What are some of the key provisions that should be included in the next economic stimulus to help boost green job growth and renewable energy projects? What hurdles exist to passing a so-called 'green' stimulus? Which industries should benefit from the economic package? During today's OnPoint, Bracken Hendricks, a senior fellow at the Center for American Progress, discusses his recent testimony on the upcoming stimulus before the Senate Energy and Natural Resources Committee. He explains how carbon intensive industries should be addressed in the plan and assesses the level of risk associated with investing in new, green projects.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. With us today is Bracken Hendricks, a senior fellow at the Center for American Progress. Bracken, nice to see you.
Bracken Hendricks: Thanks for having me on.
Monica Trauzzi: You just testified before the Senate Energy and Natural Resources Committee about energy measures the next Congress and President could take into account in the next economic stimulus package. What are some of the key details you believe should be included in this so-called green stimulus?
Bracken Hendricks: Well, I think the first point is just the importance of having energy, clean energy, efficiency, renewables as a centerpiece at our strategy for the economy over the long term. And it sounds paradoxical to talk about long-term planning as we're talking about a stimulus, but this is a very major investment in the future of the country. People are hurting. People are out of work. Communities have been underinvested in. We've lost manufacturing jobs. We need to rebuild. We need to get the economy moving, but we need to get it moving in the right direction. And energy and environmental strategy really, I think, defines where this country needs to go right now. We've got a crippling trade deficit. We've got an underinvestment in cities, crumbling infrastructure, and we really need to rebuild. And we need to anticipate the transition to a low carbon economy. So the stimulus offers us an opportunity to help consumers, help cities, rebuild our infrastructure, reposition American businesses for competition, and really turn the corner in a way that drives down the cost of taking action on global warming long term. So, from that strategy, there's a number of things that really clearly emerge. We immediately should be pursuing every opportunity for energy efficiency. Weatherization is a very obvious opportunity. We can rebuild our cities. We can put people on career ladders into families-supporting jobs. In the building trades almost a million workers have lost their job just in construction alone in the last year. That's a devastating impact. We can be driving new credit, new investment into the build environment and workplaces and we can put people back to work. And we can take the same dollar that we would spend on wasted energy and instead we can spend it on the skills of a craftsperson to change your windows and wrap your furnace and help cut our energy use. At the same time though, we also need to invest in infrastructure, so there's a whole set of long-term investments. Our energy grid, we need a smart grid for distribution. We need to be moving towards building a national system of electrical transmission. We've got a backlog of transit projects at a time when people are trying to get out of their cars, trying to cut their use of oil. We need to support the growing burden on our transit systems and help start new transit and rail projects as well. So the list goes on, both in the infrastructure side and in short-term investments that really helped jumpstart new markets for green technology and renewables.
Monica Trauzzi: It sounds like a lot of renewable energy industries are trying to get their foot in the door in this stimulus and they're trying to get some money out of this package. Rank for us these sort of green industries. Who should get more money allotted through this stimulus? Where should we be focusing our energy?
Bracken Hendricks: You know, you never want the government picking winners and losers, but I think we want to be investing in low-carbon technology. We want to be investing in the efficiency of the economy and there's a number of things that clearly do that. So green building, weatherization of homes, public investments in green schools and greening public buildings clearly are a down payment on driving down the cost and increasing the skills of workers for this transition. Similarly we should be taking distributed generation of solar panels, smart grid technology very seriously, investing in that in public buildings, but also offering incentives for community organizations for these sorts of investment at the community level. There's also a really interesting thing that's going on which was the recent fight to get the production tax credit advanced. You know, we're now seeing a contraction of capital flowing into large-scale renewable projects, not because the industry's not important, not because it's not economically viable, but because the meltdown in the global financial markets is really causing capital to dry up. And on these newer technologies, because you really have to finance just on that project, these aren't long-standing utility companies. In many cases they're building new projects, access to capital is critically important. So there's some fixes to some existing policy that would just help open up capital markets to start building the infrastructure of a low-carbon economy.
Monica Trauzzi: President-elect Obama has signaled that he'd like to sign some form of a green stimulus on January 20, his first day in office. What do you see as some of the biggest battles that might emerge and stand in the way of getting this piece of legislation signed in a couple of weeks essentially?
Bracken Hendricks: Well, you know, one of the things that's remarkable to me is how little contention there is. I was just at the Energy and Natural Resources ,at a hearing there. And there was some back-and-forth about sort of scale, immediacy, public spending, which types of infrastructure you wanted to build, but there was really pretty much a consensus that a serious package needed to move forward, that it needed to move forward quickly, that clean energy would be a centerpiece of that. So we're seeing it from leadership, we're seeing strong messages from both House and Senate leadership. Clearly, this is an issue that was a major theme of the campaign that the greening of the economy could be a source of millions of new jobs, investments in communities. And this is really the first opportunity to move forward on that. So I have every reason to believe that we're going to see a big package with a very clear component focused on clean energy and advancing renewable technology and efficiency as a centerpiece of American competitiveness.
