The Clean Energy Economy
|September 06 2009|
America’s clean energy economy is dawning as a critical component of the nation’s future.
Research by The Pew Charitable Trusts shows that despite a lack of sustained policy attention and investment, the emerging clean energy economy has grown considerably—extending to all 50 states, engaging a wide variety of workers and generating new industries. Between 1998 and 2007, its jobs grew at a faster rate than overall jobs.
Like all other sectors, the clean energy economy has been hit by the recession, but investments in clean technology have fared far better in the past year than venture capital overall. Looking forward, the clean energy economy has tremendous potential for growth, as investments continue to flow from both the government and private sector and federal and state policy makers increasingly push for reforms that will both spur economic renewal and sustain the environment.
By 2007, more than 68,200 businesses across all 50 states and the District of Columbia accounted for about 770,000 jobs that achieve the double bottom line of economic growth and environmental sustainability (Exhibit 1).
Pew’s research indicates a strong start for a new economy still very much in its infancy.
To put our clean energy economy numbers in perspective, consider the following. Biotechnology, which has developed applications for agriculture, consumer products, the environment and health care and has been the focus of significant public policy and government and private investment, employed fewer than 200,000 workers, or about a tenth of a percent of total U.S. jobs in 2007, according to a 2008 Ernst & Young report. And the well-established traditional energy sector—including utilities, coal mining and oil and gas extraction, industries that have received significant government investment—comprised about 1.27 million workers in 2007, or about 1 percent of total employment.
Growing attention and financial support from both the private and public sectors indicate that the clean energy economy is poised to expand significantly. Signaling interest in new market opportunities, venture capital investment in clean technology crossed the $1 billion threshold in 2005 and continued to grow substantially, totaling about $12.6 billion during the past three years.
Although they have dropped significantly in recent months because of the recession, investments in clean technology are actually faring better than other industries: They were down 48 percent in the first three months of 2009 compared with a year earlier, while total venture capital across all sectors was down 61 percent for the same period. “It’s important not to miss the forest for the trees,” Nicholas Parker, executive chairman of the Cleantech Group, said in January 2009. “In 2008, there was a quantum leap in talent, resources and institutional appetite for clean technologies. Now, more than ever, clean technologies represent the biggest opportunities for job and wealth creation.”
Between 2006 and 2008, 40 states and the District of Columbia attracted venture capital investments in technologies and industries aimed at economic growth and environmental sustainability. And all states will receive a major infusion of federal funds through the recently enacted American Recovery and Reinvestment Act (ARRA), which allocates nearly $85 billion in direct spending and tax incentives for energy- and transportation-related programs.
PDF format, 1.3MB, 61Pages.
The Clean Energy Economy
Today, every state has a piece of the clean energy economy. But there will be winners and losers going forward. Policy makers who act quickly and effectively could see their states flourish, while others may lose opportunities for new jobs, businesses and investments. State leaders recognize this, and a growing number are pursuing measures such as financial incentives for clean energy generation and energy efficiency, renewable energy and energy efficiency standards, and laws to reduce vehicle emissions.
Through ARRA, the federal government has made an extraordinary investment that will give these and other efforts a significant boost. But to realize the clean energy economy’s full potential, the nation needs a comprehensive, economy-wide energy plan. President Obama has expressed his support for a federal market-based system that would substantially reduce greenhouse gas emissions, and national standards that would help America draw more of its energy supply from clean, renewable sources and achieve greater energy efficiency. Those federal and state policies, together with continued private-sector support, will position the United States as a leader in the global clean energy economy.
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