The United States in the 21st century faces an enormous challenge—successfully managing the transformation from a predominantly carbon-intensive economy to becoming a predominantly clean energy-based economy.

The reality of global climate change due to rising carbon emissions makes it imperative that the U.S. economy dramatically cut its consumption of traditional fossil fuels, the primary source of carbon dioxide (CO2) delivered into our atmosphere by human activity. Rising levels of CO2 in the atmosphere is in turn the primary cause of global warming.

This economic transformation will engage a huge range of people and activities. But there are only three interrelated objectives that will define the entire enterprise:

• Dramatically increasing energy efficiency.
• Dramatically lowering the cost of supplying energy from such renewable sources of energy as solar, wind and biomass.
• Mandating limits and then establishing a price on pollution from the burning of oil, coal, and natural gas.

It is crucial for economic policymakers and the American people to understand the likely effects of these three overarching objectives as much as possible. Specifically, we need to gauge our success in curbing CO2 emissions alongside the broader effects on the U.S. economy, particularly on employment opportunities, economic growth and people’s incomes.

This paper examines these broader economic considerations—jobs, incomes, and economic growth—through the lens of two government initiatives this year by the Obama administration and Congress. The first is the set of clean-energy provisions incorporated within the American Recovery and Reinvestment Act, initiated by the Obama administration and passed into law by Congress in February. The second is the proposed American Clean Energy and Security Act, co-sponsored by Rep. Henry Waxman (D-CA) and Rep. Edward Markey (D-MA), which is now before Congress. ...

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The Economic Benefits of Investing in Clean Energy
How the economic stimulus program and new legislation can boost U.S. economic growth and employment

Robert Pollin, James Heintz, and Heidi Garrett-Peltier June 2009
Department of Economics and Political Economy Research Institute (PERI)
University of Massachusetts, Amherst

CONTENTS
1 Introduction and summary
5 Understanding the economic stimulus program and new clean-energy legislation
14 Creating $150 billion a year in clean-energy investments
21 Methodologies for estimating employment and GDP growth
27 Job creation through clean-energy investments
40 Forecasting the impact of a carbon cap on economic growth
46 Conclusion
48 Appendix 1: Technical methods
57 Appendix 2: The employment impact of clean-energy investments across individual states
61 References
63 Endnotes
65 About the authors and acknowledgments

ABOUT THE AUTHORS
Robert Pollin is professor of economics and co-director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. James Heintz is associate research professor and associate director of PERI. Heidi Garrett-Peltier is a PERI research fellow. Their recent research studies include “Green Recovery: A New Program to Create Good Jobs and Start Building a Low-Carbon Economy” (September 2008), published in collaboration with the Center for American Progress.

About the Center for American Progress
The Center for American Progress is a nonpartisan research and educational institute dedicated to promoting a strong, just and free America that ensures opportunity for all.

We believe that Americans are bound together by a common commitment to these values and we aspire to ensure that our national policies reflect these values. We work to find progressive and pragmatic solutions to significant domestic and international problems and develop policy proposals that foster a government that is “of the people, by the people, and for the people.”

About the Political Economy Research Institute
The Political Economy Research Institute (PERI) promotes human and ecological well-being through our original research. Our approach is to translate what we learn into workable policy proposals that are capable of improving life on our planet today and in the future.

In the words of the late Professor Robert Heilbroner, we at PERI “strive to make a workable science out of morality.” Established in 1998, PERI is an independent unit of the University of Massachusetts, Amherst, with close ties to the Department of Economics.

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