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Leo Hindery, Jr. Headshot

Is "Going Green" Enough of an Answer for Our Economy?

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"Going green" is the current political wisdom, and almost every politician in America has tentatively embraced it, including most notably President Obama who has often spoke optimistically about "green shoots" and a "green New Deal". But is going green enough of an answer to a moribund economy stuck in a jobless recovery that every day runs head-on into the wall of China's unfair trade practices? In most ways, the answer is "not sufficiently", and on several fronts "going green" has yet to work out as promised.

First of all, everyone needs to be much more realistic about the potential associated with "going green", starting with observing that America's current green economy identifies only 750,000 green jobs in the country today. This is but 750,000 jobs out of a total U.S. workforce of 154 million, of which fully 30 million American workers are today effectively unemployed.

Looking ahead, according to the Global Climate Network, the deployment of all new green energy technologies, such as wind and solar power, has the potential to create worldwide only 20 million new jobs by 2030. And since this figure comes from the Global Climate Network, which has a strong interest in emphasizing the potential of green jobs, even this figure may be overstated.

Because the global economic downturn has hit the aging developed world far harder than fast-growing emerging markets, it is no surprise that these countries -- the U.S., Germany and the Scandinavian countries most notably -- have been focusing attention on the job-creating potential of green technology. Yet we know that China, which President Obama identified in his inaugural address as already the "renewable energy superpower", is on a pell-mell course to capture way more than its share of these jobs. And with only 20 million new green jobs being created globally over the next 20 years, when one country captures more than its 'share' of them, they are gone forever.

So it is that with our own need to quickly create 22 million jobs in order to get our economy back near full employment, green jobs are nowhere near the solution for our overall economy that the administration and many in Congress are positing.

This said, there are five things that the administration and Congress should be doing to ensure that the U.S. gets at least its fair share of the new global green jobs, initiatives that run hand-in hand with the steps needed to turn around our overall U.S. economy. For investments in green technologies are little different than the needed investments in traditional infrastructure -- they're all part of a tapestry of reestablishing the global competitiveness of the United States, getting our workforce back to near full employment with fair wages and benefits, and dramatically reducing our massive trade deficit which is every day stealing the future of our children.

The building of new airports and high-speed rail, the construction of a national 'smart' electric transmission grid, deploying broadband to all parts of the country, and developing wind and solar alternatives to carbon-emitting power sources are simply parts of that tapestry.

The five initiatives needed to put America's train on the green economy track are:

  • We need to be much more capable and efficient in getting government and private monies out the door into 'things green.' Right now, getting an environmental impact statement agreed for a new wind or solar facility can easily take a year or more - the average EIS for all federal agency projects is an almost unbelievable 3.4 years - and for a nuclear plant it is up to a decade. By contrast, even in Germany which is the most environmentally sensitive of the major developed countries, these timeframes are reduced by 50 to 75% - China, of course, doesn't even have a formal EIS process.
  • We need to get very good, very fast, at fully funding critical infrastructure improvements, including green investments.
  • We need to immediately level the global trade playing field, especially with China, which is racing ahead of every other nation in green manufacturing. China already leads the world in wind turbine manufacturing by a large margin, and its global market share in solar components is at least 40% and rising. Even in light bulbs, where America's General Electric Company had a dominant share in incandescent bulbs all the way back to Thomas Edison, China now accounts for more than 90% of the global production of the new-age compact fluorescent bulbs.
  • We also need a buy-domestic program that generally mirrors the programs of our major trading partners, especially China's. The green economy is not yet in any country fully commercially viable, so as every other nation is doing, we need to give it a 'push' with a fair and reciprocal "Make It In America" program of the sort being advanced by the House Democrats.
  • And we need our own Energy Bill and reform.

Let's take these in order.

First, as the non-partisan GAO and the inspector general of the Department of Energy continue to note, the U.S. government manifests a stunning inability to invest quickly and efficiently in anything green or otherwise. We are confounded by our utter failure to declare a "national economic emergency" in order to streamline the permitting and approval processes, especially the EISs, that most new infrastructure projects must navigate in order to go forward. By contrast, the other major developed countries - and China - are far better both at bringing government and the private sector together to advance the green economy.

