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

Attempts to quantify the size, scope and benefits of the fledgling clean economy are in their earliest stages. What do we know so far?

A youth-led green jobs rally in Washington in Oct. 2009
A youth-led green jobs rally in Washington in Oct. 2009. That same year Pew Charitable Trusts released the nation's first quantitative assessment of the U.S. clean conomy. Credit: UOPowerShift09, flickr

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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. 

The 2009 definition by Eurostat, the EU statistics agency, casts a wider net. In addition to industries covered by Pew, its definition includes nuclear power firms, plus those that protect wildlife and plant species and restore mining sites and polluted waterways, among others. Eurostat doesn’t offer a list of individual sectors. 

The most recent definition, crafted by the U.S. Bureau of Labor Statistics (BLS) in 2010, mirrors Eurostat’s definition, but it does tally sectors. The agency counts more than 330 industries out of nearly 1,200 total U.S. industries. The BLS expects to produce its first national green jobs count this spring.

Brookings used a mix of Eurostat and BLS definitions for its 2011 “Sizing the Clean Economy” report, the most recent tally of U.S. clean economy jobs. States also tend to use these definitions, said Muro of Brookings.

What are clean economy jobs?

The answer depends on which definition of clean economy you choose. Under Pew’s definition, a clean economy job is largely energy-related with positions ranging from solar panel installers to engineers who design fuel-efficient motor engines. Eurostat and BLS cover nearly every industry promoting sustainability, from organic meat producers and mass transit workers to national park rangers.

Is a clean economy different from a green economy?

Technically, yes. The green economy is broader. Definitions aside, clean economy has become the term of choice in the United States. 

For its 2009 study, Pew polled 2,000 people on the phrase “green jobs” and found that most participants had vague and vastly different understandings of what that meant. “‘Green’ isn’t really a word that captures much,” Cuttino said the survey revealed.

Pew researchers chose “clean energy economy,” a phrase that had been circulating in Washington policy circles. They wanted to capture the idea of innovation and felt “clean” came closer. Participants said the phrase was “a more apt description,” Cuttino said. “They were more likely to understand it and identify it.”

Muro of Brookings, whose report uses clean more than green, said the green economy definitions still provide a more accurate snapshot of the state of the U.S. clean economy. “Many green sectors that may not be tied to innovation … actually do produce jobs.”

How big is the U.S. clean energy economy?

According to Pew’s 2009 report, some 68,200 clean economy businesses in all 50 states employed 770,000 people in 2007. The report tracked clean economic growth from 1997 to 2007. The organization is slated to publish an updated study this summer.

The July 2011 report of Brookings found that in 2010, the clean economy had more than 41,100 businesses, employing 2.7 million workers, or two percent of the U.S. workforce. Fossil fuel industries, by comparison, employed 2.4 million people, it said. (In contrast to Pew, Brookings did not count firms with fewer than five employees, which accounts for why its tally of businesses is much smaller.)

The birth of the clean economywho advanced the concept, when and why?

The idea dates to the late 1990s, according to the handful of economic and political experts interviewed for this story.

At that time environmentalists were making strides in shutting coal plants and tightening federal regulations on acid rain and smog-forming chemicals. Globally, momentum was building to put a price on carbon emissions. More than 80 countries signed the Kyoto Protocol, the 1997 UN treaty that requires industrialized countries to reduce greenhouse gas emissions. (The United States was a major force in advancing Kyoto talks, but ultimately never ratified the treaty.)

Increasingly, environmentalists were running up against a major obstacle, said Bracken Hendricks, a senior fellow at the Center for American Progress, who was one of the earliest advocates of the clean economy. Labor unions and fossil fuel interests were viewing pollution controls as job killers, and they were fighting to block them.

Throughout the late 1990s and early 2000s, Hendricks said the “jobs versus the environment” battle pervaded his policy workfirst as a special assistant to then-Vice President Al Gore, and later as an economic analyst at the Working for America Institute, an economic group tied to the AFL-CIO, the nation’s largest labor union. There, he said, he developed strategies to empower communities and defend workers’ rights—all of which he realized could be approached “through a green lens.”

Others were thinking along the same lines. And Hendricks and a small group of community and political leaders began to rally around an idea: that investment in clean energy “could be incredibly job-creating,” he said.

Their thinking coincided with the Sept. 11, 2001, terrorist attacks, which propelled America’s interest in developing domestic energy to replace foreign oil. Sensing opportunity Hendricks co-founded and became executive director of the Apollo Alliance. The goal was to develop national, state and local policies to stimulate investment in clean energy and boost employment.

“Figuring out how to move this private sector was at the heart of this agenda,” he said.

Apollo brought union leaders, community activists and major environmental groups together with energy companies for the first time. It gained support of prominent community leaders like Van Jones, a social justice advocate in Oakland, Calif., and co-founder of the Ella Baker Center for Human Rights, who joined Apollo’s board soon after it formed.

The groups worked together but at different levels. Jones and the Ella Baker Center worked to unify the labor and environmental movements in the San Francisco area around green jobs, while Apollo tried to influence policymakers at the national level.

When did Washington start to take notice?

It wasn’t until the 2004 presidential election that clean economy concepts made it to the national stage, Hendricks said. In the few years that followed green jobs became a cornerstone issue for Democrats.

Worldwide similar discussions were taking place.

In October 2006, the acclaimed economist Lord Nicholas Stern released his seminal report on the cost of climate change to the world economy. The report concluded that doing nothing to slow global warming would deflate the global economy by one-fifth, but investing in renewables and efficiency would yield “a wide range of opportunities for growth and development along the way.”

In February 2007, former president Bill Clinton took up that theme in a speech to the House Democratic Caucus, in which he urged lawmakers to help overhaul how the nation produces and consumes energy. “We ought to pursue this relentlessly. There are millions of jobs to be created,” he told the caucus.

