By Robert Pollin, Department of Economics and Political Economy Research Institute, University of Massachusetts-Amherst

On March 22, the Surdna Foundation convened a small conference of researchers at its New York City headquarters on the topic of "Major Economic Challenges Ahead in Building a Clean-Energy Economy in the United States."  I had the opportunity to work with colleagues at the Surdna Foundation in helping to organize this event.

The aim of the conference was to bring together a wide range of researchers whose work either directly or indirectly addresses the economic challenges of transforming the United States into a clean-energy economy over the next 20-30 years.  The conference participants who have been working explicitly on matters of clean energy included Marilyn Brown of Georgia Tech, Mark Delucchi of UC Davis, Gary Gereffi of Duke, Skip Laitner of the American Council for an Energy-Efficient Economy, and Robert Repetto of the UN Foundation, as well as my University of Massachusetts colleagues James Heintz and Heidi Garrett-Peltier.  Those who work in other areas related to clean energy included Eileen Appelbaum of Rutgers, who works on labor markets and gender issues; Fred Block of UC Davis, whose recent research is on U.S. industrial policy; Richard Freeman of Harvard, whose research covers a wide span of issues in labor economics; and Chad Stone of the Center on Budget and Policy Priorities, who is interested in linking a clean-energy agenda with measures to reduce poverty.  The other conference participants, offering important perspectives as non-specialists, included John Hawkins and Beth Herz of Surdna and Debbie Zeidenberg of PERI.

The debates over major issues of concern started spontaneously and immediately in the morning, even before the first presentation (my own) began.  The high energy level was maintained non-stop throughout the full day meeting.  At the same time, the discussions were focused, both around strictly methodological issues and broader concerns about policy.

In terms of the policy ideas coming out of the discussion, as well as written comments provided by participants after they had time to reflect on our discussions, I think the main ideas can be summarized as follows:

Stress energy efficiency. Media portraits of a clean-energy agenda concentrate on images of windmills or solar panels.  Obviously, renewable energy sources, in particular wind and solar power, will be major factors in building a clean-energy economy in the U.S.  But investments in energy efficiency will play at least as important a role.  This includes investments in retrofitting our existing building stock; enhancing the efficiency of our electrical grid transmission system, through "smart grid" investments; and dramatically expanding our public transportation systems.

At least in the short-run, there are several major advantages of such investments in energy efficiency relative to renewable energy investments.  These include:  1) The technologies are known and reliable, so that the risks associated with such investments are low; 2) Energy efficiency investments will necessarily take place in all communities, and the spending will be concentrated within those communities as opposed to leaking out of the communities through imports; and 3) These investments are major engines of new job creation, with a wide range of opportunities becoming available in all communities.

Industrial Policies. Fred Block stressed the point that the February 2009 economic stimulus program, the American Recovery and Reinvestment Act (ARRA), incorporated for the first time in the U.S. a broad set of measures to stimulate private investments in clean energy.  But the ARRA is designed only as a two-year program.  Thus, Block asks, "What additional policy steps are required to catalyze the high levels of private investment and spending in clean energy and infrastructure that are needed from 2011 onwards?  How do we assure that the right tax incentives, financing structures, and regulatory rules are in place to assure the levels of "clean investment" needed on both economic and environmental grounds?"

Incorporating Private and Public Funding Sources. The ARRA provided an unprecedented level of federal financial support for a clean-energy investment agenda.  That support was financed through federal deficit spending.  Moving forward, we certainly cannot expect comparable levels of support for clean-energy investments coming from federal deficit spending.   A major policy research question will therefore be how to design an approach to financing that will maximize whatever is likely to be available for this agenda.  For example, Chad Stone suggested that we focus on ways of redirecting the existing levels of federal R&D spending to support a clean-energy agenda.  A broader question is how to create incentives for the private sector to redirect a significant share of their investment funds to clean energy.

Low-Wage Workers and the Poor. If, at least in the short-run, the primary effect of a clean-energy policy agenda is to raise energy prices for low-income households, then this will certainly undermine any long-term prospects for the clean-energy project.  By contrast, my PERI colleagues and I have proposed that there are three basic ways in which a clean-energy investment agenda can benefit low-income people:  1) by creating abundant new job opportunities; 2) by lowering home energy costs through building retrofits; and 3) by significantly lowering transportation costs through major investments in public transit.  Beyond these channels, Chad Stone emphasized that a cash assistance program is still a vital ingredient in a climate and energy program designed to put a price on carbon, since low-income people will disproportionately feel the effects of any increase in fossil fuel prices.

Improving Communications. Several conference participants stressed the central role of improving communication of our research findings and policy recommendations.    This is certainly an area that will require much more effective work, including joint efforts between researchers and those with more expertise in broadly-based communications initiatives.

The overarching purpose of our conference was to explore more deeply the ways in which a clean-energy investment agenda can become a centerpiece of economic policy in the U.S. over the next generation.  Lots of important ideas came out of the conference.  Most importantly, the conference enabled us to see more clearly both how much we have achieved to date and the major challenges that we face moving forward.


Robert Pollin is Professor of Economics and founding Co-Director of the Political Economy Research Institute (PERI) at the University of  Massachusetts, Amherst. His research centers on macroeconomics, conditions for low-wage workers in the U.S. and globally, the analysis of financial markets, and the economics of building a clean-energy economy in the U.S.  For Robert's bio, please click here.

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