Green Jobs Archives

October 18, 2010

The Wrong Debate on Green Jobs

In the heated discussions about climate change and the clean tech economy, it's hard to avoid arguing about whether green jobs are "real" or if they can replace traditional fossil-fuel jobs. On the one side, think tanks such as the Center for American Progress issue reports on the potential for creating millions of new jobs as we build the clean economy. With a different perspective, the forces aligned against climate action often create a false trade-off between economy and environment. They make the argument that doing anything to tackle climate change, like putting a price on carbon, will destroy oil, gas, and coal jobs in particular. But this debate is moot on two counts.

First, we're not facing a choice between the growth of old economy jobs and the expansion of new energy jobs, but between decline and prosperity. One global economy, the clean one, is growing, and the global battle for the new jobs is on. Some countries - such as China, Germany, Spain, Portugal, and many others - are going after these jobs aggressively. The other part of the economy - the dead fuel economy - is not going to be a growth engine (with the important exception of natural gas, which may provide a useful, medium-term bridge to the future). Oil is basically at peak production globally, and coal plants are nearly impossible to build in the U.S. anymore. Even as the world demands more energy, and even as fossil fuel production continues, these companies will continue to get more efficient with labor. So don't count on the fossil guys to create new wealth and jobs.

So the choice is between a growing industry and a flat or shrinking one. That means it doesn't really matter if the growth area is growing fast enough to "replace" the old one or not - we have to go after that growth no matter how big it is.

But, second, and more importantly, we've been talking about the new economy jobs entirely the wrong way. Admit it, what do you picture when you hear the phrase "green jobs"? Mainly solar installers and wind turbine mechanics, right? In a recent, skeptical Newsweek article, the author laments that "green-tech workers - people who do things like design and build wind turbines or solar panels - now make up only 0.6 percent of the American workforce." When described this way, pursuing green jobs doesn't seem like much of an economic growth plan.

Those clearly defined green jobs do lie at the core of this new world, and they are in fact growing fast, sometimes literally replacing what came before. A famous GM auto plant will soon be pumping out electric Teslas, for example. And remember how sustainable building materials company Serious Materials took over a Kensington Windows plant that was closing and re-hired the laid off employees - this was one of the few bright spot stories from deep within the recession.

But there are more subtle shifts in labor going on as companies that did one thing in the old economy are finding their skills useful in the new one. Another company, Global Marine Energy, has been installing and maintaining undersea cables for over 150 years. After serving the telecom and oil & gas industries for decades, it's now also stringing cable to offshore wind farms all over Europe.

Or consider a former Maytag manufacturing facility in Newton, Iowa that now produces wind towers. This wind tower manufacturer, Dallas-based Trinity Industries, represents the less-discussed, real green jobs story. A company that has made rail cars and barges since the 1930s, Trinity is finding new markets. Imagine standing an empty rail car on its end, and you can see how Trinity was able to apply its skills. I heard about Trinity from Howard Gould and David Smith, two investors with a hedge fund dedicated to what they call "the clean infrastructure space."

As Gould says, "everyone is still stuck in the idea that the clean economy is wind and solar." He describes the supporting structure of industries, the "picks and shovels'" that will underpin this new gold rush. A lot of it is not sexy, but it's real and it's often inherently local. "The guy driving the truck hauling equipment to make oil platforms in the Gulf of Mexico," Gould says, "could easily haul stuff to a wind farm."

All these kinds of infrastructure jobs are not included in most green jobs discussions, but they're very real. And they'll certainly account for more than 0.6 percent.

Then there are the jobs we don't have exact definitions for yet, or that we can't fully imagine. Chelsea Sexton, an electric vehicle advocate and consultant, talks about what we'll need to support millions of electric car owners. Mechanics will develop new skills of course, but we'll need new service and support teams to help people get used to a new business model (that is, paying their utility for their car fuel). And as Sexton says, we'll develop "a new industry to accept used vehicle batteries and sort them according to chemistry, condition, and future use...there are all sorts of possibilities in green jobs that we just haven't thought through."

A new green economy is just that...a whole new economy, with job openings at all skill levels, from truck drivers to inventors of new battery chemistries. The solar or wind installer is just the tip of a very large iceberg that's coming our way. Will we let it pass by or take our piece?

(This post first appeared on Triple Pundit.)

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September 9, 2012

Politicians Who Deny Climate Change Cannot Be "Pro-Business"

It finally seems to be dawning on many Americans that there's something to this climate change thing. The historic drought has been hard to ignore. While belief in a long-term trend because it's hot out right now is a bit ridiculous, it's a start.

