By Andris E. Cukurs, CEO, Suzlon Energy Ltd.
No matter their political party, lawmakers agree the U.S. must begin generating millions of jobs if it is to regain its economic vitality. As for President Obama, he considers jobs “our No. 1 focus in 2010.”
That’s why it’s hard to believe Congress hasn’t yet passed legislation essential if America is to continue attracting many tens of thousands of clean-energy jobs. Moreover, the right bill would reduce our dependency on foreign oil.
Such legislation would approve a national renewable electricity standard, or RES. It would require electric utilities to obtain a certain percentage — presumably 12-to-20 percent — of their power by 2020 from wind and other alternative energy sources. The House of Representatives passed a bill in June that set a 15 percent requirement, but the Senate did not take it up in the last Congressional session. Now it must be cleared by both Houses.
A strong move in the Senate to consider RES legislation has begun, involving a bipartisan group of lawmakers. Bills already submitted or being prepared would eliminate or soften opposition from utilities and Senators from regions where wind and solar power production lags behind the rest of the country. Senate RES proponents want Congressional consideration soon.
Why is a national RES necessary? In the U.S., the explosive growth of the industry ranks among the most important energy developments of this young century. From a nascent industry just a decade ago, it has generated more than 20,000 U.S. manufacturing jobs with another 65,000 related jobs spread across the economy.
In the past two years alone, nearly $3 billion in 100-plus U.S. manufacturing facilities have been added, announced or expanded. Most important, companies from critical industries are flocking to the American wind industry for new business and growth opportunities.
If Congress adopted a national RES that required utilities to get 15 percent of their electricity from renewable sources by 2020, that standard would, it is estimated, create demand for as much as 100 gigawatts of new wind capacity by that year — enough to power 9 million homes.
A national RES also is critical to the U.S. because, without it, utilities are hesitant to clear long-term deals for renewable energy.
Banks have begun once again to undertake routine project financing and the Energy Department is awarding grants for U.S. renewable-energy projects. Still, in establishing a mandatory target for the percentage of electricity that must come from alternative energy by a certain year, a national standard would help in gaining the funds needed for new projects.
And a national standard would spark plenty of new green jobs. A study released in February by Navigant Consulting, the major global consultancy in energy, estimates that a 20 percent renewable-energy standard in the U.S. by 2020 would generate 191,000 more jobs.
Where U.S. Jobs Could Emerge
The Navigant Consulting study indicates that a national RES would stimulate job growth in the wind, solar, biomass, waste-to-energy and hydropower industries that would benefit the Southeastern U.S. and manufacturing states in particular. It also would complement tax benefits and ensure both the preservation and creation of jobs throughout rural America, researchers say.
“- Louisiana, Alabama, Kentucky, Tennessee, Georgia and Florida, which will profit from substantial biomass and municipal solid waste-to-energy
“- Ohio, Michigan, Pennsylvania and Indiana, which will gain from growth in manufacturing for a wide range of technologies
“- North and South Dakota, Iowa, Kansas, Nebraska and Illinois, home to major wind resources
“- Colorado, Arizona, Oregon and California, where solar, wind and hydropower have significant growth potential
“- States that do not currently have renewables standards or targets like Indiana, Florida, Virginia, Kentucky, Tennessee, Georgia, Arkansas, Oklahoma and Alabama
The benefits of a national RES for Southern states are significant, especially since many Southern lawmakers are skeptical about the benefits of a national energy policy for their states. The national RES provisions are included in a comprehensive national energy policy bill.
In its research and interviews, Navigant Consulting found several common themes from both domestic and foreign manufacturing firms, and they relate to job creation.
First, companies are most likely to locate manufacturing facilities where the market for their products is and will be over the long-term. Second, on-again, off-again short-term tax credits don’t guarantee a long-term market for renewable electricity. Third, a strong national RES guarantees a long-term market for renewable electricity.
Fourth, a strong national RES is more likely to support more American manufacturing jobs than several short-term tax-credit extensions would. That’s because companies tend to locate production facilities in regions with long-term demand.
Americans Strongly Support Alternative Fuel Sources
In survey after survey, Americans overwhelmingly favor development of renewable-energy sources to reduce or eliminate the country’s dependence on foreign oil and to create green jobs. In one of the most recent surveys, released in late January, the Yale Climate Project and the George Mason University Center for Climate Change Communication found that 85 percent of respondents favor more research on renewable energy such as wind power.
At the same time, however, while they are willing to support wind energy, Americans want to make sure that wind energy won’t lead to higher electricity bills. That’s unlikely since wind is one of the most cost-competitive energy resources. The cost of electricity from the wind has dropped to near 4 cents per kilowatt hour in 2008 from 25 cents in 1981, the Energy Department reports. And analysis by the department’s Lawrence Berkeley Lab found that wind prices have been competitive with wholesale power since 2003.
Surveys also maintain that a national RES will lower energy bills. For instance, energy research firm Wood Mackenzie found that an RES would reduce natural gas prices and save more than $100 billion in electricity costs by 2026.
And the Union of Concerned Scientists’ 2030 National Blueprint for a Clean Energy Economy figures net annual savings from reductions in electricity and fuel use from a national RES at $255 billion by 2030. The study concludes that businesses, and homeowners, in every region of the country including coal-dependent regions would share in those savings.
In addition, U.S. lawmakers believe a national RES would revitalize rural America since farmers and rural land owners in windy areas can receive payments of $3,000-8,000 per wind turbine per year while also still working their land.
Will Electric Utilities Still Strongly Oppose RES?
In his State of the Union address in late January, President Obama backed the bipartisan effort in the Senate, saying he was “eager” to help that effort. And he reiterated his support for a bill with incentives “that will finally make clean energy the profitable kind of energy in America.”
It’s still unclear whether the electric utility industry will continue to oppose legislation of the type being considered or introduced by Senators who favor a national RES. Utilities invested in coal-fired power plants are expected to keep up their vigorous opposition. But many utilities, such as Pacific Gas & Electric, Exelon Corp. and Duke Energy, are actually moving heavily into wind and solar.
Passage of a U.S. national RES remains uncertain, but Congress has a history of doing what’s right, especially when the issues relate to staying competitive internationally in an emerging technology or field. U.S. lawmakers also increasingly recognize that by setting mandatory renewable-electricity standards, the U.S. will secure more clean-energy jobs and will help the country become independent from foreign oil, a top priority for their constituents.
In fact, in a January 2010 survey by the pollster Frank Luntz, launched in conjunction with Environmental Defense Fund, 48 percent of respondents cited ending dependence on foreign fuels as the most important environmental and economic goal going forward.
For the sake of jobs – meaningful green and clean jobs – and energy independence, I hope Congress will act soon and pass a national renewable-electricity standard.
Author: Andris (Andy) E. Cukurs is chief executive officer of North American operations of India-based Suzlon Energy Ltd., the world’s third-largest wind turbine manufacturer.