Clean Energy, Clean Jobs

Funds from a recovery and reinvestment package devoted to clean energy will create jobs, write Dan Weiss and Alexandra Kougentakis.

Peter Orszag, new director of the Office of Management and Budget, has estimated that more than 75 percent of the proposed recovery package will be spent in the next year and a half. (AP/Susan Walsh)
Peter Orszag, new director of the Office of Management and Budget, has estimated that more than 75 percent of the proposed recovery package will be spent in the next year and a half. (AP/Susan Walsh)

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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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Energy projects included in the House Recovery and Reinvestment Act

Proposed stimulus project Proposed House stimulus package grant/loan (in millions) Existing program FY 2009 funds appropriated (in millions) *Percentage increase in stimulus package spending compared to FY 2009 appropriation Notes on 2009 spending
Smart grid for more efficient electricity transmission, distribution, and production systems. $11,000 Electricity Delivery and Energy Reliability. $140 7,857%  
Renewable energy and transmission line construction loan guarantees. $8,000       We could not identify a program comparable to stimulus package proposal.
Grid/transmission subtotal $19,000   $140 13,571%  
General Services Administration (GSA) program to increase energy efficiency in federal buildings. $6,000 Federal energy management program. $20 30,000%  
Local government energy efficiency block grants. $6,900 State energy program. $45 15,333%  
Energy efficiency housing retrofits. New program to make Housing and Urban Development (HUD) sponsored low-income housing more energy efficient. $2,500       We could not identify a program comparable to stimulus package proposal.
Native American housing block grants. Rehabilitate and improve energy efficiency at some of the over 42,000 housing units maintained by Native American housing programs. $500 Dept. of Energy tribal energy activities funding. $6 8,333%  
Self-help and assisted homeownership program. Projects using sustainable and energy-efficient building and rehabilitation practices. $10       We could not identify a program comparable to stimulus package proposal.
Sustain, renovate, and modernize Dept. of Defense facilities: energy efficiency (HVAC, water, sewage, insulation, etc). $1,791 Dept. of Defense Energy Conservation Investment Program. Improvements to existing facilities and utilities systems to upgrade design, eliminate waste, and install energy-saving devices. Projects are designed for minimum energy consumption. $70 2,559%  
Grants and loans institutions for energy sustainability and efficiency recovery funding $1,500       We could not identify a program comparable to stimulus package proposal.
Public Housing Capital Fund. Improves energy efficiency, increases affordable housing projects that are ready to go, and addresses the housing needs of senior citizens and people with disabilities. $1,000 Public Housing Capital Fund Program. $2,439 41% We could not identify specific amounts designated for energy conservation.
Dept. of Defense research on energy efficiency at military installations. $350       We could not identify a program comparable to stimulus package proposal.
Appliance rebate program for Energy Star products. $300 Energy Star Program. $49 612%  
HOME Investment Partnerships Program. Helps local communities build and rehabilitate low-income housing using green technologies. $1,500 HOME Investment Partnerships Program. Assists states and local governments in expanding the supply and affordability of housing to low- and very low-income people.     We could not identify a program comparable to stimulus package proposal.
Industrial energy efficiency via capture of waste heat energy. $500 Industrial technologies. $65 769%  
Job Corps facilities. Upgrades job training facilities and energy efficiency at facilities for at-risk youth. $300 Energy-saving investments for Job Corps facilities. $1 20,027%  
Weatherization Assistance Program. Install efficiency measures in low-income households. $6,200 Weatherization Assistance Program. $250 2,480%  
Low-Income Home Energy Assistance Program (LIHEAP) $1,000 Low-Income Home Energy Assistance Program (LIHEAP). $5,100 20% 2009 appropriation is $4.5 billion, with a contingency fund of $590 million.
Building/appliance efficiency subtotal $30,351   $8,045 377%  
Renewable energy research $2,000 Energy Efficiency and Renewable Energy (EERE) programs (not including building, vehicle, or industrial technologies; or weatherization assistance, state energy, tribal energy, federal energy management). $1,159 173%  
Dept. of Energy Advanced Research Project Agency to accelerate the innovation cycle for both traditional and alternative energy sources and energy efficiency. $400 Innovative Technology Guarantee Loan Program. $6 6,667%  
Carbon capture-and-sequestration research for coal-fired power plants. $2,400 Clean Coal Power Initiative, Futuregen, and Clean Coal Technology Program. $311 772%  
U.S. Fish & Wildlife Service facilities construction, with emphasis on energy efficiency and renewable energy. $300 U.S. Fish and Wildlife Service: construction, improvement, acquisition, or removal of buildings and other facilities required in the conservation, management, investigation, protection, and utilization of fishery and wildlife resources, and the acquisition of lands and interests (no mention of energy). $34 882% Energy efficiency and renewable energy spending was a subset of 2009 program.
Renewable energy and alternative energy subtotal $5,100   $1,510 338%  
General Services Administration (GSA) program to purchase alternative fuel vehicles and plug-in hybrids for federal fleets. $600 Federal Transit Authority’s clean fuel bus grant program. $73 822%  
Electrification of transportation to reduce emissions. $200       We could not identify a program comparable to stimulus package proposal.
Alternative-fueled vehicles pilot grant program. $400       We could not identify a program comparable to stimulus package proposal.
Advanced battery research loans and grants. $2,000 Vehicle technologies: advanced battery storage technology research, development, and demonstration for electric, hybrid-electric, and plug-in hybrid vehicles; advanced combustion engine research and development, materials technology, fuels technology, and technology integration. $215 930%  
Diesel Emissions Reduction Act (DERA) Grants and Loans. $300 Diesel Emissions Reduction Act (DERA) Grants and Loans. $49 612% Authorized in Energy Policy Act of 2005.
Clean vehicles subtotal $3,500   $337 1,039%  
New transit construction. $1,000 Urbanized area programs; bus and bus facility grants; over-the-road bus; planning programs; National Transit Database; alternatives analysis program; alternative transportation for parks and public lands. $6,388 16%  
Transit upgrades and repair. $2,000 Fixed guideway modernization for trains and other conveyances with an exclusive right of way. $1,309 153%  
Transit capital assistance. $6,000 Capital investment grants for new transit projects. $1,569 382%  
Amtrak and intercity passenger rail construction grants. $1,100 Operations, capital improvements, and debt service to the National Railroad Passenger Corporation (Amtrak). $1,325 83%  
Transit subtotal $10,100   $10,591 95%  
Workforce Investment Act: Green jobs allocation. $500       We could not identify a program comparable to stimulus package proposal.
Total $68,551   $20,623 332%  

*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.

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Daniel J. Weiss

Senior Fellow