A Primer on the U.S. Clean Energy Economy: What It Is, Why It Matters

Is steering large sums of federal money into America's clean energy economy worth the risk? The question is now at the forefront of national debate, and the answer often divides along party lines.

Environmentalists, unions, many state lawmakers and Congressional Democrats say clean energy spending can power a job engine. Free market advocates and conservative Republicans say green subsidies are wasteful and political. For evidence they look no further than Solyndra, the solar panel maker that landed $528 million in taxpayer loans before going bankrupt.

But what does the economic data show? Have clean energy tax incentives and policies sparked meaningful employment gains and private investment?  

The answer appears to be yes. But attempts to quantify the size, scope and benefits of the fledgling U.S. clean economy are still in their earliest stages. Even the definition of what constitutes the clean economy, or what qualifies as a clean or green job, are not fully settled. Supporters say accumulating a body of statistical evidence could help push the national debate past partisan politics. "It's critical to have this kind of information," said Mark Muro, a senior fellow at the nonprofit Brookings Institution and co-author of the group's 2011 green jobs study.

Here's a primer on what we know about America's clean economy so far—what it is, how it rose to prominence over the past decade and who's taking the lead as Congress dawdles on a national clean energy agenda.

What exactly is a clean energy economy?

Broadly defined, a clean economy is a segment of an economic system in which supply chains are transformed to meet demand for low-carbon energy technologies. It's based on a simple but controversial idea: that cutting global warming emissions from burning fossil fuels and shifting to clean energy can unleash economic growth and job creation.

There are three definitions of what constitutes a clean economy. The first comes from Pew Charitable Trusts, a Washington policy group. The others were developed by Eurostat, the EU's official statistics agency, and the U.S. Bureau of Labor Statistics.

Pew's definition was introduced in its 2009 jobs report, "The Clean Energy Economy," and includes nearly 80 industries across five categories: clean energy production and generation; energy efficiency; reduction of greenhouse gas emissions; water conservation, sewage treatment and recycling; and worker training in these areas.

The emphasis is on innovation and the scope is "narrow," said Phyllis Cuttino, author of the Pew report and director of the Pew Environment Group's clean energy program. For one it doesn't cover nuclear energy, though it does count businesses involved in natural gas production and carbon capture and storage systems for coal plants. Pew also leaves out non-green businesses or agencies that employ people to making their operations greener.