The $30 billion jobs opportunity

In an election year, you cannot swing a dead cat without hitting a political ad, photo op, or campaigning politician. In a country still reeling in many ways from the economic collapse of six years ago, the largest talking point still centers around job growth. Regardless of one's opinion on how many jobs we really need as we develop more and more efficient ways to maintain our quality of life, the current state of affairs in Illinois comes down to 433,000 people who want and need to work who cannot find a job. With approximately 150,000 to 200,000 job openings in Illinois going unfulfilled, we would need to create about 250,000 new jobs in order to obtain full employment. With manufacturing making a slow recovery, and nowhere near fast enough to create that kind of growth, where can we turn for good paying, productive jobs?

Clean energy and energy efficiency.

Currently, Illinois' residential and small business consumers spend over $30 billion a year for energy. Almost all of that capital leaves the state, with only a small portion getting recycled back into the Illinois economy. If we can find a way to tap into that capital already being spent, and turn that into job growth, we can both improve our employment situation and create a cleaner, healthier future. In addition, that $30 billion, at current rates of escalation, can be $35-40 billion within only a year or two, so economically, it behooves us to move quickly.

The key to the job growth comes from the need for almost all energy efficiency and clean energy work to use local labor. The fixing up of homes and small commercial buildings, installation of solar panels, and construction of wind turbines uses, almost exclusively, local labor. Dirty energy industries, including nuclear, employ somewhere between 5 and 8 people for every $1 million spent. Clean energy and energy efficiency employ about 16 to 17 in good, median income-scale jobs. That means that our $30 billion each year could fund as many as 495,000 jobs in Illinois. Even if we only took half of our current energy expenditures and switched them to clean energy or energy efficiency, we would more than eliminate our current unemployment. In addition, we would build a stronger, more resilient economy less susceptible to shocks from energy price increases.

It will take much work in our financial sector to develop the mechanisms to make this change happen, but it can happen within months, not years. We have the capacity to train workers through our robust community college network. We have the knowhow through years of programs managed by local consultants and non-profits. All it takes is for the financial system to let small building owners tap into the same tools to which institutions and large customers already have access. Tools like on-bill financing, property-assessed clean energy, and community energy cooperatives provide the mechanism that can turn $30 billion a year in energy expenditures into a $500 billion construction program.

It will also take political will...to bring big energy companies and utilities to the table when any program like this is in the interest of the consumer but not large energy companies. It will be interesting to see if either candidate for Governor has the insight or will to make something like this happen.

Going nuclear on nuclear

I have a bit of a secret for you. If you find a room full of your tree-hugger friends getting a little too chummy with indignation over the recent reports of fracking-related media, or reveling in the environmental benefits of their new electric cars, you can break up that harmony by walking over and uttering one simple sentence...

"So you all have to love nuclear energy because of the reduced climate impact, eh?"

No issue sends environmental advocates to their corners more than the nuclear issue. On one hand, you have those screaming for climate impact reductions who think we have to use and maybe even expand nuclear to produce nearly carbon-free electricity. On the other, you have those who fear the safety of increased reliance on nuclear energy, and the continued risk of mining a limited resource. Like most issues related to energy, both camps are right environmentally and technologically speaking. The interesting thing is, economically speaking, the pro-nuclear camp is the one that is wrong.

The current technology for generating electricity from nuclear energy operates between 25% and 33% efficiency, not including the energy to mine and transport the fissile material to the generating plant. At the same time, among all the conventional fuel options, nuclear requires the largest number of people per unit of output. Despite these high labor costs, nuclear remains a moderately competitive because of low fuel costs. With a limited number of countries that have nuclear technology operating only 500 plants worldwide, demand for fuel remains constant and prices do not fluctuate greatly.

The most significant cost elements in nuclear power plants come from the capital-related expenditures associated with building, renovating, and decommissioning plants. Power plants have a 40-year life cycle after which they must receive an extension on their license to operate (which they will again have to do every 20 years going forward). At this time, they must meet all regulatory requirements. This requires a significant investment. As plant operators approach this milestone, they have a decision to make: invest in the plant upgrade or shut down the plant. This decision is entirely an economic one, and several operators have made the decision not to invest.

Several factors contribute to the economic downfall of nuclear. First, as mentioned previously, it has a high capital investment requirement - the most of any electricity generating source except solar, and that has changed drastically over the past several years. Second, natural gas mining through fracking has altered the course of projected electricity costs. Utilities and generators made huge investments in natural gas plants starting at the end of the last century, and that market now drives the cost of electricity. (This has also caused the shuttering of coal plants as they cannot keep up with the investments at the current historic low prices for electricity.) Third, due to significant drops in the rate of increasing electrical demand, we have historically high capacity factors in our electricity generating fleet. Capacity factor measures how much peak delivery capacity we have relative to the peak demand from the grid. Operators of the grid like to maintain at least 15% capacity factor, and we sit now at 22%. We can lose generating capacity and still have a cushion for unforeseen conditions.