You can see a shift in how the media covers weather. The statement "because of climate change..." is often stated clearly without caveats such as, "what some scientists think may be a warming planet." You see it in the UN calling for action to help the hungry cope with rising food prices "in an age of increasing population, demand and climate change."

And you see it in the growing number of mega-corporations — including America's Alcoa, Coca-Cola, Cisco, HP, J&J, Nike, and P&G — signing on to the "2 Degree Challenge Communiqué," a call for the world's governments to take strong action to slow greenhouse gas emissions.

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Climate change is basically accepted as fact the world over. But you wouldn't know it watching our political conventions (or at least one of them). So while the world seems to be waking up to a fundamental, existential threat to our species (and not to "the planet," which will be fine with or without us), the US policy debate remains mostly deaf, dumb, and blind.

Climate change has become a political "third rail," harder to talk about than changing Social Security or Medicare. We didn't hear any mention of it at the GOP convention, except as a punchline, and we didn't hear much at the DNC convention...except for one quick, but important, remark from President Obama. Former President Clinton mentioned energy efficiency and Vice President Biden said the words "clean energy" once. But then President Obama, after duly noting the chance to create more natural gas jobs, spoke about building wind turbines and reducing dependence on foreign oil. Finally, he stepped firmly on the third rail: "Climate change is not a hoax. More droughts and floods and wildfires are not a joke; they are a threat to our children's future."

This is great, but let's not get too excited. One line does not a policy make.

Still, Obama's admission that climate change is real (a low bar for showing leadership these days) is light years from Governor Romney's dismissive attitude. His convention speech mocked President Obama for his earlier promise to "begin to slow the rise of the oceans." Romney offered instead to "help you and your family" — as if the health and state of our entire planet has nothing to do with the health of our families.

Here's what makes the general silence on climate and the mocking from the self-identified pro-business party so absurd: tackling climate change is the smartest thing we can do for both our public health and our private sector. Reducing carbon emissions from our power plants, cars, and factories cleans the air and saves a lot of money. At the macro level, the burning of coal alone costs the U.S. about $350 billion per year in health (asthma, heart attacks, and so on) and pollution costs. At the micro level, from companies down to households, the opportunities to get lean and save money are vast.

But more strategically, tackling carbon is an immense economic opportunity. Here's billionaire and entrepreneur Richard Branson on the upside potential:

"I've described increasing levels of greenhouse gases in the atmosphere as one of the greatest threats to the ongoing prosperity and sustainability of life on the planet. The good news is that creating businesses that will power our growth, and reduce our carbon output while protecting resources, is also the greatest wealth-generating opportunity of our generation. [There is no] choice between growth and reducing our carbon output."

This quest will drive innovation and create millions of jobs for some lucky companies and countries. Is this multi-trillion-dollar opportunity something we really want to miss out on? The other major economies are not sitting this one out. Germany is quickly moving its electric grid to renewables. China is committing hundreds of billions of dollars to energy efficiency and much more to the clean economy in general.

But let's say you don't buy the argument that fighting climate change keeps us competitive globally, saves trillions of dollars, and generates new wealth. Then how about the overwhelming national security rationale? Using less oil, for example, reduces funding to petro-dictators around the world. The former head of the CIA, James Woolsey, puts is very bluntly: "Your gas money funds terrorism."

On this score the difference between the parties is stark. The DNC's platform includes the words "climate change" at least 18 times and lists it as an "Emerging Threat" along with cybersecurity, biological weapons, and transnational crime. While "emerging" may not be the word I'd choose, it's leaps and bounds beyond the GOP' s party platform, which mentions climate change just once...and again, only to mock it. Their platform complains that the Obama administration has elevated "climate change" (with the sarcastic quotation marks) to the level of a severe threat to our security.

But let's be clear: it's not the Democrats or even President Obama specifically that declared climate change a national security threat. That would be the Pentagon in its Quadrennial Defense Reviewtwo years ago.

A strong plan to tackle climate change through government policy, business innovation, and citizen action is not just something that's not optional; it's preferable. Moving away from carbon to a cleaner economy makes us healthier, more profitable, and more secure.

My work is not political — I try to help companies create business value from sustainability and green thinking, so I normally avoid these kinds of discussions. But the discrepancy in party positions on this most critical issue has become too extreme to ignore.

There's blame on both sides, but let's not pretend the two parties neglect climate change equally. Yes, it's a shame that most Democrats will not stand up and proudly stand behind many of the positions in their own platform. But the GOP's denial of climate science, and all the risks and opportunities it presents, is surreal.

