NDN Blog

This week, President Obama announced the lineup of his new energy team. The nominations of Gina McCarthy for EPA Administrator and Ernest Moniz for Secretary of Energy – coupled with the already announced nomination of Sally Jewell at the Department of Interior – illustrate President Obama’s commitment to energy as a driver of the next economy. Given the range of important issues this team will face, the Senate needs to quickly confirm all three.

As has been noted before, under President Obama, America has a national energy strategy for the first time in decades. The All of the Above strategy balances the President’s politics of grounded pragmatism regarding America’s current energy supply with his clear understanding that our future depends on clean energy.  

Dr. Ernest Moniz is a physicist and the Director of the Massachusetts Institute of Technology’s Energy Initiative. In this role, he conducted research on virtually all aspects of energy. He served as Undersecretary of Energy in the Clinton Administration. 

Gina McCarthy will helm EPA at a potentially momentous time in the agency’s history. The potential for EPA to regulate carbon at existing power plants during the next four years – as mandated by the Clean Air Act - could shape the future of American energy policy and the future of the planet.

This team will have stewardship over a range of initiatives that are critical for creating next economy jobs, including ARPA-E and the clean energy portion of advanced manufacturing. Given the importance of these emerging sectors of the economy, the Senate should move to quickly confirm the President's energy team.

(Addendum: Dr. Moniz has drawn some criticism for his support of natural gas by anti-fracking advocates. This prompts two important clarifications: 1) Dr. Moniz supports natural gas as a ‘bridge fuel’ - replacing carbon intensive coal with less carbon intense natural gas - specifically on the grounds of reducing carbon emissions and 2) the Department of Energy has little jurisdiction over fracking policy. It’s also worth noting that Al Gore knows and highly respects all of these candidates and wishes them the best of luck in their confirmation.)

Thanks to all who attended our great discussion with Nish Acharya, Director of the Economic Development Agency’s Department of Innovation and Entrepreneurship.

Mr. Acharya’s remarks touched on the wide range of issues associated with innovation with a specific emphasis on what the Obama administration has done to help enhance innovation ecosystems around America. Mr. Acharya spoke at length about EDA’s groundbreaking I6 Challenge, what has grown out of that process, and how accelerating regional economies is critical for entrepreneurs across the country.

We appreciate Mr. Acharya’s time and encourage all to learn more about the interesting and underpublicized I6 challenge here.

Infrastructure featured prominently in the 2013 State of the Union address. This week, the President rolled out some more information on his various initiatives to rebuild America’s infrastructure. This plan is wholly consistent with the infrastructure component of our Next Economy Partnership Project. As you know, we believe investing in innovation infrastructure is a key step in creating new jobs.

The President’s $50 billion proposal – known collectively as Fix It First - consists of a handful of important measures. $40 billion is dedicated to upgrading bridges, roads, and transit infrastructure. Also included in this effort is a measure to expedite the review processes often associated with infrastructure upgrades – an important and often overlooked impediment to getting work done quickly. Repairing and replacing our aging infrastructure is low hanging fruit when it comes to accelerating economic development. Not only are jobs created in construction, but updating and modernizing the ecosystem for entrepreneurs is critical for startup growth to occur.

From our perspective, the most compelling element of the President’s proposal is the Rebuild America Partnership. This Partnership is a combination of policy concepts that unite under the banner of expanding the role of localities and enhancing the role of private capital in infrastructure investment. 

On the financing side, the Rebuild America Partnership would aid in the implementation of the newly expanded Transportation Infrastructure Finance and Innovation Act program, commonly referred to by the acronym TIFIA. This program is designed to better leverage federal infrastructure dollars by attracting private sector funding as part of a project. In an era of constrained budgets, programs like TIFIA provide a path forward regarding financing major infrastructure projects.

Also in the financing realm, the Rebuild America Partnership calls for the creation of a national infrastructure bank. If Congress can make this happen, the bank could help localities finance a wide range of infrastructure upgrades, including transportation, water systems and modernizing our aging energy infrastructure. 

