Obama Embraces ‘Green Path’ in Economic Stimulus Plan (Update1)

By Lorraine Woellert

Dec. 2 (Bloomberg) -- President-elect Barack Obama is considering a stimulus package that will include a heavy dose of spending on environmentally friendly projects aimed at creating “green-collar jobs” and saving energy.

While the package will focus on short-term outlays for traditional infrastructure projects to jumpstart an economy now officially declared to be in recession, it will also include longer-term measures to safeguard the environment.

“Clean energy is going to be a foundation for rebuilding the American economy,” said Bracken Hendricks, an analyst at the Democratic-leaning Center for American Progress and an adviser to the presidential-transition team. Generating jobs in concert with cutting pollution will be “a major component” of any economic-recovery plan, Hendricks said.

Obama wants to enact a recovery plan soon after his inauguration. Senate Majority Leader Harry Reid told reporters today that any proposal would have to be “robust” and include at least $400 billion in spending, though he wouldn’t rule out a bigger package. Senators Dick Durbin of Illinois, Obama’s closest Senate ally, and Charles Schumer of New York argue that an infusion of as much as $700 billion is warranted.

Reid said a green jobs component could be worth as much as $100 billion. He has endorsed investment in improved electricity transmission infrastructure and other ideas being put forth by Obama advisers.

‘Green Path’ Infrastructure

Obama adviser Jared Bernstein and other economists say that money would help fund environmentally sound infrastructure projects that could be up and running within a few months. Among the steps along the “green path,” Bernstein said, might be a requirement that repairs made to public buildings be environmentally friendly.

“Almost any major infrastructure project is going to be done in the greenest way possible,” said Alice Rivlin, a former vice chairman of the Federal Reserve who has spoken with members of the transition team about the package. “There will be spending for quick-starting infrastructure as well as for larger, better-thought-out programs over several years.”

A critical mass of support for clean-energy spending and green-collar-job creation is building among environmentalists, labor groups, local governments and companies such as Google Inc. and American Electric Power Co., the biggest U.S. producer of electricity from coal.

Creating Jobs

The loosely knit coalition is advocating for what Hendricks calls a “green recovery” stimulus that would create jobs with an eye toward conserving resources and reducing reliance on fossil fuels such as coal and oil.

School repairs, for example, could be required to meet green building standards, including low-energy boilers and weatherization. Transportation spending could emphasize public transit, and support for new power sources such as wind and energy could go hand in hand with spending on an efficient electricity superhighway.

Ideas include $2 billion in spending on public transit to reduce fares and expand service, $5 billion in renewable-energy bonds for consumer-owned utilities, $2.5 billion to buy and scrap old polluting cars, and $900 million to help weatherize 1 million homes.

‘Smart Grid’

Google is among the companies lobbying for long-term tax rebates for renewable energy as well as federal investment in electric “smart grid” technology that promises to lower energy use by creating two-way communication between energy providers and consumers.

Both provisions would create high-technology jobs, said Harry Wingo, energy policy counsel for Google, which has been meeting with Obama advisers and Capitol Hill lawmakers.

Green-jobs provisions “are going to lead to more job creation here and put us in a better spot to compete for the global market in clean energy,” Wingo said.

Other ideas include regulatory changes that could lead to less energy use and electricity-infrastructure improvements, said Susan Tomasky, president of AEP Transmission in Toledo.

The idea is to build new and better transmission lines to link the sunniest and windiest regions to the national grid.

AEP is among companies pushing for stimulus language that would make it easier to finance and site electricity infrastructure. It also wants Obama to formalize his campaign’s embrace of “an interstate highway system for transmission.”

Delivery Systems

“Obama gets that you can’t just build windmills and wish for the power to get where it needs to go,” Tomasky said. “It is all about infrastructure.”

Some groups are sounding a cautionary note. The U.S. Chamber of Commerce’s Institute for 21st Century Energy embraced the notion of creating jobs in renewable energy industries while warning against government overreaching.

“Whenever government tries to pick winners and losers, whether through burdensome regulations, central planning, or open-ended subsidies, it fails and taxpayers and consumers pay the price,” the institute said in a Nov. 17 report.

The conservative Heritage Foundation has criticized the green-jobs concept as big-government spending that would do little to stimulate growth.

‘Crisis du Jour’

“The people who have wanted these green initiatives are wrapping them up in the crisis du jour, the stimulus,” said David Kreutzer, a senior policy analyst at Heritage in Washington. “You have to pull resources out of some other part of the economy for government to spend it on green jobs. You don’t get a net job increase.”

Nonetheless, businesses are lining up behind the idea. In addition to big power consumers such as Google and utilities such as AEP, venture capitalists such as Kleiner Perkins Caufield & Byers support the green jobs concept and are lobbying for green provisions to be included in the stimulus.

“There’s a clear majority who want to do this,” said Michael Eckhart, president of the American Council On Renewable Energy, a Washington-based group of business leaders, academics and venture capitalists.

Even the simplest ideas could save energy and create jobs, said Jason Saragian, a spokesman for Owens Corning Inc., a Toledo, Ohio-based maker of insulation as well as material used in wind turbine blades. The company is pushing for tax breaks to encourage retrofitting of older buildings.

‘Huge Opportunity’

“There are 80 million underinsulated homes in the United States,” Saragian said. Buildings emit 42 percent of the nation’s greenhouse gasses. Weatherization “is a huge opportunity” to cut energy use, Saragian said.

State and city leaders are also making a pitch. Pennsylvania Governor Edward Rendell, chairman of the National Governors Association, said a stimulus should consist of increased spending on programs such as unemployment compensation, federal aid to states, and infrastructure for renewable energy. “There are upwards of $136 billion worth of projects ready to go,” Rendell told reporters.

The U.S. Conference of Mayors has its own list of some $25 billion worth of infrastructure projects that could be completed in 2009.

“The challenge is to make a green stimulus actually green,” said Dan Becker, a consultant with the Safe Climate Campaign, a Washington-based clean-air advocacy group. “The more road building you have the blacker it gets.”

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net .

Last Updated: December 2, 2008 18:24 EST

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