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Green Growth: How the Eco-Stimulus Can Generate Jobs

Editor — Sat, 14 Feb 2009 02:44:45 +0000

By Cascadia Capital CEO Michael Butler and Senior Vice-President

Part I, Picking the Winners

We are living in the Age of Uncertainty. Nobody knows how bad the economy really is or how long the pain will persist; nobody knows what type of stimulus package we need or whether a stimulus will actually work. And nobody knows where clean technology innovation is headed, given the current tumult in the capital markets.

Despite financing the future for hundreds of emerging growth companies over the past 25 years, I admit to not having all the answers today, at a time when that would be immensely helpful.

But I do know that the current stimulus package – with approximately $90 billion worth of energy-related spending and tax breaks – has the potential to boost certain sustainable industries and renewable energy sectors that have enormous job-producing potential, and that these good-paying and high-value positions will enhance economic growth both today and tomorrow.

An Extended Keynesian Injection

Unlike the New Deal stimulus, this 21st century eco-stimulus offers us an extended Keynesian injection because new green companies and new clean industries will be created from the ground up while existing – but still maturing – segments of the New Energy Economy will expand and extend their reach.

The businesses and sectors that stand to gain the most from Washington’s legislative initiative will be the ones that can best harness public and private sector capital flows to generate a fairly quick payback. Every enterprise in the clean tech world is looking for stimulus money, but if you can’t break even on a cash flow basis anytime soon, there’s little sense in approaching lawmakers on Capitol Hill for financial aid.

Energy Expenditures

Congress is still not officially signed off on the size and composition of the stimulus. So, my informal, conservative and real-time dollar break out, which is subject to change as legislators crunch the numbers, currently looks like this:

Energy Efficiency and Transmission – $50 billion
Renewable Energy Tax Credit Extensions – $13 billion
Tax Breaks for Large-Scale Renewable Projects – $11 billion
Energy Efficiency Improvement – $9 billion
Renewable Energy Manufacturing – $1.4 billion
Department of Defense Energy Upgrades – $4 billion

Yet even as the legislation is hammered out before going to President Obama for signing, it’s possible to identify three potential winners that will have a tremendous economic – and job-creation – impact on the post-petroleum era.

First, the solar and wind power industries. These sectors are struggling today because debt funding and critical tax equity take-out financing has dried up; but I believe they could experience a reversal of fortune if Congress includes a refundable tax credit in the stimulus package (See Part II, following this story).

Taxing Matters

Amending the tax code in this way makes sense because the refundable tax credit would be a financeable arrangement and go directly to the solar and wind developers, who created a combined 30,000 new jobs in 2007 and 2008. With the right tax policies in place, the solar energy sector alone could create 440,000 permanent jobs and spur $325 billion in private investment by 2016, according to Navigant Consulting.

The second potential eco-stimulus winner will be the green building industry, which represents a mammoth opportunity and offers a powerful

long tail in terms of new employment possibilities.

Building for the Future

The numbers tell the story in a stark way here: There are currently 120 million homes, 5.1 million commercial buildings and legions of government office structures in the U.S. today. These structures account for approximately 40 percent of the nation’s carbon emissions and consume 60 percent of its raw materials, so if even a reasonable percentage of them were retrofitted and became more energy efficient and environmentally friendly, we’d be setting a major economic multiplier in motion.

The material science sector could especially benefit from a green building stimulus surge if it develops and markets products like clean cement and other building products; and the software industry could also prosper by creating automation services and systems to manage the homes, offices and buildings that are working toward greater energy efficiency.

A Jolt of Prosperity

The third stimulus beneficiary will be the nation’s outdated and outmoded electricity infrastructure, which needs to be upgraded with intelligent and breakthrough digital technology that will boost efficiency and reliability while lowering cost.

A number of skeptics talk about how daunting this overhaul would be. And they are right. The current electricity grid feels like a 19th century creation rather than a 21st century innovation. And it’s a jumble of fraying old wires, decaying transmission stations and antiquated analog equipment that is holding the nation’s global competitiveness back.

But this effort would be well worth it. A recent analysis by the Grid Wise Alliance reveals that $16 billion in smart-grid disbursements over the next four years would serve as the catalyst for projects worth $64 billion. These projects would create nearly 300,000 direct and high-value jobs between 2009 and 2012; and 150,000 of these positions would be established before the end of 2009. In addition, the Grid Wise report indicates that 140,000 indirect jobs would be generated between 2013 and 2018 as a result of smart-grid investment.

A Rising in the Valley

Smart grid innovation and infrastructure improvements would – in the same way as green building retrofits – help the software industry play a much-needed role in clean technology. And, with information technology hitting a plateau, Silicon Valley could reinvigorate itself by embracing a modernized electricity grid through two-way communications devices, smart meters and advanced control systems that take all the gathered energy information and manage it in real-time.

Franklin D. Roosevelt’s New Deal spending programs struggled to reverse The Great Depression for almost a decade, and it wasn’t until the United States geared up for the Second World War that the economy finally righted itself.

A New New Deal

I believe Barack Obama is more fortunate than Roosevelt because the nation is on the brink of a New Energy Economy today. If Congress and the new President choose eco-stimulus programs and policies wisely, we may see prosperous and peaceful new horizons sooner rather than later.

Michael Butler is Chairman and CEO of Seattle-based Cascadia Capital, LLC, a national investment-banking firm that is helping sustainable industries finance the future; Jamie Boyd is a senior vice president at Cascadia.

