Clean Energy, Clean Jobs

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Even before he was sworn in as the 44th president, Barack Obama devoted laserlike focus to devising an economic recovery package to help Americans weather what could be the worst economic hurricane since the Great Depression. In collaboration with congressional leaders, he and his team of advisors devised the $355 billion Economic Recovery and Reinvestment Act of 2009, which the House Appropriations Committee passed on January 21. The full House plans to consider the bill on January 28. This is the program spending portion of the overall $825 billion recovery package.

The bill would invest $69 billion in energy efficiency, renewable energy, transit, and fuel economy programs. This is over three times what was spent on these programs in 2008 and appropriated for 2009. The stimulus package would dramatically reduce electricity and oil use, and cut greenhouse gas pollution. Most importantly, the bill would create an estimated 459,000 jobs by the end of 2010.

Many clean energy programs were starved for funding during the Bush administration. The Economic Recovery and Reinvestment Act would significantly increase investments in clean energy compared to 2009 funding levels. The following are examples of programs that will benefit:

• Investments in building and appliance efficiency would increase by nearly 400 percent, which includes measures to lift the energy efficiency of public housing and low-income households. On January 24, President Obama noted that these programs would “save taxpayers $2 billion a year by making 75 percent of federal buildings more energy efficient, and save the average working family $350 on their energy bills by weatherizing 2.5 million homes.”
• Funds for renewable energy research would climb by 225 percent.
• Research into “carbon capture and storage” technology to cut greenhouse gas emissions from coal-fired power plants would grow by 772 percent.
• Programs to speed the development of super fuel efficient cars and cleaner fuels would have funding 10 times as high as current levels, including needed funds for advanced battery research.
• Resources to adopt “smart grid” technology and update the transmission grid–vital for efficiency and renewables–would get a 130-fold increase in funding. These funds  would build 3,000 miles of new transmission lines and put 40 million smart meters in homes.

The significant proportion of clean energy programs in the proposed stimulus legislation demonstrates confidence that such investments would create jobs. This reflects the finding in "Green Recovery," a report by the Center for American Progress and the University of Massachusetts, that a $100 billion investment in efficiency and renewables programs would create 2 million jobs in two years. That’s four times more jobs compared to a similar investment in oil and gas drilling.

In addition, the House Ways and Means Committee included $20 billion to extend existing tax incentives for renewables and energy efficiency as part of the American Recovery and Reinvestment Plan, its $275 billion tax package, which passed on January 22. For companies that are unable to use tax credits due to losses or miniscule profits, the bill would create a temporary Department of Energy grant program to offset up to 30 percent of the cost of eligible projects.

Despite the benefits of the clean energy and other stimulus package investments, some congressional conservatives argue that the stimulus package would not spend money fast enough to create enough jobs by 2011 to justify the huge expenditures. But these critics rely on a quick and incomplete analysis by the Congressional Budget Office that predicts that significant portions of the new funds will not be spent until 2011 or beyond.

Some of the CBO’s projections about this package are inconsistent with the estimates it made just four months ago. It analyzed the spend-out rate under the Job Creation and Unemployment Relief Act of 2008, H.R. 7110—the economic stimulus package that passed the House of Representatives but was opposed by Bush last September. CBO estimated that 77 percent of the funds for highway construction in H.R. 7110 would have been spent by 2011. Yet the office predicts that only 13 percent of the highway funds from the pending stimulus package would be spent by 2011. (H.R. 7110 would have spent its funds over the 24 months of 2009 and 2010, while the pending bill would spend funds over 19 months if it were signed into law by mid-February).

The CBO analysis also predicts that funds for efficiency, transit, and other clean energy programs would be spent relatively slowly, even though most of the funds would go to existing programs. The assumptions CBO used to generate these projections are not included in its paper, so it is impossible to assess their validity. CBO is expected to revisit its analysis now that the Appropriations Committee has passed the bill.

What’s more, the Office of Management and Budget reviewed the CBO analysis and found it flawed. OMB Director Peter Orszag wrote House Budget Committee Chair John Spratt that:

“Our analysis indicates that at least 75 percent of the overall package (including its tax component and the other spending provisions that were not analyzed by the Congressional Budget Office) will be spent over the next year and a half.

“We are committed to maintaining at least a 75-percent spend-out rate for the package as a whole.”

OMB believes that this stimulus package would spend funds quickly enough to create jobs this year and next. In addition to getting the economy moving, it would steer investments in the right direction. President Obama and congressional leaders crafted an ambitious package that would stimulate economic demand to jump start the economy. It would also invest in weatherization of homes and buildings, the smart grid, and transit, while tackling long-term challenges such as our dependence on oil and global warming.

During his inaugural address President Obama reminded Americans “that each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.” He also declared that, “The state of the economy calls for action, bold and swift, and we will act—not only to create new jobs, but to lay a new foundation for growth.”

The Economic Recovery and Reinvestment  Act would address both of these challenges. It would create clean energy jobs and lay a foundation for the low-carbon economy essential for long-term economic growth, national security, and an inhabitable planet.

Thanks to Scott Lilly.

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Read more: Re-energizing the Economy

Energy projects included in the House Recovery and Reinvestment Act

*Percentages are rounded.

For details on the stimulus package see here.

For details on FY 2009 appropriations see here.

FY 2009 appropriations for all progrmas were the same as FY 2008 except for Weatherization Assistance and LIHEAP.