However, the most important concept of the Rebuild America Partnership is the concept of partnership itself. This model recognizes and embraces the importance of localities in making critical infrastructure decisions. By embracing a partnership model as opposed to a top-down, DC centric model, states and cities are empowered and innovation can thrive.

(You can read more details about the President's plan here.) 

It has long been a tenet of our work here at NDN/NPI that as a response to the rising levels of competition our companies and workers are facing today, our policy makers should strive to accelerate innovation throughout the American economy.  

To help us get a glimpse of the latest thinking from the Obama Administration on how to best accelerate innovation in the US, we are excited to host Nish Acharya, Director of the Office of Innovation and Entrepreneurship in the U.S. Department of Commerce’s Economic Development Administration for a lunch here at NDN/NPI on Wed, February 27th. 

Under Mr. Acharya’s leadership, the EDA has helped to implement the i6 Challenge, an innovative multi-agency grant that encourages and rewards groundbreaking ideas that accelerate technology commercialization, new venture formation, job creation, and economic growth across the United States.  He will be updating us on the progress of the i6 Challenge and other Obama Administration efforts.  

Lunch will be served at noon, and the program will begin at 1215pm.  Please RSVP here to reserve your slot. 

Thanks and see you on Wednesday the 27th!

John Grant

Director, Next Economy Partnership Project

President Obama’s ambitious 2013 State of the Union address laid out some important new thinking about a range of policy areas that are critical for rebuilding our economy for the 21st century. Many of these ideas are consistent with the policy principles of our Next Economy Partnership Project.

The fundamental argument that the President made during the State of the Union is the government has a role to play in our economic recovery. This argument is deeply consistent with our research and our advocacy. 

The three major questions posed by the President last night:

1) How do we bring more jobs to America?

2) How do we equip people with the skills to do those jobs?

3) When people have those jobs, how do we determine that they make a decent living?

These issues are inextricably intertwined. Jobs and skills go hand in hand. Similarly, the four main thrusts of the President’s plan for economic recovery are intertwined. The four main pieces of the President’s plan are advanced manufacturing, clean energy, education, and infrastructure. This plan is wholly consistent with the findings of our Next Economy research effort.

Advanced Manufacturing – On Tuesday, President Obama laid the groundwork for a major investment in advanced manufacturing. On Wednesday, the President fleshed out his plan for advanced manufacturing from a once shuttered Volvo facility in Asheville, North Carolina that has been reborn via advanced manufacturing. The manufacturing hub argument also connects a critical component of our Next Economy program – local involvement. Partnering with local leaders to attract new investment in communities can jolt the entire ecosystem back to life. 

Clean Energy – As noted here, clean energy and advanced manufacturing are interrelated. In the State of the Union, President Obama called on Congress to pass a market based solution to reduce carbon pollution. Even though deployment of renewable sources of energy has doubled in President Obama’s first term, a cap on carbon would further kickstart the clean energy economy. We’ve advocated for a carbon tax or a clean energy standard, but more realistically, Congressional inaction will force the President to take action on climate and clean energy through his regulatory apparatus. The President proposed an Energy Security Trust to fund research into alternatives to oil. This effort could fund breakthrough research to end oil dependence and protect American families from price shocks in the global oil market.

Education – A major element of boosting our economy is boosting our workforce. President Obama’s call for investing in STEM education and enhancing our community colleges is a critical component of retooling our workforce. In Asheville, the local community college partnered with Linamar to create a pool of workers for their new facility, a model that should be replicated across America. Today, President Obama set a national goal of 2 million Americans retrained with skills for a modern economy.

