July 14, 2011, 8:28 am
‘Green’ Economy Is Real but Needs a Push, Study Suggests
By JOANNA M. FOSTER
Like so many buzz phrases, “green economy” is an expression that is generously tossed around with little regard for its meaning.
In his State of the Union address in January, President Obama stressed the importance of nurturing America’s green economy to “strengthen our security, protect our planet and create countless new jobs for our people.” For something said to be so crucial to growth and economic renewal, however, surprisingly little is actually known about the nature, size and growth of the green economy.
The Brookings Institution, in collaboration with the Technology Partnership Program of the research and development company Battelle, has compiled what it describes as one of the most comprehensive and up-to-date analyses of the nation’s enigmatic green economy.
The report, “Sizing the Clean Economy,” collected data from every county and major metropolitan areas in the United States from 2003 to 2010. Defining a “green” or “clean” economy as the sector that produces goods and services with an environmental benefit, the study amassed numbers on mascots of green like wind, solar and hydropower and less glamorous sectors like public mass transit and waste management and treatment.
One point the report makes is that while green initiatives are driving growth and innovation, market and policy challenges are preventing them from reaching their full potential. Those obstacles include policy gaps that undercut market demand, shortfalls in financing that lead to uncertainty and instability for investors, and an inadequate system for supporting innovation.
According to the report, the green economy employed 2.7 million people in 2010, or about 2 percent of the American workforce.
To put this number into some perspective, the health care sector, the largest private job provider in the nation, employs 13.8 million people, or 10.2 percent. Despite its relatively modest size, the green economy is still larger than the fossil fuels sector (2.4 million jobs) or the biosciences sector (1.4 million jobs).
Over the last seven years, the green economy has grown at a rate of 3.4 percent, trailing the 4.2 percent growth achieved over all, but still noteworthy given the disproportionate impact of the housing crisis on the green sector. (Many housing and construction-related companies can be classified under the green rubric.)
The report also found that the green economy weathered the recession better than the nation’s economy did as a whole.
Where the green economy excels is at providing the kind of well-paid, low-skill jobs that are often lamented to be leaving the United States, the study suggests. These “green collar” jobs are manufacturing-heavy and export-driven and represent a substantial source of growth.
One of the most surprising findings, said Jonathan Rothwell, a senior research analyst at Brookings, was where some of the largest and fastest-growing regional green economies are found.
“Albany-Shenectady, New York emerged as the metropolitan region with the highest percentage of green jobs and the fifth-fastest growing green economy in the nation,” he said. General Electric, for example, is based in Albany and has opened innovative battery factories and started other green initiatives there.
One of the greatest challenge facing the growth and development of the green economy, however, is that companies with promising patented ideas that have proven themselves in small-scale test production simply cannot secure the financing they need to scale up production.
“The same risky and breakthrough nature of these products that make them so exciting and attractive for scientists and venture capitalists, is what repels large investment banks which feel like they can’t invest in a product unless it has a proven track record,” Mr. Rothwell said.
To combat this financing obstacle, Mr. Rothwell advocates scaling up the Department of Energy’s loan guarantee program, and, more ambitiously, creating a tech fund that would parallel what crop insurance was for the agricultural industry.
Such a program would further the development of new green initiatives but take the risk out of investing in them for the first few years by offering different types of insurance until they demonstrated their long-term viability.
“The important take-away message here is that the green economy is real and it’s growing, but it needs some encouragement to live up to all the expectations,” Mr. Rothwell said.