Second, our unwillingness to date to establish a National Infrastructure Bank (or NIB) is a major obstacle. Long before this Great Recession began, we knew that thoughtful investments in all types of infrastructure, including things green, were one of the top two ways to create lots of jobs and help restore America's global competitiveness, provided the spending was coupled with buy-domestic requirements. (The other way is employment programs for the roughly 5 million unemployed out-of-school youth.) The specifics of this are simple: each $1 billion spent on infrastructure creates on average 25,000 new jobs, and when the investments are for high-tech, energy efficient green things, then the new-jobs figure is on the order of 45,000 per $1 billion spent. An NIB would immediately increase many-fold, and at much lower costs, the infrastructure investment capacities of our federal, state and local governments. It would also make such investments less dependent on annual appropriations; and give these needed investments beneficial access to the private capital markets, large fiduciary investors, and foreign central banks.

Third, there is now clear evidence that 90% of China's domination in high-tech manufactured goods vis-à-vis the U.S. is due not to its relatively low labor costs but rather to its subsidies related to plant sitings, financing, taxes and currency and to its extremely low environmental standards. Only responsible trade agreement enforcement on our part can turn imbalances of this sort around.

Fourth, we need to adopt our own buy-domestic requirements related to all federal government procurement. This will be a vital stimulus to our domestic efforts to participate in the 'green' economy, not to mention the salutary effects it will have on our economy in general. Our program should generally mirror the buy-domestic programs of our major trading partners and last as long. Foolishly, America is almost alone among the major nations in not having such a program.

As an adjunct to this Make It In America initiative, we must also immediately go after China's "Indigenous Innovation Production Accreditation Program", which limits all Chinese central and provincial government procurement to companies that have "indigenous" -- or Chinese -- "innovation". Embedded in this Program are China's two so-called 'trade advantages', namely, (i) its regulations to block non-Chinese firms from selling their products to Chinese government agencies and (ii) its rules that force Western companies to give up technological secrets in exchange for access to China's markets, which it uses every day to further advance its position as the globe's "renewable energy superpower."

Fifth, the administration and Congress need to tell us soon how far they believe new energy legislation should go in addressing (i) capping emissions of heat-trapping gasses from specific sources, (ii) cutting down on drilling, (iii) establishing either a cap-and-trade system or an alternative, and (iv) mandating the use of renewable fuels. Without certainty soon as to what will be in our nation's eventual Energy Bill, and as to the green economy incentives which it must contain, the U.S. will inevitably watch most of those 20 million new globe-wide green jobs end up overseas and not on our shores. The extent and vibrancy of any nation's green economy flow out of energy reform -- a green economy will never be meaningful otherwise.

Going green is pretty obviously not going to create millions of new jobs in its own right. The real upside will be if going green becomes, in large part, the impetus we need to reorder the overall U.S. economy to include our finally having both an all-of-government manufacturing & industrial policy and 'fair trade' instead of the largely-unfair 'free trade' system we have now.

Back in the '80s, Robert Reich penned a provocative essay entitled "Who is US?" Reich asked then, "Is 'US' American companies making things in America, or is 'US' multinational corporations based in the U.S. but with much/most of their business and production abroad?" This particular question is as important today as it was then, but now we must also ask several others:

Is US the only major developed country without a comprehensive national clean energy economic development policy that ensures the creation of a new generation of high-quality green jobs?

Is US the only country which will largely lose out on the green jobs associated with domestically manufactured renewable energy components and leave itself only with the jobs from renewable energy construction, installation, operation and maintenance?

Is US the only country that doesn't offer incentives to persuade clean energy companies to set up facilities at home?

Is US the only major developed country without a local content -- "Make It In America" - requirement?

For me, an American government that is truly concerned about US - with "US" being the citizens of this country - will forcefully undertake the kinds of green and overall jobs initiatives that will further the near and long-term well-being of the American people. Let's hope the Obama administration acknowledges this soon, goes beyond its current rhetoric, and, along with Congress, proceeds to energetically implement this agenda over the next two years.

Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.