Months later the first green jobs bill, the Green Jobs Act of 2007, was introduced in Congress. Apollo helped craft the measure with Green for All, a then-new initiative by Van Jones. The provision authorized $125 million a year for green jobs training. It was later folded into the Bush administration’s Energy Independence and Security Act of 2007. It wasn’t funded until two years later.

In 2008, the green jobs debate broadened to address calls for a new economic system that could meet growing demand for renewable power.

That year Hendricks and Rep. Jay Inslee (D-Wash.), one of the early champions of the clean economy in Congress, published a book called “Apollo’s Fire: Igniting America’s Clean Energy Economy.” In it they told stories of how clean energy investments were transforming supply chains and local economies nationwide. It was one of the first publications to use the term “clean energy economy,” and it helped cement its use. Clinton provided the forward, calling the book “a field guide for our future.”

The clean economy and the recession—what’s the connection?

By the 2008 presidential elections the clean economy had become a frequent topic on the campaign trails of both parties. “With green technologies, we can create thousands, millions of jobs in America,” declared Sen. John McCain (R-Ariz.), the GOP nominee, in a campaign speech.

The idea became more popular as the global economic downturn spread and millions of Americans lost their jobs.

President Obama’s 2009 stimulus bill provided more than $50 billion, or six percent of all spending, to spur renewable energy deployment and clean energy industries and jobs. The stimulus included $2.3 billion in tax credits for clean energy manufacturers and $500 million to fund the green job training programs that were part of the 2007 energy act. Hendricks, who by then was working with the Center for American Progress, helped craft the measure’s clean economy components.

Later that year Pew released the first study quantifying the U.S. clean economy. And in his 2010 State of the Union address, Obama mentioned the clean economy. “The nation that leads the clean energy economy will be the nation that leads the global economy,” he said. In California, clean economy sectors shed fewer jobs than the overall economy during the economic slump, according to research released this month.

Where do things stand at the federal level?

Experts say federal support of the clean economy has arrived at a crossroads.

Federal stimulus programs that helped propel clean technologies to commercial scale are drying up. Popular subsidies like the 1603 Treasury cash grant program for small solar firms and the loan guarantee program for large-scale renewable energy installations have expired. Others, most notably the wind production tax credit, are facing expiration this year.

The government so far has failed to implement a national clean energy standard that would set a requirement for low-carbon production and ignite demand for rooftop solar and wind farms. “A lot of the public policy we have in place is disappearing, and a lot of the public policy that we don’t have, we desperately need,” Cuttino of Pew said.

Who’s opposed to clean economy spending, and why?

Republicans in Congress have grown increasingly opposed to taxpayer-backed clean energy programs. They are supported by fossil fuel industry interests and libertarian think tanks.

One of the organizations, the Heritage Foundation, a conservative research group, told InsideClimate News that it supports clean economic growth if it’s fueled by the free market. “This notion that the government can double down to make [the clean economy] economically viable … is not true,” said Nick Loris, an analyst at Heritage. Government spending “merely shifts labor and capital from one sector of the economy … to another sector of the economy,” he said.

Loris said that a low-carbon economy is possible if there is natural market demand for it. “I just don’t think it can happen as quickly as politicians want it to happen.”

Where’s most of the clean economy action today?

States, cities and municipalities are driving efforts to build the clean economy, experts agreed.

More than two-thirds of states have renewable or clean portfolio standards and every state but four has at least one clean economy policy, according to a report last month from the National Governors Association. Ten states participate in California’s Advanced Clean Car program, which requires them to put thousands of electric cars and other zero-emissions vehicles on their roads. These and other such policies give investors certainty that demand for clean technologies will remain over time, despite the logjam in Washington.

Still, according to the Brookings report, much of state and city clean economy action is in waste management, water treatment and public transit—not clean energy. Roughly 750,000 people, or one-fourth of its jobs count, worked in these sectors in 2010. In the Pew report, some 500,000 jobs, or 65 percent of all positions, were in water conservation, recycling or air-pollution mitigationin 2007.

The clean economy and the ‘China card’: is there really cause for concern?

Data shows that China is inching ahead of America in a neck-and-neck race to capture the largest single share of the global clean economy.

China accounted forhalf of the world’s solar panel production in 2010—the most of any nation, a giant leap from 2008. The U.S. accounts for less than 10 percent of global solar manufacturing. Meanwhile, China became the world’s largest maker of wind turbines in 2009, and remains in the top spot.

Beijing has been spending heavily to develop its domestic clean energy market. It spent $33 billion on solar subsidies alone in 2010. By comparison, Obama’s 2009 stimulus bill provided more than $50 billion across all renewables sectors to be spent over four years.

On the demand side China is quickly catching up. In 2011, China quadrupled its installed solar capacity from 2010, bringing its total to 2,000 megawatts. The number of U.S. solar installations increased 50 percent in the third quarter of 2011 over last year to 3,100 megawatts, according to the latest industry data.

China installed 44 percent of the world’s wind energy installations in 2011, the most of any nation. It’s now the world’s leading wind producer with nearly 63,000 megawatts. The United States installed about 17 percent of the global share last year, growing its installed wind capacity to almost 47,000 megawatts and putting it in second place globally.

Both countries continue to attract multi-billion dollar investments. The U.S. led the world in renewable energy investments before falling behind China in 2009 and 2010. Last year it reclaimed the top spot by raising nearly $56 billion, a more than 30 percent increase over 2010, which was spurred by a race to use expiring federal subsidies, according to Bloomberg New Energy Finance. China came in second.

Correction: An earlier version of this article misspelled the surname of the director of the Pew Environment Group’s clean energy program. She is Phyllis Cuttino, not Cutino.