Many advocates for nuclear fear that dropping our nuclear capacity will threaten future stability in the electricity market and could cause us to move sharply back to coal in the future. This concern has merit if you consider coal and nuclear to be the only options. Recent developments in solar technology and increases in production capacity have dropped the price of solar PV to a point where it nears grid parity with all forms of generation. If this trend continues (and with room to grow and improve, there is no reason to think it will not), it is just as likely that solar replaces nuclear. Even more economically feasible, new wind development already beats all other forms of electricity generation for cost effectiveness. We have only begun to tap both of these sources.

Even more importantly, we are a nation of waste and excess. We currently use twice as much energy per person as the rest of the developed world to deliver at best the same quality of life. Opportunities abound to reduce the amount of energy we consume, and more importantly for this discussion, the peak demand for that energy. Investing in real, permanent demand reduction costs less than investing in refurbishing nuclear plants - and certainly far less than investing in a new one. The other benefit is that we can realize these demand reductions in one or two years as opposed to the ten years it would take to install a new nuclear plant, and at about the same time horizon it would take to repair one. We can easily replace nuclear (and coal for that matter) with demand and consumption reductions and not change our quality of life one bit.

The nuclear plants we currently operate need to live out their useful life, and then retire. We should prioritize the decommissioning of those that sit in fault areas so that we avoid the consequences that Japan felt after the Fukushima disaster, and plan regionally to adjust capacity. We also must develop technologies that render the waste products from these plants inert. The case against nuclear does not have to include the fear of the nuclear waste, but we must consider the mitigation of that waste a priority going forward. We cannot leave a 10,000 year legacy of potential life-threatening material, and must include the cost of that mitigation in the analysis. For the coming decades, even if we eliminated nuclear power today, our country would pay billions of dollars to protect us from the consequences.

The modern environmental movement is not a one-trick pony focused on carbon. We can reduce carbon and address a more sustainable, renewable energy future without nuclear. It not only makes ecological sense to do so, but also economic sense.

End the Green Economy

For the better part of the last fifteen years of my career, I have spent much time among advocates of the "green economy": one where we consider the triple bottom line of economic, environmental, and social performance.  This has spawned a whole new language of economic development around the word green including "green jobs",  "green materials", "green practices", etc.  For the most part, the industry has applied these labels in an attempt to convey that certain products or services have more value to a consumer, and therefore, can justify higher costs.  In some cases, these higher costs come from small implementation that has not yet reached scale to create economic advantages, and in some cases, the new strategy or technology avoids producing harms that conventional approaches do which means higher costs.  On the other hand, sometimes, people just want to charge more, and hope that labeling something "green" will motivate people to spend more than they might.  Regardless of the motivation, there is one thing that now becomes clear to me.

We must end the green economy.

By advocating for a green economy, we automatically set up a conflict between the current economy and another one that challenges it.  This sets up a debate where those succeeding in the current economy control the conversation by constantly challenging the new economy (or subset of the economy) and proposing all types of calamitous consequences if we follow this new path.  People naturally resist change and cling to the comfortable, so this line of reasoning has great traction and creates roadblocks to achieving the goals of better quality of life.  Instead of presenting this new economy - rife with unanswered questions about the true implications of full implementation - with its "green" moniker and advocating for wholesale revolution, we should consider a better path.

Those who advocate for a "green economy" out of altruistic reasons seek better quality of life for all.  This means that in making one person's life better by providing access to reliable energy, we cannot reduce the quality of life for another by polluting their community.  For those that advocate on this level, the more desirable plan should focus more on challenging the failings of the current economy rather than presenting a wholesale collapse and rebuild.  The current economy is supposed to distribute resources adequately and fairly.  When it does not, we need to challenge that.  The current economy is supposed to assign all of the costs and consequences associated with a product or service to that product or service.  When it does not, we need to challenge that.  The current economy is supposed to provide clear information to all parties in a transaction so that each may make a rational decision.  When it does not, we need to challenge that.

