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June 16, 2009
Job Growth in Clean Energy Outpaces Overall Job Market
    by Robert Kropp

Report from the Pew Center on the States finds that job growth in the clean energy economy has been sustained by investment, and with increased government assistance is likely to weather economic downturn.


Despite a lack of sustained government support between 1998 and 2007, the number of jobs in the emerging clean energy economy grew nearly two and a half times faster than the overall job market during that time. According to a report by the Pew Center on the States, jobs in the clean energy economy grew at a rate of 9.1% during that time, compared to a rate of 3.7% in traditional jobs.

The report, entitled The Clean Energy Economy, found that by 2007, more than 68,200 businesses in the 50 states and the District of Columbia accounted for about 770,000 jobs.

According to Kil Huh, Project Director for the Pew Center on the States and a principal author of the report, the report utilizes research provided by the National Establishment Time Series (NETS), a database of US public and private businesses based on data from Dun & Bradstreet, on which to base its conclusions.

A potentially groundbreaking aspect of the report is its development of a framework in which jobs in the clean energy economy can be categorized. The categories into which the report divides the clean energy economy include clean energy, energy efficiency, environmentally friendly production, conservation and pollution mitigation, and training and support.

The report found that 65% of jobs in the clean energy economy are in the category of conservation and pollution mitigation. However, according to the report, jobs in the categories of clean energy, energy efficiency, and environmentally friendly production are growing at the fastest rate.

Jobs in the clean energy field help produce, transmit, and store clean and renewable power. Those in the energy efficiency field help reduce the amount of energy used, and jobs in environmentally friendly production develop alternatives to existing products that require less energy and emit fewer greenhouse gases (GHG).

According to Huh of the Pew Center, "These three categories stood out by their high growth rate in the number of jobs. Collectively, they grew by 30% during the time frame studied, and represent 200,000 jobs today."

"These jobs were created in direct response to consumer demand," Huh continued. "The growth happened with a lack of sustained government support, and we suspect that recent government actions will help job growth in the green economy significantly."

The report acknowledges the vital role played by the infusion of venture capital into the green economy. In 2008, investors directed $5.9 billion, or 15% of all global venture capital investments, into the clean energy economy, a 48% increase over 2007. By the end of 2008, a total of about $12.6 billion in venture capital investment had been directed into the clean energy economy since 1998.

Venture capital investment in clean energy companies, especially those engaged in solar technologies, accounted for 69% of all such investment between 2006 and 2008. In 2008, funding for solar companies accounted for 40% of venture capital investment.

As with every other area of the economy, the current economic downturn has had its impact on venture capital investment in clean energy. The report found that during the first three months of 2009, investment in clean energy was down 48% compared to a year earlier. However, the report also found that investment in clean energy still managed to outpace such investment elsewhere; during the same time period, total venture capital investment decreased by 61%.

Huh of the Pew Center said, "Analysts suspect that the green industry will weather the downturn better than other market segments, both because of stimulus and because the drivers for growth are still there. Consumers continue to call for a viable alternative to traditional energy sources."

As Huh noted, job growth in the clean energy economy occurred without significant government engagement. However, recent developments such as funds for clean energy provided by the American Recovery and Reinvestment Act of 2009 (ARRA) show promise for rapid growth in the field. The stimulus bill provides $85 billion in spending for energy and transportation, and includes $21 billion in tax incentives for renewable energy, as well as more than $30 billion for spending on a variety of clean energy programs.

Other initiatives that have been enacted at the state level in recent years are also likely to lead to job growth in the clean energy economy. Twenty-three states have implemented three regional clean energy initiatives, which anticipate expected federal cap-and-trade legislation regulating carbon markets: the Midwestern Greenhouse Gas Reduction
Accord (MGGRA), the Regional Greenhouse Gas Initiative (RGGI), and the Western Climate Initiative (WCI).

In addition, 29 states and the District of Columbia have established renewable portfolio standards, which require electricity providers to use renewable sources for a percentage of the power they sell to their customers. Nineteen states have established Energy Efficiency Resource Standards that encourage a continual increase in energy savings on the part of utilities.

Finally, the vehicle emissions standards adopted by California, which call for a 30% reduction in carbon emissions by 2016, were adopted in May by the Federal Government as well, when President Obama announced national limits on vehicle emissions that would match California's.

The report concludes that while with ARRA the federal government has made an extraordinary investment in clean energy, the nation needs a comprehensive, economy-wide energy plan to realize the clean energy economy's full potential. According to the report, "Federal and state policies, together with continued private-sector support, will position the United States as a leader in the global clean energy economy."

"Federal proposals for a market-based system for climate control will help shape consumer demand," said Huh. "The legislation would move the entire industry in that direction of clean energy. The green energy economy seems poised for continued growth."

 

 
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