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Just How Big Is the Clean Energy Economy

A new report provides detailed evidence that the clean economy is here. Keeping it here will require a national and regional policy framework for driving innovation.

This morning the Brookings Institution's Metropolitan Policy Program released a comprehensive new report, "Sizing the Clean Economy," which takes a detailed look at the United States' ongoing transformation toward a low-carbon future. The report, co-produced with Battelle Technology Partnership, presents the most detailed data available on jobs and establishments in the clean economy, and finds that the clean economy accounts for 2.7 million jobs, more than both the biosciences and fossil fuel sectors, and a little over half the size of the IT sector. (Also check out the new interactive map that accompanies the report)

Clean energy compared to other sectors

However, "clean energy" jobs account for only a fraction of the 2.7 million clean economy jobs calculated by Brookings/Battelle. Indeed, the majority of jobs are in more traditional "environmental" sectors like waste management and treatment, mass transit, and conservation. The jobs we usually think of as clean energy jobs--those in renewables, nuclear, smart grid, fuel cells, batteries, energy efficiency and electric vehicle technology--account for just 20 percent of this 2.7 million. While the rest of the clean economy has generally lagged the overall economy in terms of job growth, these newer clean energy industries have experienced explosive job growth, albeit from small bases.

Clean energy vs overall economy

The report's analysis underscores the dynamism and diversity of the clean economy and its contribution to a stronger overall economy. The clean economy is manufacturing and export-intensive, and can thus play an essential role in closing the nation's large and persistent trade deficit. Additionally, the clean economy provides more opportunities at higher pay levels for low-skill workers than the national economy. At the same time, it employs a higher percentage of scientists, architects, and engineers than the national average. These findings are bolstered by the report's comprehensive analysis of the diversity of clean economy occupations in the US' largest 100 metropolitan areas.

Clean energy job growth

Looking forward, however, the report presents a picture of the clean economy that is simultaneously encouraging and concerning, a contradiction fueled by policy and political uncertainty that threatens to derail the fast growth that has occurred over the past two years. The report notes, for instance, that the clean economy outperformed the overall economy during the recent economic recession. The issue is that much of this had to with the stimulus' infusion of federal funds in clean tech related sectors. These and other federal investments that have been so crucial to renewables' growth are set to expire over the coming years, posing the very real threat of a crash in the clean tech industry.

Recognizing this clean tech "funding cliff," the Brookings report presents a very thorough and cogent set of policy recommendations for "advancing the clean economy," that if implemented could put the industry on a sounder footing over the long term. These include:

Fostering a robust domestic market for clean technologies, including through a clean energy standard and government procurement.

Ensuring the availability of adequate finance, and recognizing the need for affordable, risk tolerant, and large-scale capital. This includes creating new emerging technology deployment finance agencies (like the Clean Energy Deployment Administration currently under Congress), as well as reforming the many tax incentives and subsidize that currently support clean energy but aren't optimized to drive innovation in energy technologies.

Driving innovation by investing more and differently to make clean energy cheaper and more reliable. This would include scaling up investment in clean energy RD&D budgets, increasing funding for innovative research paradigms like ARPA-E, EFRCs, and Energy Innovation Hubs, and creating a new regional clean economy consortia initiative.
Lastly, efforts to advance the clean economy should be placed squarely within the context of regional clusters, which play an outsized role in economic growth because they foster innovation, entrepreneurship, and job creation.

According to the authors, the most challenging aspect of the data presented by their report is "the fundamental question raised by the dynamic growth but modest size of the most vibrant and promising segments of the clean economy." Can we provide a stable policy environment to continue the ongoing momentum of nascent clean energy industries? And can we drive down the costs of clean energy through innovation to make it viable without ongoing subsidy? Fortunately, the report lays out a smart road map to make the vision of a robust clean energy economy a reality.

By. Devon Swezey

This article was published with permission from The Breakthrough Institute

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