Green Jobs Depend on Obama Win As Fiscal Cliff Approaches
Jerry Limbeck and his son Andrew both got the bad news the same day in October, in the form of a folder with a color-coded sticker. It meant that after months of assembling turbines, they were losing their jobs in the Windsor, Colorado, factory of Vestas Wind Systems AS. (VWS)
The problem, according to the Aarhus, Denmark-based company, was that uncertainty about the extension of a U.S. tax credit had slowed orders. As a result, Vestas was cutting its manufacturing workforce in Colorado by 18 percent.
“They had to do something,” said Jerry Limbeck, 49. “I totally understand what the reasoning was behind it. I was real fortunate to even have that job to begin with. The way the economy was, it was a pretty decent job for being a nonskilled laborer like I am.”
How many other workers in clean-energy jobs follow in the Limbecks’ footsteps hinges in part on today’s election. President Barack Obama has championed renewable energy sources, such as solar and wind power, which have generated jobs for thousands of people across the country, while falling short of stated goals. Republican nominee Mitt Romney has said Obama’s “‘green energy’ agenda has been nothing short of a disaster” and that the government shouldn’t fund specific companies and technologies.
Beyond the election, the industry is entangled with policies that are dependent on the resolution of the so-called fiscal cliff, the more than $600 billion in federal tax increases and spending cuts that take effect at the beginning of 2013 unless Congress acts. Whether policy makers reach a final deal that includes more than $18 billion in energy-related tax incentives is uncertain.
“The outcome of the election will have an influence on the pace of growth in these industries,” said Mark Muro, a senior fellow at the Brookings Institution in Washington. “If the nation and states weaken the policy framework, the industry uptick and need for workers will stagnate.”
Four years ago Obama pledged to make the U.S. less reliant on fossil fuels and create 5 million green jobs in 10 years. So far, job creation has been far more modest than Obama projected, and bankruptcies at government-supported companies, including solar-panel maker Solyndra LLC, which received a $535 million loan guarantee, have generated a political backlash.
The 2009 economic-stimulus plan spent $90 billion on clean energy and “saved or created” 225,000 positions through 2010, the President’s Council of Economic Advisers reported in November 2010. Out of 113,247 participants in green-job training programs funded with $435 million in stimulus, 30,857 people were hired in new positions, the Department of Labor’s inspector general said in an Oct. 25 report.
“What we call the clean economy, and especially the clean tech sectors that people are so interested in, are actually not large job creators,” Muro said. “The job creation is muted in general because they’re relatively small and very efficient technologies.”
Brookings found the U.S. employed 184,699 workers in 2010 in clean technology, which includes wind, solar, fuel-cell and smart-grid power used for electricity, according to a 2011 report.
Now, policy uncertainty may jeopardize those jobs and the potential for future growth. Romney has said that he does not support extending the production tax credit. Wind-energy companies get 2.2 cents for every kilowatt-hour produced, shaving as much as one-third off the costs. The industry employed 75,000 people -- including 30,000 in the manufacturing sector -- in 2011, according to the American Wind Energy Association, a Washington-based lobbying group.
“When you withdraw that type of support you will lose jobs,” said Ethan Pollack, senior policy analyst at the Economic Policy Institute, a research group in Washington that gets some of its funding from labor unions. “The wind industry in the U.S. has been growing substantially, and a lot of that has been because of the strong support of the wind tax credit.”
In addition to job losses at Vestas, a U.S. unit of Munich- based Siemens AG (SIE) cut 615 jobs in September, part of an industry reduction of about 2,000 jobs since July, according to IHS Emerging Energy Research, a unit of Englewood, Colorado-based IHS Inc. (IHS)
Critics of government funding for renewable energy say it hinders growth in other segments of the labor market. “You don’t create net jobs by subsidies,” said David Kreutzer, research fellow in energy economics and climate change at the Heritage Foundation, a Washington-based policy research and advocacy group.
“If you subsidize windmills enough, you can certainly create jobs producing windmills,” he said. “But you’re going to have to be taking resources out of the rest of the economy that run the job-creation mechanism.”
State policies present another source of uncertainty for green jobs. Currently, 29 states have mandates and deadlines requiring utilities to purchase energy from renewable sources. Michigan has a ballot initiative today to expand requirements.
At least 19 bills were introduced in 2012 to repeal or weaken the standards in various states, with three approved in Ohio, New Hampshire and Virginia, according to a report by the Energy Department-funded Database of State Incentives for Renewables and Efficiency.
Beyond the policy decisions, many of these benchmarks already have been met, hampering growth in the wind industry in particular, said Matthew Kaplan, associate director at the IHS energy-research group.
“The future is a smaller wind-energy market,” he said. “There will be longer-term implications where we will see fewer manufacturers in this market and fewer developers making large investments.”
The solar industry faces less immediate policy uncertainty than wind. A 30 percent tax credit for solar-system buyers isn’t set to expire until 2016. The industry added 13,872 workers in the 12 months ended September, bringing the total number of employees to 119,016, according to a Nov. 2 report from the Solar Foundation, a nonprofit organization in Washington.
“Solar is an area for growth,” said Phyllis Cuttino, director of the clean-energy program at the Washington-based Pew Charitable Trusts. “And it’s not, at the moment, an area where you have a lot of controversy in Congress.”
Most of the job increases have been in sales, distribution and installation of systems, while manufacturing “took a hit,” said Andrea Luecke, the Solar Foundation’s executive director. By 2020, the number of certified technical employees in the solar industry will increase to about 36,600 people, a 24 percent rise from 2010, according to a recent report from CleanEdison Inc., a clean-technology training company based in New York.
The U.S. is projected to install 2.9 to 3.3 gigawatts of solar systems in 2012 and between 3.3 and 3.9 gigawatts in 2013, according to Bloomberg New Energy Finance. Last year, U.S. solar installations totaled 1.85 gigawatts.
“It’s a young industry and it’s growing, so hopefully I can help spread knowledge of renewable energy,” said Berwanger, 24, who graduated from Washington University in St. Louis with a degree in mechanical engineering in December. “I just found that there were a lot of opportunities.”
On the manufacturing end, jobs may be at stake as the U.S. is embroiled in a trade dispute with China. Solyndra has accused Chinese panel makers of driving it out of business. Some solar manufacturers, including the U.S. unit of Bonn-based SolarWorld AG (SWV), have said it is hard to compete with low-priced Chinese panels.
The Commerce Department ruled in May that China sells solar products to the U.S. below cost and on Oct. 10 issued anti- dumping duties of as much as 250 percent on Chinese imports.
The U.S. International Trade Commission, an independent agency that deals with global disputes, will issue a final decision Nov. 7 on whether Chinese exports of solar-energy cells are harming U.S. manufacturers. The U.S. has imposed duties on companies including Trina Solar Ltd. (TSL) and Suntech Power Holdings Co. (STP) to compensate for Chinese-government subsidies and to prevent the goods from being sold below cost.
Some critics say that clean-energy industries in the U.S. should be able to compete without government support and that credits and incentives are not feasible considering the country’s budget challenges.
“The prospects of the industry are not good in the new era of government constraints,” said Robert Bradley, chief executive officer of the Washington-based Institute for Energy Research, a free-market research group. “Do you want to spend billions of dollars trying to keep the ‘green’ industries at their current level, or do you want to use these same dollars for a lot of other government functions that are all going to be facing budget cuts?”
As for Limbeck, he said he is holding off his job search for now, anticipating that Congress will extend the tax credit before January so companies can hire again.
“I’m really kind of hoping Vestas will call me back,” he said. “If not, chances are I’ll have to find a different trade.”
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