You want jobs? Efficiency not mining

Over the next several weeks, the media will cover ad nauseum President Obama's decision on the Keystone XL pipeline that developers plan to run through the upper Midwest to connect the tar sands mining operations of Canada with the Gulf Coast export terminals of Texas.  Ignoring for now the potential cost in human life due to increased emissions of carbon soot and carbon dioxide, the increased risk to drinking water and arable land from pipeline breaks (which happen regularly), and the increased environmental damage to the Gulf Coast region where the tar sands refining operations will take place, the pipeline makes no sense from the point of view of a financial investment.  Depending on the source, the pipeline plans to create between 1,000 and 5,000 temporary jobs, 50 and 1,000 permanent jobs, and potentially influence the development of as many as 20,000 jobs.  It will cost at least $5.3 billion, and none of the fuel produced from the delivery and refining processes will go to support American machinery...it will all go to a burgeoning Latin American market.  This pipeline represents profits for the corporation that owns it, not energy independence for the US or Canada.  The jobs created by the investment - even if they happen at the highest level imagined - do not justify the expense, and we have much better ways to invest the capital.

For the sake of analysis, I consider a temporary job to have the value of one-tenth that of a permanent job; this assumes that a permanent job will last on the order of ten years, and the temporary job around a year.  This puts the range of direct, combined jobs at somewhere between 150 and 1,500.  At an investment of $5.3 billion, the investment-to-job ratio sits at around $35 million to $3.5 million per job.

The best alternative to the Keystone XL pipeline, energy efficiency investments, not only avoid all the human health problems KXL will cause, but it also creates more - and better - jobs.  Two recent energy efficiency programs serve as a basis for this argument.  The Energy Impact Illinois (EI2) program used ARRA money to match utility incentive program and private homeowner contributions to winterize homes and reduce the demand for heating energy.  In the US Southeast, ARRA funds also contributed to the Better Building Neighborhood Program (BBNP) which operated in the same fashion.  For each of these programs, the investment-to-jobs ratio looks like this:

Program                    Investment                      Jobs created                      Ratio         
EI2                               $24.0M                              140                          $171,428/job
BBMP                          $37.9M                              350                          $108,285/job

For an investment in energy efficiency on the scale of Keystone XL, the $5.3 billion investment would mean somewhere between 30,000 and 50,000 permanent jobs.  With a simple return on investment (ROI) somewhere in the 10-50% range for the direct savings (reduced utility costs), and a multiplier effect resulting in an ROI of up to 375% regionally from the boost to jobs and economic growth.

For decades, many have argued against investments in renewable energy and energy efficiency because they "cost too much".  This argument had merit on the renewable energy side when new technologies had no scale or access to market, and on the energy efficiency side when energy costs remained artificially low due to market manipulation and the absence of externalities (like the additional healthcare costs and property damage that results from burning fossil fuels).  The charge that clean energy costs too much no longer holds water.  Investments in energy efficiency bring greater ROI than investments in fossil fuels, and result in hundreds of times more jobs.  In a time when we see coal plants shuttered because owners cannot afford to pay for maintenance, and power producers investing in wind over natural gas, the time is right to stop investment in fossil fuel projects that will lead to forty more years of guaranteed, high volume use of fossil fuels.  The time is right to say, "No!" to Keystone XL, and instead put that money into energy efficiency (first) then renewable energy.

Because it will put Americans back to work and make our quality of life better.  Is that not what we should expect from our economy?