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Millions of Sustainability Jobs? In Your Dreams

A Google search for “millions of green jobs” yields 380,000 references. Every week there’s another report showing how, if the US plays its public policy cards right, we’ll soon be producing most of our energy from “clean,” renewable wind and solar sources, driving around in electric cars that will deliver power back to the grid, and living in super-energy-efficient homes. And, by the way, all of this will create millions of jobs for equipment installers and repairers, and the US will enjoy a renaissance in manufacturing where it will once again be a world leader with more millions of high paying jobs making the kit this new green energy economy will demand.

Promoting this utopian green vision is convenient “lifeboat talk” for many in the political establishment, designed to encourage a dejected public at a time when the economy is barely growing, standards of living are falling and jobs are continuing to migrate overseas. Worse, in an effort to force the pace at which this grand vision will become reality, tens of billions of dollars of taxpayer money in grants, loan guarantees, and tax credits have been shoveled into frequently speculative technologies and even more risky individual companies

Precisely because the vision of “millions of green jobs” now equates to billions of dollars in grants and subsidies to support their development, all sorts of organizations with heavily vested interests are conducting “research” into how many green jobs will be created if a certain set of public policies is implemented. Needless to say, the definition of a green job has been stretched every which way to suit the particular agenda of whatever organization is doing the research.

This has led to some truly extraordinary projections and statistics. A particularly fanciful study was conducted by the American Solar Energy Society in 2009. It examined the number of green jobs that will be created in the US in renewable energy and energy efficiency by 2030 and found that the largest categories of green jobs created in these industries will be accountants and cashiers. Presumably, if I work stacking shelves in Safeway with organic food products and CFLs, I have a green job, whereas a few years ago I didn’t because the store only sold regular foods and incandescent lightbulbs.

A recent book, “The False Promise of Green Energy”, does a fine job of debunking the long list of fallacies inherent in this bogus research on “millions of green jobs” – much of it paid for with  government grants – purporting to lay out the economic benefits of plowing huge sums of taxpayer money into efforts to create them.

The models examined in the book are all over the lot in terms of the range, nature and timing of the “green jobs” that can be created by various public policy options, and most are based on extremely questionable assumptions that fly in the face of historical economic reality. The book also highlights other fallacies associated with the overhyped green jobs concept, with a particular focus on renewable energy. For example:

1.    It’s financially unfeasible to scale energy production from renewable sources using existing or foreseeable technology to a level where it makes a major difference anytime soon in how we power our economy.

2.    Even if that were possible, the notion that the equipment would be largely manufactured in the US is fantasy. China and other low labor cost nations have mastered the business of manufacturing just about everything else that was made in the US 40 years ago. Why won’t they do it in the energy equipment space?

3.    The private sector can’t figure out how to get a respectable ROI in the renewable energy space so the industry in the US only exists on the back of extensive taxpayer subsidies. Government’s track record of picking winners in entire technologies, let alone in individual companies, is lousy. In any case, does anyone seriously believe we can outspend China in a renewable energy subsidy competition!?

The recent high-profile bankruptcies of several energy technology companies funded with large amounts of taxpayer money illustrate these problems and show that this type of flawed government policy is imposing a tax on all of us that is no less unacceptable than raising income tax rates across the board. And will it really generate many jobs? How many of you would bet that Tesla Motors, to which the DOE has loaned $465 million to produce cars costing north of $50K, will ever match GM in terms of employment?

Dave Gold, a partner in Access Venture Partners has long argued in his Green Gold Blog that government shouldn’t be involved in the business of investing in specific technologies, let alone individual companies: he says it’s bad policy and bad politics. Like “The False Promise”, Gold argues that the role of government on the one hand is to invest in basic research on which no one else will take a flyer (think NASA-related research) and, on the other, to level the economic playing field: e.g. eliminate subsidies to ALL forms of energy production and cleantech, and put a tax on things we don’t like such as gasoline consumption and plastic bags. Then get out of the way and let the private sector figure out how best to allocate resources to specific technologies and companies.

Green jobs thinking is greatly overblown. The notion that the US should pursue a policy of channeling huge amounts of public funds into the development of renewable energy and related cleantech is seriously flawed, particularly in light of our massive and increasing national debt and the fact that Congress seems incapable of organizing a whelk stall, let alone an energy policy. Whelk Stall? Look it up.

Graham Russell is Founder & Principal at Trupoint Advisors, which helps companies achieve strategic success through sustainable business initiatives. www.trupointadvisors.com. Russell writes and speaks on the subject of sustainable business and teaches sustainability in the University of Colorado Denver MBA program. 