One of the failings of the discussion of the green economy comes from the instant association that many have with "green" meaning increased regulation.  Although any time we discuss asking more of industry, we often devolve to regulation because of a combination of industry resistance and political posturing, the changes in the economy can come in many forms.  For every significant benefit realized by improving CAFE standards through regulation, we have equal benefit through Energy Star labeling that allows industry to determine the method of performance.  Whereas intense scrutiny of power plant and refinery emissions for toxins has protected waterway and airstreams effectively over the past generations, we have achieved equal successes through market-based forces like cap-and-trade (specifically for sulfur and nitrous-oxide emissions from power plants).  In all of these cases, the most important part of the discussion was not the IF but the HOW.  The current debate on implementing a "green economy" still centers on the IF...we need to move it to the HOW.

How do we do that?  It starts by demanding more of the current economy.  We should pepper our leaders - both industrial and political - with questions about performance.  Why do people in West Virginia have to suffer the negative effects of coal ash dumping in order for people in DC to get power?  Why can companies spend millions of dollars lobbying against technologies such as rooftop solar that compete in the marketplace, while avoiding making required changes in their power plants to reduce emissions?  Why do industries not have the requirement to maintain the atmosphere, waterways, and earth at the same level of natural state as it was before their operations?  Why should an employee accept endangering their life for reasons unrelated to the job they do?

The time has come to turn the debate from one about "why a green economy?" to "why the current economy?".  Over the past several decades, we have seen quality of life gains plateau or even recede. While other countries continue to grow across classes, we see the large portion of our population less well off now than they were twenty years ago.  Those of us who advocate for the results of the green economy know that it will not only improve our quality of life, but produce a more stable economy.  In order to get there, though, we need to drop the conversation that puts us on the defensive, and instead make the advocates of the current way of doing things defend their system.

A year in green tech: 3-D printing

Like most members of my generation, I remember the red and blue glasses that people would wear to watch three-dimensional movies - which had been invented a generation earlier - and then three-dimensional television.  They did not really work all that well for TV, but the movie experience was entertaining...even if most of the movies were not.  It is funny now that almost every major action movie gets released in a 3-D version, my family and I vote much more often to watch the 2-D version.

With three dimensional entertainment still more of a fashion than a value-added experience, there is a 3-D technology that could completely change our quality of life and even the way that we think of moving goods and resources.  Three-dimensional printing offers the possibility to create objects with a minimum of waste, and at the user scale not the industrial scale.  The technology follows a simple principle of adding material to create a model, item, or form.  Traditionally, we either cast items in injection molding, or we machine away material from a stock to create a solid object.  The first takes significant amounts of energy to accomplish the end goal, while the second either wastes material or takes time to collect and recycle the remnants.  In 3-D printing, the device continuously layers material to build the item.  It uses only the material necessary to create the finished product.


How will this change the way we live?

Airwolf 3D

Currently, we use most of the items we own only a fraction of their useful lives.  For many of these, we only need them for minutes, then we do not need them again for a long period of time.  Instead of having to own all of these only to use them sporadically, what if we could use the item, break it down into its constituent materials, then reform it into something else that we need.  If we continue to do this over and over again, we not only eliminate the concept of waste, we minimize the amount of resources we need to support our quality of life.  It will take the addition of energy to continually make the changes to the material, but given the amount of renewable energy available to us, and the knowledge we have of how to do most everything else with a minimum of energy use, tackling both concerns coincidently seems well within our technological grasp.

In manufacturing, 3-D printing can reshape industry.  Currently, our manufacturing industry works with a small number of relatively large scale points taking stock resources and assembling finished products that they then ship to a larger number of wholesale or retail outlets.  This requires "double handling" of first the stock material and then the finished product.  It also creates "feast and famine" economies for many towns that host these large scale operations.  Down the road, as technology improves, we can move to the point where each community has multiple manufacturing centers similar to today's big-box retail.  In those spaces, stock materials and a small-number of manufactured-for-assembly items would arrive, and a local workforce would use these inputs to create the products that their community needs.  If a resident or small business owner needs a specialty replacement part, they do not have to worry about a manufacturer no longer supporting the item, they just send a scale image to the center and receive a new one within hours.  Institutions already are doing this and saving both time and money.

Three-dimensional printing does have challenges.  First, the process moves slowly, and currently only supports small-scale items on even a remotely commercial level.  Also, with the level of current technology development, the quality of the finished product does not meet the expectations many of us have for some items.  Industry has made much progress, and just today, HP announced that they have made some breakthroughs on both these issues and will have an announcement later this year.  That may just amount to corporate propaganda, but the presence of such a large company in the arena means that capital and talent have converged on the issue.

The technology will not, in and of itself, feed an ever-growing population, or right all the injustices of inequality that threaten our quality of life.  It does move us one step closer to making life easier to support with fewer resources, and given our current projected predicament, every improvement helps.

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?