The New Economy is Neither Red Nor Blue - It's Green

What a difference a year makes. Just twelve months ago, the newly-elected President Obama and his government seemed destined to transform America.

The stunning upset last month by Massachusetts Republican underdog Scott Brown in the safest Democrat senate seat in the country put an end to the Obama aura of invincibility, and reminded politicians of all stripes that voters expect them to deliver jobs, or else…

That makes a recent report on employment in the clean tech sector all the more timely. The study by RES Alliance for Jobs looked at the net employment benefits of Washington requiring electrical utilities to ramp up supply of renewable energy sources.

They found that a mandatory national renewable electricity standard (RES) of 25% renewable energy by 2025 would create 274,000 additional jobs—equivalent to 2.36 million additional job-years of employment across America in emerging clean energy sectors like solar, wind and bio-energy.

A cynic might ask why politicians today would care about employment targets six election cycles away. Getting there will require starting now, and interim renewable standards for energy producers will provide much-needed job relief in the immediate future.

The report found that a 12% national RES by 2014 will create 64,000 additional jobs across the USA; a 20% target by 2020 will create 191,000 new jobs—often in communities that need it most.

Rustbelt states such as Michigan, Ohio, and Pennsylvania hit hardest by the recession will feel the benefits first. 75% of these new green-collar jobs nation-wide would also be created in the beleaguered domestic sectors of manufacturing and construction.

Requiring utilities to scale up supply from renewable sources has already resulted in impressive economic returns at the local level. California leads the way with ambitious targets that have stimulated more clean tech investment than any other state in America. In 2007 alone, Californian renewable requirements spurred the opening of 10,209 businesses with 125,390 new jobs.

Those doubting the importance of emerging clean energy technologies should note that clean-tech job creation nation-wide outpaced the rest of the economy by 250% over the last ten years.

Beyond jobs is the important issue of money. Costly stimulus programs are increasingly unpopular with anxious taxpayers rightly concerned about ballooning deficits and increased reliance on offshore creditors.

Regional tax-breaks (otherwise known as tax credit wars) can help attract capital from emerging industries but they also pit one part of the country against the other, eroding the local tax base and failing to deliver the long-term certainty that manufacturers demand when choosing where to locate high-cost manufacturing facilities.

In contrast, a national RES would be comparatively a no-cost item for a cash-strapped Congress. Sounds like an economic no-brainer – so what’s the holdup? Requiring utility companies and their powerful lobbies to change the way they do business requires one resource that is in perennial short supply in Washington: political will.

But as they say, nothing focuses the mind like the prospect of a hanging, and the economic alternative to implementing a national RES is not pretty.

Even out to 2025, researchers at RES Alliance for Jobs project there will be a net decrease in high-paying clean energy jobs nation-wide if lawmakers fail to act.

Jurisdictions in Europe and Asia are working hard to attract capital to their markets and America stands to lose big if it does not provide a competitive investment climate with long-term certainty.

Industry leaders are not mincing words on what they need to see before they park their money in US markets. “The passage of a Renewable Electricity Standard by Congress would send a clear signal that the United States is fully committed to building a sustainable renewables industry,” Vic Abate, Vice President of corporate giant General Electric (NYSE:GE) told lawmakers last year.

Which brings us back to politics. Many Republicans have strongly opposed a national RES such as the relatively mild targets included in the Waxman-Markey bill now languishing in the Senate.

A GOP lawmaker in Arizona even tabled legislation this year that would strip his state of the legal authority to enact any renewable energy standards (but strangely not their ability to subsidize conventional energy).

The opponents of Obama’s agenda of “change” may not have the lifting power to form government themselves, but they have clearly demonstrated their ability to obstruct progress proposed by the Democrats. The resulting policy deadlock is as impressive to global capital markets as passing out on your prom date.

Is this wise politics for Republicans? A recent poll by the Pew Foundation shows a whopping 83% of Americans believe that strengthening the economy is a top priority. Creating jobs came in a close second at 81%. Scott Brown’s stunning upset victory in Ted Kennedy’s senate seat shows that US voters are volatile, angry and prepared to turf out any politician that is not listening to them.

With mid-term elections coming up in November, many Republicans seem to be feeling a renewed sense of cockiness that the good old days of George Bush are here again. They would be wise not to mistake the widespread anger in America for a shift in the partisan winds.

The future of the economy in America and around the world is neither “red” nor “blue.” It is green. Politicians worried about their own job security ignore that imperative at their peril.