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7 thoughts on “Millions of Sustainability Jobs? In Your Dreams

  1. I think you are correct in your pessimistic viewpoint that green jobs will somehow be bolted onto an economic system that cannot value natural capital, as these will mainly be token green jobs. You can’t generate green jobs in “old testament” economics, but green jobs are part of “new testament” ecocommerce. The essence of the new economic movement is the incorporation of natural capital into the equation. Leaving natural capital, the greatest economic engine ever gifted to humankind, on the side of the road, is the economic black hole for the emerging [green]economy. Bringing natural capital into the economic equation, the so-called “Grand Experiment” is now possible due to GIS, cloud computing and web-interactions.

  2. As in many other subjects, we cannot look at one item in isolation. Indeed any claim of ‘new jobs’ must include how many ‘old jobs’ are replaced by these new jobs, how many old jobs are lost unreplaced, and how many jobs would have been lost but for the economic activity resulting from the new jobs.

    By way of how vested interests twist the message one must also consider the definition of ‘job’. Apparently some take it to be job-years, ie if there are 10 jobs created that last 10 years they will count it as 100 jobs. Recently there was great (intentional) confusion in California regarding the job impact of high-speed rail. Proponents were claiming 10 million jobs, while it was found that the actual was closer to being between 10-20 thousand. Job-years vs jobs was the major cause of the discrepancy.

    If indeed the capitalism system is THE best, why indeed do we need the government to support any part of innovation. Because other governments such as China, India, and EU do. I like the idea of removing support for commercializing any industry, but that too is unrealistic. Would you stop purchase of the initial production of an industry when prices are extremely high. Indeed would you suspend the military support necessary to keep shipping lanes open for transportation of oil and trade goods?

  3. The bullet #1 is incorrect. It’s true that currently it’s financially unfeasible to produce 100% of the needed energy from renewable sources. But it’s not true that with today’s technologies it’s unfeasible to scale energy production from renewable sources to substantial levels. If there is a will, there is a way as the example of Germany shows. The share of electricity produced from renewable energy in Germany has increased from 6.3% in 2000 to over 20% in the first half of 2011. Yes, it’s only electricity, not the total energy, but Germany targets to reach total renewable energy share of 18% by 2020 (with 35% renewable electricity share by 2020). These are substantial levels that can be reached today.

    And by the way, a large portion of the labor involved in the production and installation of renewable energy equipment is involved in the installation phase. China will dominate the production phase, but local companies install and maintain the equipment. Solar equipment sold in Germany, for example, is now mainly Chinese where ten years ago it was mainly German. However, 370,000 people in Germany were employed in the renewable energy sector in 2010, especially in small and medium sized companies. This is from 160,500 in 2004.

  4. Well argued Mr. Russell. For the “green” movement to be integrated into a capitalist economy, it must pass through the gates of supply and demand. That is our system, it has been since the 18th century, and it is the best system. As long as human beings behave in rational self interest, you will never get consumers to pay a huge premium for something that is worse than what they already have.
    Economics 101 tells you that in a capitalist system, capital must flow to its most productive uses. That will take more than pushing electric cars that consumers don’t want, or subsidizing wind power that is expensive and unreliable, or telling consumers what light bulbs they can use. I don’t see the “millions of green jobs” materialzing in the near future. It may happen years and years down the road. Some impetus must occur in the supply/demand equation that gives consumers the incentive to buy into green technologies. Unfortunately, the US government is trying to create that impetus through grants and loan guarantees. Thus, we are likely to see more Solyndra debacles in the future.

  5. The only subsidy I would like to see is ending the one given to fossil fuel consumption. As long as it is free to dump CO2 etc. into the air, renewables will need a different subsidy.

    Since we will eventually have to pay billions more for health care, storm damage, coastal protection, we should start collecting the carbon tax now. I think the last Forbes article I saw put the cost for carbon pollution at $893 per ton. So, if the range is between $28.92 (different article) and $900 we can pick say $100 on the low end of this spectrum. If we began collecting the $100 per ton tomorrow I am sure the economics for solar, geothermal, biofuels and wind would make them viable immediately. Then we can just let market competition declare a winner.

    1. Economists Urge Honest Accounting of Carbon’s True Costs – Forbes
    http://www.forbes.com/…/economists-urge-honest-accounting-of-carbons-t…Jul 15, 2011

    2. Administration Grossly Underestimated Carbon Cost, Says Study …
    http://www.nytimes.com/…/14climatewire-administration-grossly-underesti…Jul 14, 2011
    …Based on the four scenarios, the social cost of carbon values for 2010 ranged from $28 per ton to $893 per ton. In the 2050 model, values ranged from $64 to $1,550.

  6. To those who have brought up the issue of current fossil fuel subsidies, I may not have made it clear enough that I fully support the Dave Gold position quoted in the item to the effect that ALL energy production subsidies ought to be removed. In my mind, that means ALL!! The government’s approach to energy production in the US is a shambles: it’s internally inconsistent (as some of you have pointed out), financially wasteful and largely driven by political rather than economic considerations.

  7. We expect this year to be another year of hurdles for job seekers. There is news of terrible occurrences soon to occur in the corporate world but the mighty ones will survive.

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