Their views and policies on climate won't help our businesses deal with, and profit from, the largest market shift we've ever seen. And they won't help prepare our country for the hard realities of life in the 21st century.

(This post first appeared at Harvard Business Online and on Bloomberg - see the active commentary on either.)

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September 28, 2012

The Supposed Decline of Green Energy

Here's a surprising new fact about energy in the United States: the percentage of our electricity coming from the greenest sources — that is, the non-hydroelectric renewables such as solar, wind, geothermal and biomass — has doubled in just four years to nearly 6 percent. (Thanks to climate uberblogger Joe Romm for uncovering this data from the Energy Information Agency).

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This significant win for clean energy has gone mostly unnoticed in the press. If anything, the story has been the opposite: recent reports herald the decline of wind, and for a year the media has made a big deal out of the demise of solar panel manufacturer Solyndra.

Given this negative drumbeat, it's not surprising that the business world tends to perceive renewable energy as an altruistic, rather than fiscally prudent, investment. But this view is dead wrong. The renewable energy industry is growing very fast... and not because it's a philanthropic effort.

Let's look at the plight of solar panel manufacturers again. Every growing industry experiences painful shakeouts driven by rising competition. In the case of solar, vast investments in production capacity in China have quickly brought down the cost of panels — a jaw-dropping 65 percent slide in just 18 months. This is good news for people buying solar, but it's not great for many manufacturers. By lowering the "China price," the world's low-cost manufacturer is doing to solar what it did to the apparel and electronics sectors: driving higher-cost producers (usually in the West) out of business.

Aside from China's role specifically, all of this should look familiar to any students of business history. Adam Shor studies the solar sector for the Electric Power Research Institute. As he put it to me, "Show me a mature industry with more than five big players." In the most oft-cited parallel example, a century ago there were hundreds of car manufacturers.

But all of this context misses a critical point that most businesspeople are overlooking: problems for manufacturers do not equal problems for the entire sector.

Jigar Shah, a well-known clean tech entrepreneur and former CEO of the Carbon War Room, gave me this perspective: Solar cell manufacturers account for only three percent of the roughly 100,000 U.S. jobs in the solar sector. Another quarter make other components and the rest, making up a large, growing and local job base, work elsewhere in the value chain. Thus the fastest growing players are young companies that sell, install and service solar: soon-to-be household names like SunEdison (which Shah founded), SunRun, Sungevity, and SolarCity. In a lengthy article on these solar entrepreneurs, The New York Times recently reported that Sungevity, for example, has seen its revenues explode 16-fold in just two years.

So back to this doubling of the share of electricity. Once technologies take off, doublings can happen pretty fast — just ask the investors in the Internet, mobile or social media. Will renewables' share double every 4 years? As Shah pointed out to me, the solar business is growing 30 percent per year (see the Solar Energy Industries Association site for general info in the U.S. solar market). Here's a math check: doubling every 4 years requires 19 percent annual growth.

The power of exponential growth and economic tipping points work wonders: in just three more doublings in share, non-hydro renewables would provide nearly half of our electricity needs — more than we get from coal or natural gas today.

The scale and pace of change I'm describing is not a fantasy — it has already happened elsewhere. Portugal transformed its electric grid from 17 percent renewables to 45 percent in just five years (as of 2010). And in the first half of 2012, renewables provided over 25 percent of Germany's electricity. On one sunny day this past May, Germany set a world record by generating 50 percent of its peak electricity needs solely from solar power. Shah predicts that next spring, the number will be closer to 70 percent.

It was easy to write off renewable energy as a side show at one or two percent of total electricity generation. But it isn't good business to ignore it now, as the economics get better and better. Making the assumption that solar or all green energy won't work because one company didn't pan out is absurd. In 2000, were all technology investments poor bets because Pets.com went under?

The cost of using renewable energy, either through power purchasing agreements that cost nothing up front or through direct investment, is dropping fast. This reality changes the calculus on green energy for homeowners, governments and corporations alike. Upfront costs are falling, which makes the ongoing variable cost of renewables — that is, zero — even more attractive. Better yet, zero is a predictable cost, which CFOs love.

In recent years, several corporate energy managers have told me that when they run the numbers on renewables, the payback just isn't quick enough.

I'd suggest running the numbers again.

(This post first appeared at Harvard Business Online and on Bloomberg - see the active commentary on either.)

(Sign up for Andrew Winston's blog, via RSS feed, or by email. Follow Andrew on Twitter@GreenAdvantage)