Renewable Energy and Job Creation
As I’ve mentioned in previous posts, I’m in the process of studying the size and shape of job creation that will come as a welcome by-product of the migration to renewables.
How this sits in the constellation of benefits to renewables depends on whom you ask. But regardless of the level of importance that job creation has compared with national security, fiscal responsibility, the health and safety of the world’s population, and stemming the long-term ecological damage wrought by extracting and burning fossil fuels, it’s got to be in there someplace.
Yet job creation is a very complicated subject, as it comes with so many moving parts:
- What percent penetration of renewables are we talking about? What type? In what time-frame?
- How are market forces affected by the actions of Congress (e.g., removing/perpetuating subsidies that keep the price of oil artificially low, creating incentives for renewables, state legislatures enacting renewable portfolio standards)?
- What’s happening outside the US, where many countries are taking aggressive action to move to renewables?
- What are the strategies of the corporate giants like GE and Siemens in this global economy? From here, it looks like they don’t care where the green jobs are; if the US misses the boat, that’s too bad. Is that true?
- What brown jobs will be lost (e.g., coal mining) simultanously to the build-up of green jobs? Do we have the political stomach to deal with any job loss?
- What will be the impact of all the green job training in the community colleges?
I’ve become particularly interested in the issue of subsidies, as they seem to be so critical in forming the climate in which private investors will climb on board the clean energy bandwagon. But because macroeconomics isn’t my strength, I’m going to have to speak with a great number of economists, analysts, and political pundits to get this right.
It appears that the reason this is so complicated is that subsidies take many forms, some of them (deliberately?) hidden:
- Construction bonds at low interest rates or tax-free
- Research-and-development programs at low or no cost
- Assuming the legal risks of exploration and development in a company’s stead
- Below-cost loans with lenient repayment conditions
- Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire
- Sales tax breaks – taxes on petroleum products are lower than average sales tax rates for other goods
- Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth)
- The U.S. Strategic Petroleum Reserve
- Construction and protection of the nation’s highway system
- Relaxing the amount of royalties to be paid – apparently, we get about 40% of revenues from oil on public land vs. 60% – 65% in most other countries
- Not forcing the industry to deal with the “externalities” – healthcare costs, long-term environmental damage, etc. — costs that are becoming increasingly clear and subject to quantification
If anyone has a suggestion for people I should interview in this regard, please let me know.
Craig,
Interesting subject. Very complicated. Much has been written about oil subsidies and how deep they go, including lobbying in US in our political system.
Subsidies are not a long term solution to anything, except for maybe short term political goodwill.
I have written this before and will state again, until alternative energy is lower cost than status quo, it will never move forward. Subsidies are not consistent with the free enterprise system. We the American public does not need to subsidize alternative energy. It should be able to work on its own. A new technology idea that will lower costs of something that is currently in demand, will easily get investors. If the new technology is not in demand, why should we the tax payers be investing in it?
Demand is what you should be researching. What does our Government need to do to increase the demand for alternative energy (but not with subsidies)? Find that answer, then step back and watch how quickly the free enterprise system takes over.
My solution is easy to do but also political suicide in our Government. This is what we need to solve. Tax oil and coal. You can read my JEDI Fund Proposal for more on this.
My project will be an outdoor recreation business providing several different seasonal / outdoor / nature related activities over all seasons of the year. I plan to use & show alternative energy in action, creating a school field trip destination to educated all ages about what is out there and how it works. The business will also ideally sell small home & business systems, teaming up with a contractor group to sell & install systems. If I can work with area vocational schools to set up an aprentice program to follow real world installs it will be even better.
I hope to show other businesses that the benefits today of installing alternative energy systems goes way beyond money saved by using alternative energy as a promotional device of the busines and it’s commitment to the environment.
So my project that will employ 8 in the off season to 65 in the peak ( = to 40 full time year round) will not fit directly, but will be a big part of it.
Craig,
Since I use Word a lot; I’m used to hitting tab key which takes me off the comment page and when I don’t see it on the comment page, I automatically hit enter again and submit my comments. My problem; but maybe you could add a pop up which says are you ready to submit?
