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Laying the Foundation for a Clean Energy Economy

Continuing Recovery Act Programs that Create Jobs and Enhance Competitiveness

SOURCE: AP/Gerry Broome

A worker installs solar-paneled roof shingles on a home in Raleigh, NC. A clean energy and climate bill should include provisions that incentivize renewable energy production and manufacturing, and more energy efficient homes.

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Last week Vice President Joe Biden and Council of Economic Advisors Chair Christina Romer released CEA’s new report on the American Recovery and Reinvestment Act’s economic and job-creation impact. The report finds that ARRA’s grants, tax incentives, loan guarantees, and clean energy investments—matched by billions of dollars of private sector investment—are successfully growing the clean energy sector while creating jobs.

CEA estimates that ARRA has saved and created a total of between 2.5 million and 3.6 million jobs as of the second quarter of 2010—an estimated 827,000 of which are a result of public investment in clean energy production, energy efficiency, grid modernization, and advanced vehicles manufacturing.

This report is proof that smart public investments that spur growth in the clean energy sector are the key strategic first step toward a more stable, economically vibrant America. We must remember, however, that ARRA was designed as a two-year federal stimulus with funds that will run out by 2012. ARRA jump-started a process of building a low-carbon, sustainable economy, and we now need to make long-term commitments to that process. America is at risk of an extended jobless recovery and as a result we must craft long-term policy solutions that provide certainty and stability to investors, markets, and American companies to keep their doors open post-ARRA.

As Senate Majority Leader Harry Reid (D-NV) continues putting together a climate and clean energy bill he must therefore include provisions that will extend and build off ARRA programs. This bill must begin to create a national clean energy strategy that will prevent clean energy companies from moving out of the United States to other countries with more competitive positions in the growing global clean energy economy.

A strong clean energy sector will also ensure that Americans have access to good-paying manufacturing and construction jobs. The recession has hit many Americans, but it’s hit minority communities, particularly Hispanics, the hardest due to the large concentration of Hispanics in the construction and manufacturing sectors.

To that end, a comprehensive climate and clean energy bill must include provisions for market-driven clean energy and efficiency incentives that drive projects where construction and manufacturing workers are needed. This includes an ambitious but achievable national renewable energy standard to foster the long-term market stability essential to U.S. competitiveness in renewable energy manufacturing and production, and direct public investment programs and strong market incentives to encourage homeowners and commercial and industrial property managers to invest in energy efficiency through measures such as the proposed HOME STAR and Building Star programs.

Any bill must also include ongoing funding mechanisms and market-based incentives for retrofitting homes and offices, including the Retrofit for Energy and Environmental Performance program, the Green Resources for Energy Efficient Neighborhoods Act, and strong energy efficiency building codes like those in the House-passed ACES bill.

The bill should also have provisions for a variety of financing vehicles to ensure that the progress made by ARRA investments does not go to waste. Including federal financing programs along the lines of those included in ARRA—Section 1603 renewable energy production grants, and Section 1705 loan guarantees to clean energy project developers, for example—is a smart way to ensure that investments in clean energy projects continue far past 2010. And establishing a “green bank” would increase clean energy entrepreneurs’ access to capital and help get new technologies through the “valley of death” and to commercial scale in the market.

Finally, a clean energy and climate bill must invest in smart infrastructure, which is necessary to facilitate the transition to an America that runs on clean energy. We must include provisions to extend incentives for clean energy and advanced technology vehicle manufacturing, such as the 48C manufacturing tax credits and the ARRA Advanced Technology Vehicles Manufacturing Loan Program. Equally as important is rebuilding the U.S. electricity grid to support reliance on clean, safe, domestic energy.

Congress and President Barack Obama should extend ARRA’s forward momentum into a longer-term economic strategy centered on scaling up clean energy production and energy efficiency. This will ensure that we continue building things in America and that Americans have access to good-paying jobs. The path to a clean energy economy will be a long one, but the foundation to revitalize the American economy must be laid now.

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Bracken Hendricks is a Senior Fellow and Tina Ramos is a Special Assistant for the Energy Opportunity team at American Progress.

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