Renewable energy can counter economic downturn

Posted: 11 December 2008

Author: Lester R. Brown

At a time when major US companies are announcing job layoffs almost daily, the renewable energy industry is hiring new workers every day to build wind farms, install rooftop solar arrays, and build solar thermal and geothermal power plants. The output of industrial firms that manufacture the equipment for these energy facilities is expanding by well over 30 per cent a year. These investments both create jobs and help prevent climate change from spiraling out of control.

Among the several sources of renewable energy, wind looms large. The United States has 24,000 megawatts of wind generating capacity already online (think 24 coal-fired power plants), and 83 wind farms with some 8,000 megawatts of capacity are under construction. Beyond this, no less than 225,000 megawatts of planned wind farms are waiting for access to transmission lines. Currently, the United States has 40 plants manufacturing wind power components. Eight of these plants are assembling wind turbines, 20 are fabricating wind towers, and 12 are making blades. In addition, many more manufacturing facilities are under construction, recently announced, and in planning. Every billion dollars invested in wind farms creates some 3,350 jobs - nearly four times the 870 jobs created with a similar investment in coal-fired power plants. (See data here).

Solar energy power plant, Mojave Desert USA. Photo: Warren Gretz/NREL
Solar energy power plant, Mojave Desert USA. Photo: Warren Gretz/NREL
Concentrating solar power plant, Mojave Desert USA. Solar panels focus the sun's energy and super-heat oil to power steam turbine generators.© Warren Gretz/NREL
With solar cells (photovoltaics), the US growth potential can be seen in the recent expansion from small rooftop installations to commercial generating facilities covering several square miles. In 2007, the United States installed roughly 200 megawatts of solar cell generating capacity, most of it on rooftops. In 2008, Pacific Gas & Electric - a leading California utility - contracted with two firms to build 800 megawatts of solar photovoltaic generating capacity; their output at peak power will equal that of a nuclear reactor. A billion dollars invested in solar cell installations generates 1,480 jobs.

Falling cost curve A similar growth situation exists with solar thermal power plants - facilities that use mirrors to concentrate sunlight and generate steam to power turbines. Until recently there was just one of these facilities in the United States: the 350-megawatt SEGS complex in California. Now there are 18 commercial-scale power plants under development (15 in California, 2 in Florida, and 1 in Arizona) with a collective generating capacity of 4,160 megawatts - nearly a twelvefold increase.

This is an example of yet another labour-intensive energy technology (2,270 jobs per billion dollars invested) with a sharply falling cost curve that is fast becoming a major player in the U.S. energy economy.

Geysers Geothermal Power Plant California
Geysers Geothermal Power Plant California
Twenty plants are still operating at the Geysers steam field in Northern California, the largest single source of geothermal power in the world. Wastewater from nearby cities is injected into the field, providing environmentally safe disposal and increased steam to power plants. Photo © 2000 Geothermal Education Office.
Next consider geothermal energy. For 20 years, the United States had only one commercial-scale geothermal generating facility, in California. Now suddenly, almost overnight, there are some 96 projects - most of them with a generating capacity ranging from 10 to 350 megawatts - in western states. We are witnessing the emergence of a major new source of electricity. Two new technologies - plug-in hybrid cars and advanced design wind turbines - have set the stage for building an entirely new automotive fuel economy. While four manufacturers are coming to market with plug-in hybrids in 2010 or 2011, the early estimates of how many they will produce appear to be small. What is needed is a crash programme, almost a World War II-type mobilization, to produce tens of millions of cars powered largely with electricity, mostly from wind farms, at the gasoline equivalent cost of less than $1 per gallon. The good news is that plug-in hybrids do not need a new infrastructure.

Plug-in hybrids

The US goal for Detroit should be not merely to save it but to make it the world leader in producing high-efficiency plug-in hybrid cars. Replacing one gas-guzzling SUV with a plug-in hybrid will, over the car's lifetime, reduce oil imports by 200 barrels, saving $20,000 of oil imports. Such an initiative multiplied across the fleet would keep hundreds of billions of dollars at home for job-creating US investments.

A Ford Escape Hybrid SUV on a test drive. Photo: Ford
A Ford Escape Hybrid SUV on a test drive. Photo: Ford
A Ford Escape Hybrid SUV is driven non-stop for 37 hours, travelling 576 miles on one tank of gas.© Ford
Another job-creating way to save energy is to invest in urban transit, both light rail and buses. When combined with making streets bicycle- and pedestrian-friendly, this also increases mobility and reduces oil imports. In terms of job creation, investment in retrofitting buildings creates more than seven times as many jobs as a similar investment in coal-fired power plants. One of the early leaders is Houston, which plans to retrofit each of its 271 government buildings, thus simultaneously reducing energy use and operational costs. As Houston Mayor Bill White says, "It makes good business sense." In California, Adobe Systems, a software firm, retrofitted its expansive corporate headquarters at a cost of $1.4 million, dropping its electricity use 35 per cent and its natural gas use 41 per cent. The energy savings paid back the $1.4 million retrofit investment in just 14 months. (More typically, the payback time on retrofitting buildings is closer to 5 years.) And these jobs cannot be outsourced.

Leveraging private funds Building the new energy economy creates jobs in the construction of wind farms or the retrofitting of buildings, and also indirectly in the supply lines that provide, for example, the parts for wind turbines or the thermally efficient windows for retrofitting. These investments also generate jobs outside the energy sector. For example, the construction of a wind farm in a Great Plains community generates jobs in local businesses such as restaurants and home improvement outlets. The government's role in this vast job creation initiative is to use public funds as incentives to leverage far greater investments of private capital. We estimate that $100 billion of federal funds used strategically over the next 12 years would leverage $400 billion of private capital investment. If this $500 billion is allocated evenly between renewable energy development (wind, solar, and geothermal) and retrofitting, and if every two jobs created in the energy sector creates one job elsewhere, this would quickly generate 600,000 new jobs that would last through 2020. In addition to the short-term need to create jobs, there is the all-encompassing need to avoid runaway climate change and the threat it poses to global civilization. If the world is to have a decent chance of saving the Greenland ice sheet and at least the larger glaciers in the Himalayas and on the Tibetan Plateau, the glaciers whose ice melt sustains the major rivers and irrigation systems of Asia during the dry season, then global carbon emissions need to be cut 80 per cent by 2020. For the United States, this might require up to $500 billion of federal funds to mobilise $2 trillion of private capital - for a total $2.5-trillion investment in renewables and efficiency by 2020. Investment at this level would create 3 million new jobs that would last through 2020. Restructuring taxes

A complementary measure to accelerate carbon reduction would be to incorporate the cost of climate change in fossil fuel prices either through a cap-and-trade system or by restructuring taxes. The latter would mean simply raising the tax on carbon and offsetting it with a reduction in income taxes. Both these measures shift investments from fossil fuels to efficiency and renewables. One of the glaring gaps in current US policy is the failure to extend the wind production tax credit beyond one year. The time has come to extend it to 2015, giving investors the needed confidence to make longer-term investments in both wind generation and transmission lines. Beyond this, a strong national electricity grid is needed. Such a grid would both permit more-efficient management of the country's electrical generating capacity and link regions rich in wind, solar, and geothermal energy with population centres.

Historically, it is rare for so many emerging threats to have a common solution. The measures described here would simultaneously reduce carbon emissions, lower oil imports, and create millions of new jobs. This is a win-win-win opportunity that we cannot pass by.

Lester R. Brown is president of Earth Policy Institute and author of Plan B 3.0: Mobilizing to Save Civilization, available here for free downloading. Data and additional resources are at www.earthpolicy.org