But anyway on the jobs issue. True sustainable jobs will only be created without sudsidies. Most subsidies end at some point in time and at that point, if the technology is not competitive, it dies and so do the jobs. But the point you make about lost jobs is significant. Gasoline car business will be turned on its head when EV’s take over. EV’s will last much longer than gas cars and will not need the service, either. You will hurt our current business model of selling and servicing cars. That is why EV’s will have a hard time making it in US. But, you know who wins? The American consumer, so it will happen but only without any subsidies. Now certainly a gas or coal tax is a negative subsidy and we who use oil and gas pay for it. But that is our choice, not our corrupt policital system.) The other issue that our Government is interferring as in DOE’s and Congress role of picking the winners and losers in business of alternative energy. This is, simply put, a CRIME! DOE is trying but has never accomplished its main goal established 35 years ago of reducing our dependence on foreign oil. In fact it has failed, totally. Look at the Advanced Technology Mfg Loan Prgm of $25B. Why has DOE only picked a handful of winners(?) thus far? They funded only a couple of start ups like Tesla in Pelosi’s district and Fisker in Biden’s home state. Is there a connection? What do you think? DOE is sitting on $17B of the $25B they were given 2 years ago. Why? Obama has probably told them to save the most for when GM becomes “financially viable.” The other 80 or so applications polictically don’t have the connections to make the “system” work for them. This is why everyone in Washington need to be thrown out ASAP.
Good luck in your understanding of the jobs market.
Craig,
I am somewhat surprised over the absence of discussion on the utilization of Geothermal Energy. This energy source is limitless and everywhere available – just drill a couple of fairly deep holes and then let steam turbines drive generators to supply the electrical grid and heat exchangers to feed energy to community water borne heating systems. The latter is already done to some extent but mostly low temperature systems with shallow sources. We can certainly do much better with the already availible technology.
A point about the fleeting nature of subsidies – the impact is fleeting only when there is an end date, or when their total value diminishes significantly. Although I haven’t seen a full and detailed accounting, I’ve read from more than one source that traditional energy industry subsidies rarely decrease overall, over a long period. Rather, they are simply reapplied over time to different investments in varying amounts. And when looking at the total picture, the financial sources and incentives include not just local, state, and federal government, but also private equity and non-profit funding sources.
Craig, I respect your ambition on the topic. However, recognize that just from the subsidy/financial angle, the complexity of the laws and the government’s attempt to impact many of the economic aspects is the revenue engine for a large number of consultants and counseling. For one example, this CPA agency, Novogradac & Company, LLP, is well entrenched and active. ( http://www.novoco.com/energy/index.php ). The point is that finding the core components or resolving everything to job creation estimations will likely require a lot of work. The number of assumptions to be made and therefore distinct scenarios to consider is not trivial. Consider that you could start by assuming only the current state of technology and the subsequent costs for renewable sources, or you could project a few key advancements that are either nearing scale-up or just proven feasible today. I work partially in this area and am willing to share more information via email. I assume you are able to discern that from my entry and the address I provided?
@ Sivert,
We don’t know how much geothermal energy is, from a practical standpoint, available. Probably more research should be done.
The cost of tapping geothermal energy is not insignificant. There are a limited number of locations where it could be tapped by drilling to depths which are not excessive, too expensive, and impractical. On other places, tapping geothermal energy has resulted in many low magnitude tremors which many fear could lead to tremors of great enough magnitude to cause structural damage.
There are places where geothermal energy is being used and where it has proven to be economical and practical. It may be that more practical places to tap geothermal energy will be found, but whether it could ever provide sufficient energy on a global basis is, at present, unknown. I would favor doing more research. What should be avoided is spending large sums on energy sources that have not proven to be adequate or practical, and I greatly fear that we are beginning to do that.
Personally, I believe that geothermal holds terrific promise; Paul Thomsen of Ormat, whom I interviewed for my book, makes a quite compelling case for this. See http://www.ormat.com/ and http://2greenenergy.com/thomsen-contributor/5587/.
You are right, diverse locations such as Iceland, the Philippines, and El Salvador already derive a greater than 20% portion of their energy from geothermal. Some of that capacity are derived high enthalpy, or high temperature systems, located in areas of volcanic activity. But many are low enthalpy, especially here in the U.S. CA derives about 5% of its energy from geothermal sources, and that total capacity alone is greater than the capacity for any other country. NV could become a close second, according to some estimates. I can’t cite the exact amount, but it’s fair to guess that the total U.S. geothermal capacity right now is about 3 GW.