The above opinion piece is from independent writers and is not connected with Greentech Media News. The views expressed here are those of the authors and are not endorsed by Greentech Media.

Source: Greentech Media

Toward A New American Infrastructure

Editor — Sat, 10 Jan 2009 02:36:14 +0000

By Julia Levitt

Yesterday I sat in on a press teleconference with the three co-chairs of the bipartisan coalition Building America’s Future: California Governor Arnold Schwarzenegger, Pennsylvania Governor Ed Rendell and New York City Mayor Michael Bloomberg. The main topic of discussion: the results of a national poll, paid for by their group, which suggest that U.S. citizens across party lines overwhelmingly support infrastructure improvement, and that most would willingly approve a one percent increase in taxes to pay for the work.

The conference call involved a lot of hopeful rhetoric. The Governor of California cited the hefty investments his own state has already made in improving schools, housing, roads and levees, and future improvements in the states’ prisons and a high speed rail plan, and commented that he looks forward to developing public-private partnerships that will not only help get these programs running, but that will help sustain them over time.

Mayor Bloomberg stressed the role of local governments in choosing which infrastructure projects are right for their districts, and allocating funds accordingly. New York City, he said, will be spending $10.4 billion of its own funds on infrastructure improvements this year. But if federal money is allocated, he said, it must be allocated wisely. “If all we do is spend money on the same old things for the same old places, that would take away the opportunity to use a crisis to instill change.”

And though infrastructure improvements are an important part of the economic stimulus plan forthcoming from the Obama administration, Rendell cautioned, the plan for infrastructure will need to continue into the future long after the stimulus programs are no longer needed. Rendell called for a ten-year commitment – and dedicated federal budget — for rebuilding nationwide infrastructure, and acknowledged that the process would likely come in phases.

Repairs to crumbling bridges, roads and levees, for example, are “shovel-ready” projects that don’t require the months for environmental impact assessments and permitting that new projects demand. Because they offer state governments the ability to turn federal money into jobs and projects most quickly, these projects will be the likely first recipients of the stimulus package funds. To ensure that there will be funding in place for new projects that require lengthier approval processes like high-speed rail connections (not to mention, I would add, projects such as smart grids that will likely take even a few years’ more of engineering, planning and scientific evaluation) we should be planning now to continue supporting these initiatives well into the future.

The other main point of the conversation was the issue of transparency and accountability in government, buzzwords that have held constant in American politics — from early in the presidential primaries to Wednesday’s announcement that Nancy Killefer will fill the newly created position of chief performance officer — and which I’m sure we’ll continue to hear well into the year to come.

Although we at Worldchanging agree with the broad points outlined by Building America’s Future – certainly we should harness the opportunity before us to repair and rebuild our broken and outdated infrastructure; and certainly, there should be a mode of accountability in government – I need to state that a poll reporting such overwhelming numbers in favor of investing in our infrastructure which has been paid for by an organization whose website is www.InvestInInfrastructure.org should be taken with a handful of salt (You can see a summary of the survey online here). That said, I still think that it’s safe to say that the question is not “should Americans invest in infrastructure,” nor is it “should those investments be tracked to ensure transparency and accountability.” The answer to both those questions is yes.

The real question is, what kind of infrastructure are we going to build? There are so many opportunities out there to rebuild in a forward-thinking, sustainable way that it’s understandably difficult to know where to begin.

When it comes to pouring concrete, our allies at Transportation for America are speaking out in favor of repairing existing bridges, roads and highways before we invest in new highway projects. And whether federal money should now go to new highways at all is in serious doubt, considering our need to wean the country off fossil fuels, and the negative social, psychological, economic and environmental consequences of long commutes in traffic, and the fact that studies have shown that new lanes of highway will only increase transportation-related greenhouse gas emissions (PDF). Improving existing roads to create complete streets that support cars, buses, bikes and pedestrians, however, will encourage alternative, healthier modes of mobility that our neighborhoods need.

And the ways in which we invest in the built environment will play an important role also. Suburban development in the United States – the large, single-family homes on large lots that we’ve seen much of since the end of World War II – is extremely costly when it comes to providing utilities and other municipal amenities to residents: as noted in this Brookings Institute study (PDF), development on lots of one acre in size is estimated at $90,000 per home. So choosing where our infrastructure dollars go will also ideally mean choosing how we develop our land.

And, as we discussed in a recent feature, now is the time to invest money in projects that will ultimately pay off in the long run by saving energy or replacing sources that currently come at an unsustainable price. Obama has shown he understands the need to do this in the built environment by pledging to retrofit federal buildings for energy-efficiency – large up-front investments that will create jobs today, and will save millions in taxpayer funds in the future. Other investments in infrastructure that is literally smart – smart grids, and the Smart Garage concept under testing by RMI — where our vehicles will interact with buildings and utilities to store and distribute power with les waste.

What I see emerging here are two major needs as President-Elect Obama and the members of Congress decide which projects deserve federal stimulus, and how best to meet the goal that many before me have stated: turning crisis into opportunity to rebuild a more sustainable America. We encourage leaders, like those at the helm of Building America’s Future and others, to develop a system for accountability that will ensure that the projects we choose are held to the highest standards for quality, efficiency and environmental effectiveness that we know. And we encourage Americans to be watchdogs themselves, staying informed so that they understand what solutions are possible … and why the best time to embrace the possible is right now.

Source: WorldChanging.org