With legislative action on clean energy at a standstill, what can states do to develop new energy technologies and benefit the economy? During today's OnPoint, Mark Muro, senior fellow and policy director at the Metropolitan Policy Program at the Brookings Institution, discusses a new report focused on leveraging state clean energy funds for economic development. Muro explains why he believes the private sector cannot manage these technological investments on their own and how CEFs can help spur development.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Mark Muro, senior fellow and policy director at the Metropolitan Policy Program at the Brookings Institution. Mark, great to have you here.
Mark Muro: Yeah, great to be here.
Monica Trauzzi: Mark, you've just authored a new report focusing on leveraging state clean energy funds for economic development. Explain how the state clean energy funds work and whether their existence is broad enough to really have an impact on the clean energy profile of the United States.
Mark Muro: Great question and the funds have been around roughly a little more than a decade, often funded by system charges or surcharges on electricity bills, on utility bills to, you know, raise funds for clean energy purposes, you know, that are defined very tightly in some states, more loosely in other states, all with the idea of promoting clean energy. About 20 states have them, so they're not ubiquitous, none in the South, none in the Intermountain West. Yet in states that have them, they're doing a substantial amount of work. We're talking about leveraging at minimum very conservatively at least $12 billion in the last decade, probably much, much more. We had to use a very conservative account.
Monica Trauzzi: So then why the need for the report? What's happening with these clean energy funds that makes you perhaps question how the money is being handled?
Mark Muro: Yeah, actually I think we don't question how the money is being handled. It's being used very well, but in one particular way, you know, actual finance through rebates or other forms of projects, individual projects. You know, during the time that the funds have been operating, I think the needs of the country have changed. There's a greater concern about where we're going to finance clean energy, economic development, clean energy industry growth and some of the funds have been experimenting with doing just that. So, we think it's an interesting time to take another look and suggest a second complementary activity that the funds could engage in that would help us create a real vibrant clean economy in this country at a time where the federal government appears to be pulling back.
Monica Trauzzi: And so is your sense then, at this point, that we won't see any kind of federal action on clean energy for some time?
Mark Muro: You could bet that there will be no action for at least 18 months and I think, you know, the subject of work we are doing also will be -- we're going to be seeing a massive pullback in tax programs, subsidies, incentives. Already many of the programs of the stimulus package will be sunsetting. Dozens of programs are expiring, so I think over the next five years we're going to have to deal with a different finance and policy background for clean energy. So, we're looking where is there usable funding around and the states have some and we all do well to think about how it could be best leveraged.
Monica Trauzzi: So, since there's no federal policy on all of this, is there a way for the states to sort of link up all of their programs and have a cohesive approach to clean energy?
Mark Muro: Absolutely. One of our -- I mean a few of our recommendations are states that don't have a clean energy fund should create one. This is a cheap, smart, efficient way to invest in the future and clean up the economy. States that do have them need to try to leverage this money, partner, get better data on what their regional industries are and then try to work out partnerships to leverage money, either with the private sector or with the federal government. And I think it's something that Department of Energy is increasingly interested in partnering with states and regions.
Monica Trauzzi: So, are there particular regions that may benefit more by putting more of an emphasis on the clean energy funds?
Mark Muro: I think first having one gives a state economic development advantage and, again, more than half of the states don't have them. States I think that have a nascent, clean economy, as we call it, you know, vibrant clusters of industries beginning to create jobs and create new innovative firms should really think about piling on and maybe applying, you know, we suggest a portion, maybe no more than 10 to 15 or 20 percent of their existing clean energy funds to this kind of economic development activity. Because we need to do projects, but we need to build industries, clean economy industries in this country as well.
Monica Trauzzi: There continue to be concerns though in this sector and in others about too much government involvement. Isn't there something to be said for letting the private sector just do their business and propel these technologies forward on their own?
Mark Muro: Sure, you know, and I think the smartest economic development tends to partner, to require matching funds and to get into all kinds of complementary relationships with the private sector. And I think that's what some of the smartest states have done. You know, we highlight in this report work that New York, through its NYSERDA, has done. Massachusetts and California have all been involved in very interesting partnerships through the clean energy funds in economic development and I think that's the way to check, you know, an over emphasis on government investment.
Monica Trauzzi: All right, we'll end it there. Thank you for coming on the show.
Mark Muro: Terrific, thanks for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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