So, it may be fair to say that geothermal is somewhat a more known entity than, say, solar. Solar, especially concentrating solar (CSP) still has a huge opportunity for quick advancements that could lower costs. Whether it becomes on par with other renewable sources such as land based wind is a gamble. Likewise, there may be little opportunity for revolutionary cost savings with geothermal. However, it is a worthy contributor in a plan that includes a mix of non-fossil sources. Right now geothermal systems are nearly competitive with natural gas over the lifetime of the facilities, when leveling for fuel costs. It may always be competitive or more competitive with nuclear. So, I think it has a role.
If you look at small scale geothermal comfort systems, such as for homes and small to moderate buildings, you may be right. There isn’t much evidence that it will eventually become a cost effective way to reduce total utility costs by reducing HVAC expenditures. It may not be outrageously more expensive, however, it may never be on par.
Craig, et al;
My personal belief is that renewable energy businesses are an outstanding job creation vehicle, however, waiting for the Gov’t to do anything is an outstanding waste of time and energy. Ultimately, it is down to each of us to create, stimulate, and bring about the economic recovery – one job at a time.
Instead of waiting for subsidies, we at SunReports have innovated, created, and marketed our way into a crowded marketplace – without any gov’t handouts and without VC money. This is a terrific time to create – there are ample resources available that might otherwise be employed if the economy were better, and there are hundreds of interesting product innovations that need to be jumpstarted into existence, and that can be bootstrapped into being.
Our American experience is built upon the back of risk-taking, innovation, and ‘getting it done’ regardless of the barriers. We need a healthy dose of that right now, across the board.
Innovation does not need big money – – there is plenty of money on the sidelines looking for interesting projects, and products, to back. Creation, guts, tenacity and a purpose of vision that renewable energy provides are what it takes to succeed.
Every journey begins with a first step, and our economic recovery is no different. But the steps to recovery are our own – and to borrow from Nike: we need to “just do it”.
If you want to see what can be accomplished by a few dedicated and committed people, please visit our website at http://www.sunreports.com. This company, albeit young, has been bootstrapped into being with very low outside investment and zero government assistance. We are open to receiving outside help from either VC or gov funding, but we firmly believe that the creation and demonstration of our vision can be accomplished without such investment.
Good luck with your project,
Thomas A. Dinkel
CEO
SunReports, Inc.
Very cool, Thomas. I hope readers will check out your website. In any case, you’ve certainly nailed it in terms of not waiting for the givernment to come along and provide the stimulatation they talk about.
Subsidies to oil industry are in a way similar to subsidies to tobaco industry,
which very rarely pays for the health damages provoked by the smoking.
Craig,
Renewable energy job creation can serve as a stimilus package anywhere.., where the issue of jobs creation is as urgent as finding peace in Iraq, Afghanastan and responding to the floor disaster in parkistan. The sooner we put aside our individualism and focus on the enviourmental impact assessment that effects us all, our world will once again become the happiest people on earth.
Government involvement or subsidies in energy over the past decades has made us much more dependent on foreign oil and we send our money to the dictators in foreign lands. We need to get government OUT of control or manipulation over energy. Only role of government is to protect citizens from excessive pollution (excluding the CO2 global warming farse). Let the private sector invest and develop the technologies and let the most ECONOMICAL and CLEAN energy win. A job created by government taking of wealth does NOT create wealth…..it just destroys it. Most of the “green energy” companies and jobs that are being spoon fed by “free government money” will NOT exist in 5 years. It is just a entitlement program handed out by elitists (soon to be out of power) who think they are saving the planet….but what they are really doing is economically enslaving our kids, grandkids, and future generations by spending $$ we don’t have….it is unsustainable. If solar, nuclear, wind, bio-fuels, etc. are economical compared to alternatives then they will thirve….if not then they will not. Only freedom (not government control) will maximize our energy technologies for both cost and cleanliness.
All subsidies should be eliminated. The ignorant elitists in government, environmental groups, and academia have proven time and time again that they have no ability to pick winners and losers. Until we elect politicians who get that then we will be wasting much of our resources and continue to put our future generations into debt….which is morally corrupt. The government must EXIT the energy industry. What is going on is pure theft of our children’s future by control freaks who think their way is best and disguise themselves as intellectuals. That is why the USA is now going down the tubes. We need to WAKE UP unleash the free market!