Energy Buzz

Environmental Quality

Energy Insights from Experts Marilyn Brown and Arthur Ragauskas

Stimulus Package Brings Green Jobs to the Rescue

By Marilyn Brown

Marilyn Brown

Marilyn Brown
Professor, School of Public Policy
Georgia Institute of Technology

The United States is in the midst of an economic downturn of historic proportion. A failed national energy policy has contributed to our shrinking gross domestic product, and investments in a new energy economy can help turn this around. With the need to inject capital into the economy, the nation has an opportunity to invest in a sustainable energy future in ways that have not been politically feasible since 1981. That was the year when President Reagan dismantled the renewable energy initiatives of the Carter presidency following the 1973-74 Arab Oil Embargo.

In his first weekly address since being sworn into office, President Obama described how the American Recovery and Reinvestment Plan will jump-start the economy. While the Administration is still working with Congress to finalize the plan, the House and Senate versions of the plan would spend between $51 billion to $54 billion on green energy. These investments are aimed at laying the foundation for future economic growth. Altogether, the plan is expected to create 3 to 4 million jobs over the next few years, and green jobs are among the most certain of the employment benefits.

The vision is to stimulate economic growth so that we can pay off the rising national debt and move into a long-term period of economic growth supported by a modern energy infrastructure that is powered primarily by domestic energy resources. If successful, the stimulus bill will deliver more secure energy in the long run, less air pollution and lower greenhouse gas emissions, and will replace U.S. earnings now flowing overseas to oil-rich nations located in unstable and unfriendly regions of the world.

According to President Obama's top economic adviser, Lawrence Summers, the stimulus bill must have three features to be effective. It must be timely (that is, spent quickly on "shovel-ready" projects), targeted (to help low- and middle-income people) and temporary (raising the deficit for only a year or two). The green energy initiatives proposed in the stimulus bill seem consistent with these principles. Key proposals include the following:

  • Jump-start the transformation to a smarter electricity grid by installing more than 3,000 miles of modernized transmission lines to open up new markets for alternative energy production and 40 million "smart meters" to optimize operations through a combination of data, communications and controls that allow customers to respond to real-time electricity prices signals.
  • Double our capacity to generate alternative sources of energy such as wind, solar and biofuels over the next three years by extending the renewable energy production tax credit and creating Clean Renewable Energy Bonds to finance facilities that generate electricity from renewable resources.
  • Provide grants to state and local governments to expand energy efficiency and renewable energy programs, in conjunction with a pledge that governors will support regulatory reforms of utilities and strengthen state building energy codes.
  • Reduce transportation fuel costs, petroleum imports and carbon dioxide emissions by replacing the federal fleet with more efficient vehicles, modernizing public transit systems, and supporting state and local governments in carrying projects that encourage the use of plug-in electric drive vehicles.
  • Save taxpayers money by making 75 percent of federal buildings more energy efficient and by weatherizing at least 2 million homes of low-income families – in both cases, the money that is invested up front to improve the energy integrity of buildings is surpassed by the stream of energy savings that accrue over the useful life of the energy retrofit measures.

Because green energy jobs are more labor intensive than the traditional energy supply industries, such initiatives would produce a meaningful boost in employment. For example, the electric utility and the natural gas service sectors directly and indirectly employ about 5.3 and 3.7 jobs, respectively, for every $1 million of spending. But sectors vital to energy-efficiency improvements, such as construction and manufacturing, utilize 13.3 and 8.3 jobs per $1 million of spending.

According to Rahm Emanuel, President Obama's chief of staff: "You never want a serious crisis to go to waste." The American Recovery and Reinvestment Plan can set in motion investments that have been long overdue.

Electricity Reliability*

Natural gas price for electric power ($/MBtu)
2008
(thru 10/31)		 2006
$9.83 $7.49
Percent Increase: 31.2%

*All metrics are in 2008 dollars.

Oil
Security*

Price of Oil ($ per Barrel)
2008
(thru 11/31)		 2006
$99.55 $62.19
Percent Increase: 60.1%

*West Texas Intermediate Crude Oil sold for $40.17/barrel on 2/6/2009, more than $100/barrel less than its peak oil price of $145.66 on 7/11/08, dropping in lock-step with the global financial meltdown

Environmental
Quality

CO2 emissions from energy consumption (billion tonnes)
2008
(estimated)		 2006
5.88 5.91
Percent Decrease: 0.5%

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The Promising Future of Biofuels

By Arthur Ragauskas and Marilyn Brown

The nation and especially the Southeast is well positioned with ample bioenergy resources to curb U.S. petroleum imports and shrink the hundreds of billions of U.S. dollars being sent to oil-producing regions around the world. What's being developed is a domestic source of bioethanol known as cellulosic ethanol. Unlike corn-based ethanol, cellulosic ethanol does not compete with food supplies because it is made from the non-edible parts of plants.

Oil price spikes over the past year, along with mounting evidence of global climate change, have put a spotlight on energy security and the need for renewable fuels. In addition, policy levers are now triggering investments in biofuels. The U.S. Congress first passed into law a Renewable Fuels Standard (RFS) in 2005 and then amended it by setting much more challenging and far-reaching goals in 2007. This legislation commits the United States to a five-fold increase in its use of transportation biofuels from 6.48 billion gallons of biofuels in 2007 to 12 billion gallons in 2010, 15 billion gallons in 2015, and 36 billion gallons in 2022. A key component of RFS is that advanced ethanol production (not based on corn) is required to increase from 0.1 billion gallons in 2010 to 3 billion gallons in 2015 and 16 billion gallons in 2022.

These goals are already stimulating the construction of new bioethanol plants across the country, and these are only the early days of a much-anticipated major build-up of ethanol infrastructure. Along with new plants, which increasingly will churn out a next generation of sustainable ethanol, the nation needs to invest in pipeline infrastructures and distribution systems to bring these new fuels to market.

Complementing this growth in cellulosic biofuel is the rising demand for wood pellets for biopower and heat production both in this nation and internationally. Wood pellets have become a growth industry in North America over the past decade, with both demand and production increasing by more than 15 percent annually. Once again, policy levers have helped drive this demand for bio-based electricity. More than half of the U.S. states have passed renewable portfolio standards or goals that require a certain percentage of their power to be produced by renewable sources. In many states, especially in the Southeast, biopower is one of the least costly renewable options.

Unlike wood chips, wood pellets are more uniform, lower in moisture, and have excellent transportation and storage properties. These characteristics have accelerated the international trade in wood pellets, with Canada and the U.S. both exporting to Europe, where U.S. bioresources are helping nation states meet their commitments to reduced CO2 emissions. The favorable cost structure of wood pellets, their environmental compatibility and no net increases in atmospheric CO2 have positioned this energy resource on a positive future growth path. The total production of North American wood pellets exceeded 3 million tons last year and is projected to grow four-fold in the next decade.

Ultimately, scientific advances are needed to enable a next generation of low-cost and energy-efficient biofuels to meet a higher percentage of our energy needs. Numerous alternative technologies for the conversion of biomass to biofuels are being explored worldwide. Among the approaches being researched are fast pyrolysis, chemical refining, algae farms and the use of alternative enzymes and microorganisms to break down plant fibers.

Just as the forest products industry contributed to the industrial manufacturing capabilities of the Southeast in the early 1930s, today's researchers are securing transformational technologies for converting pine trees into value-added cellulosic biofuels, biomaterials and biopower. These technologies will once again redefine the economic and social development of the Southeast and other regions of the country, while at the same time addressing the energy security and sustainability challenges of today and tomorrow.