maintenance. Hartke also stressed that the Klickitat wind farm will provide a net benefit of $142 million to Washington state, when considering various taxes and land leases over the life of the project.

Yet I am also sympathetic to the argument that manufacturing provides a solid engine for job growth. California has lost about 600,000 manufacturing jobs since 2001, according to the California Manufacturers and Technology Association. And while jobs operating power plants may be low per MW installed for any technology, factories can employ hundreds if not thousands of steady workers.

This is not to say that construction and installation jobs are not real jobs -- I'm sure thousands of workers in California and the Northwest would disagree -- but more that we could also use a boost in manufacturing employment. To provide that boost, manufacturing tax credits for renewable-energy companies, as announced by the Obama administration, might prove to be fruitful. Here in California, Gov. Arnold Schwarzenegger this year proposed a sales-tax exemption for manufacturers of renewable energy equipment.

Despite these efforts, it still might be the case that manufacturers will chase cheap labor overseas. Nevertheless, it wouldn't hurt to give domestic manufacturers market certainty. Wind-turbine makers, for instance, have been laying off workers as the wind industry copes with uneven demand. Although installations of wind power topped 9,000 MW last year in the United States, the industry laid off about 2,000 workers (see The Clips).

Of course, renewable energy is not just about green jobs -- it's about preventing the further spread of global warming with carbon-free power, diversifying the fuel supply and investing in new technologies. Jobs are a very nice side benefit. Perhaps with policies now in place -- tax credits and grants for developers and factories -- along with codified renewable-energy standards, in California and nationally, we will start to realize even large side benefits [Chris Raphael].

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