Such calculations don’t even factor in the cost of not going green. In 2006 Sir Nicholas Stern, former chief economist for the World Bank, investigated the consequences of climate change for the British government. He reported that a two- to three-degree Celsius temperature rise could depress global economic output by up to three percent by killing fish, reducing water supplies, lowering crop yields, and displacing people along coastlines. At a five- or six-degree rise—which Stern says “is a real possibility for the next century”—the loss could reach 10 percent. Increases above that “would take us into territory unknown to human experience,” Stern wrote, “and involve radical changes in the world around us.”
Even so, the green future has its skeptics. Last year the American Council for Capital Formation (ACCF), a business group that favors smaller government, and the National Association of Manufacturers released a study arguing that a shift toward cleaner energy would shave up to 2.7 percent off the gross domestic product and cost up to four million jobs by 2030. “Wind, solar, and biomass are still more expensive than conventional fuel,” says Margo Thorning, the ACCF’s chief economist. Under a green strategy, she says, “the gears of our economy are gummed up by higher energy prices. That means industries that depend highly on energy tend to move, if they can, to countries where they don’t have these kinds of restrictions. You get more jobs in renewables, but you’re going to lose jobs overall because the economy has got a ball and chain around its foot.”
Other economists, though, insist the ACCF’s study is based on a pessimistic view of human behavior. “All of these models freeze the economy and don’t allow for adaptation, innovation, and technological change. So they always spit out horrible results,” says natural resource economist Thomas Power, a professor emeritus at the University of Montana. “They’re defaming market economies and entrepreneurial innovation by acting as if we’re all morons.” Even if the ACCF model holds true, Power notes, it still forecasts rapid growth under all scenarios—“but ever-so-slightly slower growth” with renewables. “The outcome they depict is in no way some sort of economic catastrophe.”
Moving toward a green economy will take steady government commitment, something that until now has been missing. “Let’s face it, the United States was really the leader in most of these technologies in the beginning,” says Marlene O’Sullivan, an industrial engineer at the German Aerospace Center in Stuttgart. “Then it just didn’t make it anywhere because there was no support politically.”
Americans get four percent of their electricity from wind, solar, biomass, and geothermal sources. Germany, by contrast, derives more than 10 percent of its electricity from these sources and plans to pass the 25 percent mark by 2020. A “feed-in tariff” allows Germans who generate their own renewable power to sell some of it back to the grid at above-market prices (see “Clean Break,” March-April 2009). The government also underwrites photovoltaic research and provides incentives for companies to locate in financially beleaguered eastern Germany. That has turned the east into a solar hotbed—“a minor Silicon Valley,” says Ulrike Lehr, an economist and physicist at the Institute of Economic Structures Research in Osnabrück.
Feed-in tariffs have now triggered interest in the United States. In Florida the Gainesville Regional Utility implemented the nation’s first tariff, in March, starting with 27 businesses and eight households that use solar energy, according to theGainesville Sun. Similar schemes are under consideration in states including Michigan, Oregon, California, Hawaii, and Washington.
Perhaps the most critical piece of a clean economic-development strategy is a massive federal investment in research and infrastructure. Green jobs will largely come from the private sector, but currently not all renewable energy is financially competitive with cheap fossil fuels like coal. It will be up to the government to tilt the balance. That’s why green-job advocates eagerly followed President Obama’s stimulus legislation as it progressed through Congress last winter. Many were pleased by the results. By the Center for American Progress’s middle-of-the-road calculation, the $789 billion package includes $71 billion in spending on clean energy projects and $20 billion in tax incentives for projects that benefit the environment. “It is actually the largest single topical component of the stimulus package,” notes Kammen, the Berkeley energy professor. “This in itself is remarkable, and is more than then-candidate Obama called for.”
A good chunk of the money goes to energy efficiency, including $5 billion to weatherize houses, $4.5 billion to renovate federal buildings, and $6.3 billion in grants to state and local governments. The bill also includes $17.7 billion for transit and rail construction, $11 billion to modernize the electric grid, and $6 billion in loan guarantees for renewable-energy projects. It sets aside $500 million for green-job training. It funds research into renewables, efficiency, automobile batteries, and carbon sequestration. Obama says the stimulus will double the nation’s renewable-energy generating capacity over the next three years.