Maria Amodio's blog

Throughout testimony presented by several witnesses before the Senate Environment and Public Works Committee (EPW) last week, one theme consistently resurfaced – cap and trade will spur investments in clean technology and increase jobs in certain sectors by putting a price on carbon. It is a simple formula: a price on carbon will create certainty, certainty will lead to increased investments in clean energy technology, and increased investments will lead to a larger share of the clean technology market.

As Kate Gordon, Senior Policy Advisor of the Apollo Alliance, testified, the United States is already losing ground on the international front. Clean energy investments are the key to our new economy and have been growing even in the face of inconsistent federal incentives, but without true federal commitment, clean energy technologies will not reach their full potential.   According to the UN Environment Program, investments in renewable energy technologies in 2008 increased by 2 percent in Europe to $49.7 billion, decreased in North America by 8 percent to $30.1 billion, and grew by 27 percent in developing countries to $36.6 billion. Specifically, investments in China grew by 18 percent to $15.6 billion and in India by 12 percent to $4.1 billion.   

Members of the business community also stressed how important federal regulation is in creating price certainty for carbon, which would increase clean technology investments domestically and therefore clean energy jobs. J. Stephan Dolezalek, Managing Director of VantagePoint Venture Partners, testified “a growing number of the Fortune 500 community has signaled that establishing a price certainty with respect to carbon is far better for business than a continued uncertainty in the face of certainty elsewhere in the globe.”  As the percentage of global capital invested in clean energy industries continues to increase, the United States will need price certainty to attract investment and thereby create jobs.

How does this clean economy market affect the domestic job market? The truth of the matter is that given the size of the U.S. economy, new jobs are constantly created while existing jobs are lost. Even though sentiments from both sides were reflected in the testimonies, this process will continue regardless of the specific legislation that will be passed. This is little consolation for those losing their jobs, but legislation can be written to include transitional assistance and training to adversely affected workers, as is done in both the Waxman-Markey bill passed by the House in June and the recently introduced Kerry-Boxer bill in the Senate. In the case of clean energy jobs, if the U.S. creates a favorable investment environment at home, American jobs using existing as well as new skills will be created, no matter where a given company is headquartered. The value chains for many clean energy technologies and products are extensive, and even a Chinese wind manufacturer will have to hire American workers if it wants to market turbines in the United States. Philadelphia’s mayor, the Honorable Michael Nutter, summed it up well: “These new, green collar jobs require building science, carpentry, electrical, plumbing, sales, and communications skills. These jobs include: insulators, carpenters, heating technicians, energy auditors, and educators, as well as support services, sales, and manufacturing. The good news is that these jobs are a perfect fit for Philadelphia’s workforce, and are not transferable overseas.”
 
The potential for job growth is welcome news as the U.S. economy continues to climb out of the recession. In opening statements of the final day of hearings, the Senators happily noted the Commerce Department’s announcement of the first increase in real GDP since the third quarter of 2007. Testimony on behalf of businesses and workers at the EPW hearings last week took this welcome news a step further by explaining how comprehensive climate legislation could further expand the economy and increase jobs.

At the Environment and Public Works hearing on Tuesday, both Secretary LaHood of the Department of Transportation (DOT) and Administrator Jackson of the Environmental Protection Agency (EPA) explained that emissions reductions progress is already underway in the transportation sector. Sec. LaHood stated, “We have much to do, but we are not waiting to begin taking aggressive and meaningful action.” 

While the Congress has been working towards establishing comprehensive climate legislation, the DOT, EPA, and Department of Housing and Urban Development (HUD) have been collaborating to develop Federal policies that could help create sustainable communities. The aim is to support and shape state and local land use decisions and infrastructure investments to develop livable communities where people have the option to drive less. According to the DOT, on an average day American adults travel 25 million miles in trips of a half-mile or less and almost 60 percent use motor vehicles for this travel. Walking, biking, and riding transit, regardless of the area where an American might live, are excellent alternatives. “If the presence of these alternatives promotes less driving, then that will reduce road congestion, reduce pollutants and greenhouse gases, and use land more efficiently."

The hiatus on nuclear plant construction might be about to end. Renewed interest in nuclear power has been spurred by existing government incentives, and comprehensive climate policy will provide further impetus.

So what does proposed legislation do to promote nuclear power? The energy bill passed by the Senate Energy and Natural Resources Committee (S.1462), the energy and climate bill introduced by Senators Kerry and Boxer (S.1733), and the energy and climate bill passed in the House (H.R. 2454) all include provisions to expand nuclear power generation. Most importantly, the latter two bills include a greenhouse gas cap-and-trade program. This will send a long-term price signal to drive investment in low-carbon technologies, including nuclear power, and will make the cost of electricity generated from new nuclear power lower relative to traditional fossil fuel-based generation. 

Sen. Murkowski opened a briefing on Post-Combustion Carbon Capture at the Senate last week by asserting technology is the key to addressing our energy needs. The Senator said that advancing technology will allow the U.S. to move towards a low-carbon future. Sen. Murkowski is correct.

And cap and trade will guide us to just that: advancing technological innovation.  As Sen. Murkowski put it, our current energy technology has an "environmental price," and a clear signal regarding the price of carbon is imperative to spur R&D in technologies with a lower environmental price.  Cap and trade allows the government to set the policy objective – to reduce greenhouse gas emissions – and businesses to decide how to best achieve the objective in the most cost-effective manner. It will give industry experts exactly what they are seeking: a clear signal that financial incentives exist for low-greenhouse gas technological innovation, whether its carbon capture and sequestration discussed at the briefing, or nuclear, wind, tidal, or other technologies.

Read more about technology policies and their relationship to cap and trade here.