Monica Trauzzi: How much risk is associated with putting money into all these new programs? We don't necessarily know that they will work on a larger national scale.
Bracken Hendricks: Well, one thing we know is that the path that we're on is not working. I think the greatest risk is to presume that you can be inactive in the face of global warming. That's clearly the most costly solution is to do nothing. And we're facing a very sustained recession at this point with the promise of a serious and prolonged job loss. So we need to really target our investments. I think one of the risks would be that leadership would be nervous about going as big as the scale of the problem, both from an energy transformation perspective, but also from an economic perspective. We need a very significant investment in increasing demand. And economists, there's a very strong convergence there as well among people as diverse as Paul Krugman, Nobel prize-winning progressive economist, Goldman Sachs, a long-established Wall Street firm. Both are saying we need a stimulus package in the realm of 2 to 4 percent, $500 or $600 billion. That's a major investment. There's another risk too, which is that if we don't make those investments wisely, if we aren't strategic about where the economy needs to go long term, even as we're trying to stimulate short-term activity, that we'll waste the opportunity or worse, make investments that are counterproductive. So the energy component of the stimulus is a very important tool for setting priorities that are going to work in the long term. We need to get the economy moving, but we need to get the economy moving in the right direction.
Monica Trauzzi: Talking about hundreds of billions of dollars here, where is all this money coming from? I mean if there was some form of cap-and-trade legislation that was close to being passed the money could come from pollution credits. However, at this point, what does it mean, higher taxes, more deficit?
Bracken Hendricks: Well, stimulus, by its very nature, has to be new money. It has to be deficit spending. If you have offset some use/pay as you go rules, that's not going to create a stimulative effect, it will simply move money from one part of the economy to another. So it's important to think about how we're going to redirect revenue over the long term and that's a very serious conversation. It needs to begin right away in January. But the stimulus conversation is really a recognition by the economic community, the investment community that there is a contraction of demand and that spending is not taking place. Investment streams are drying up and that workers, families, and communities are going to suffer unless we can do something to jumpstart that demand and the way to do that is with an infusion of new capital and new consumption. But we need consumption with a purpose. We want to be making long-term investments even as we're buying things. We don't want to do it without a sense of really where we need to go as a country.
Monica Trauzzi: A lot of non-green industries are suffering as well. They need help. I mean there's job losses in those sectors as well. Should we be helping them in an upcoming stimulus or is this solely for green only?
Bracken Hendricks: Well, this is a great question and it actually gets at a deeper point about what a low-carbon economy is, what a clean-energy economy is. You know, we're used to talking about a green job and we think that means a solar panel installer or someone manufacturing a wind turbine. But the impacts of these sorts of investments, whether they're in construction or manufacturing, are much broader and they cascade through the whole economy. There's a company I like to talk about called Timken in Ohio. They manufacture precision ball bearings. You know, at first glance you would think it has nothing to do with the clean-energy economy. In fact, they're part of the supply chain providing these ball bearings floor the Danish wind manufacturer Vestas, the Spanish wind manufacturer Gamesa. And those companies are starting to locate plants here and employ workers in our industrial heartland building real things and the impact cascades through the economy. With energy efficiency it's even more direct and more broadly based. It's everything from an electrician who instead of fine tuning, you know testing and balancing your air conditioning system, is going to the instead be investing in weatherizing and swapping out obsolete lighting systems and improving the performance of the buildings, cutting environmental emissions, and also very significantly cutting costs for consumers. So really, in the final analysis, green has to become a strategy for how we look at all of our economic activity. It's just another outcome. And it's going to touch all industries.
Monica Trauzzi: Final question here. Your colleague John Podesta is heading up President-elect Obama's transition team. What does he bring to the table, particularly in terms of energy and environment knowledge, that will sort of shape the way the incoming administration handles these issues?
Bracken Hendricks: Well, John is pretty remarkable. He is an excellent political strategist, tactician, and someone who kind of understands how things get done. He's also an excellent manager. He's built the Center for American Progress as an institution interests for five years, into a very significant institution. And that was really largely on the force of his leadership. But he's also a very deep, substantive thinker. And the area, I think, that really inspires him most, excites him most is this question of green issues, energy issues. But really from a perspective of how do you build a low carbon economy? How do you manage this transition in a way that creates jobs, rebuilds communities, and reinvests in the growth of the American economy? Not seeing the environment as some sort of a burdensome imposition, but really an engine of innovation. So I think energy and environmental issues go to the heart of his philosophy for the country and I'm frankly pleased that there is someone of his intellectual caliber, but also his vision engaged in these questions.
Monica Trauzzi: All right. We'll end it there. Lots to watch ...
Bracken Hendricks: Thanks so much.
Monica Trauzzi: ... in the next couple of weeks. Thanks for coming on the show.
Bracken Hendricks: Thanks for having me.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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