Clean Energy Legislation to Boost National Economy

Two major pieces of legislation - the American Recovery and Reinvestment Act (ARRA) and the proposed American Clean Energy and Security Act (ACES) - could have a significant positive impact on both the renewable energy market and the overall American economy, according to two studies released on June 18, 2009.

Combined, the ARRA and ACES bills would generate an annual investment in clean energy of $150 billion and would create up to 1.7 million net new jobs, according to a study by the Center for American Progress and the Political Economy Research Institute (PERI).

Of the $150 billion annual investment in clean energy, $40 billion would be directly invested in renewable energy, with the rest in energy efficiency and other clean energy technologies.  Of that $40 billion, $30 billion would be devoted to on-grid renewable electricity projects, $3 billion in off-grid electricity (like solar PV or distributed wind generation), $3 billion in off-grid non-electrical renewable energy (such as solar water heating), and $3 billion in renewable fuels.

While the stimulus legislation passed earlier this year would primarily promote renewable energy through public investment, the ACES bill will stimulate private investment, through a cap-and-trade system that limits CO2 emissions and puts a price on carbon, as well as a Renewable Electricity Standard that requires utilities to produce at least 15% of their energy from renewable sources.

According to the CAP-PERI study, about 37.5% of that $40 billion in new investment in renewable energy over the next decade would be driven by the Renewable Electricity Standard (RES) in the ACES legislation.  The 15% renewable electricity standard in the bill would necessitate 53 GW of new renewable energy capacity, and an associated $15 billion annual investment.

One of the most significant findings in the CAP-PERI study is that "clean energy investments generate roughly three times more jobs than an equivalent amount of money spent on carbon-based fuels."  This finding suggests that as state and local governments confront the negative impacts associated with high unemployment and diminished economic output, they should consider enacting policies to promote renewable energy, which generates more jobs per dollar than the fossil fuel industry.

There are two primary reasons renewable energy and other clean energy sectors create more jobs than fossil fuel energy.  First, renewable energy is more labor intensive than fossil fuel generation.  More of a renewable energy company's budget must be devoted to hiring and less is spent on extraction of fuel, which is a very high variable cost for fossil fuel companies.  Also, renewable energy generation, construction, and manufacturing is more likely to occur domestically than conventional fuels, which are primarily imported (except for coal).  These factors help to minimize the leakage of benefits of renewable energy development in the domestic economy.

Another study completed by PERI, commissioned by the Natural Resources Defense Council and Green for All, examines the effect of widespread renewable energy and energy efficiency deployment on low-income sectors of the population.  One of the common arguments against a cap-and-trade program and a renewable energy standard is that these policies will adversely affect consumers, especially the poor.  This study, however, rejects that claim and finds that a clean energy economy will benefit low-income segments of the populations through increased employment opportunities, lower electricity prices, and increased access to public transit.

Combined, these two studies show that implementing strong renewable energy and energy efficiency policies provide numerous social benefits - including cleaner air, a healthier planet, and vast economic opportunities.

According to Peter Lehrer, Executive Director of NRDC, "It's never been clearer that American ingenuity and investment in clean energy can be a driving force for economy growth, energy independence, and environmental protection, so we can increase economic opportunities while reducing global warming protection."