Infrastructure – It’s tough to get to work if the roads and bridges in your town are falling apart. Although infrastructure investment is hardly the sexiest policy, it is one of the building blocks to getting local economies moving. Since our national economy is a network of local economies, it’s important to get things moving at home. The President’s Fix It First program frontloads $50 billion for infrastructure investment, accelerating the upgrading our infrastructure desperately needs. But, as the President noted in the State of the Union, infrastructure isn’t just about roads and bridges, it’s about the range of networks that connect us and allow innovation to thrive, including a smart grid and broadband.

 “Ask any CEO where they’d rather locate and hire,” Obama said, “a country with deteriorating roads and bridges or one with high-speed rail and Internet, high-tech schools, self-healing power grids.”

Enacting the President’s plan for boosting our economy is critical for our recovery to take hold, but that shouldn’t discourage the administration or our nation. Thomas Edison once said ‘Opportunity is missed by most people because it is dressed in overalls and looks like work.’

The President did his part - 67% of viewers approved of his State of the Union proposals. Now is the time for all of us – Congress, entrepreneurs, innovators and workers - to roll up our sleeves and get to work.

From our inception two years ago, the Next Economy Partnership Project has been dedicated to accelerating job creation.

Following in the footsteps of 'the most important chart in American politics,' we believe our Next Economy research has established a clear path forward for an important policy agenda that can create new jobs in the sectors of the economy that matter in the 21st Century.

The best way to kickstart our economy is investing in education, clean energy, advanced manufacturing and innovation infrastructure.

The slide below was taken from one of our presentations on Investing in 21st Century Jobs from early 2012.

After years of circulating this short agenda in and around Washington, it is time for these ideas to become reality in 2013.

As the State of the Union approaches, Americans remain primarily concerned about the economy and jobs. This fact is confirmed by our own Next Economy research, as well as by recent opinion research from the Pew Research Center. Faced with an intransigent majority in the House that paralyzes progress on virtually all fronts, what can the President call for in his State of the Union that might break the logjam on job creation in Washington?

The Next Economy Partnership Project has advocated for several possible solutions over the course of the last two years. We believe that these commonsense, mainstream policies will help accelerate job creation in cities and towns across America by providing the building blocks for entrepreneurs to thrive. The three areas of action that we have pressed for are innovation infrastructure, advanced manufacturing, and retooling our workforce. The time to invest in those areas is now.

Infrastructure investments are critical for both near term job growth and long term competitiveness. Why? Our crumbling infrastructure is holding innovation and private investment back. Recent studies show that every dollar invested in infrastructure boosts the economy by $2.

We’re advocates of what we call ‘innovation infrastructure.’ which is much more than just roads and bridges. Infrastructure means networks – the networks of roads and bridges that connect our vehicles is important. But truly investing in a broad scope of transit and transit oriented development is a whole different level.  Another critical element of innovation infrastructure is energy. Modernizing and cleaning up our energy infrastructure is critical to unleashing the power of American entrepreneurship in an emerging, trillion dollar segment of the global economy. Innovation infrastructure also makes local communities more competitive. As noted by the Metropolitan Project at Brookings, we’re less a national economy and more of a network of local economies. Although national job numbers are important, job gains are made in local communities. People measure the strength of the economy by what they see and feel locally. Going local on job creation empowers communities and enhances consumer confidence.

We support developing a national infrastructure bank as a means of investing in innovation infrastructure. States and metro areas are ready to move on rebuilding, they’re often simply waiting on the capital.  Senator Warner from Virginia is making some noise in the Senate about the importance of an infrastructure bank. He has the savvy to potentially get this idea moving in the upper chamber of Congress and the President should support his effort.

The State of the Union needs to make a big emphasis on advanced manufacturing which is a growing and important sector. Innovation and manufacturing exist in a symbiotic relationship,  and the President should recognize this, making a major push for advanced manufacturing in the form of extending and deepening the Advanced Manufacturing Partnership, growing the National Network for Manufacturing Innovation to a broader array of metro areas, and by putting continued emphasis on the hard work of growing the manufacturing ‘ecosystem’.

Any conversation about jobs really comes back to one critical element: people.  One of the largest components of the manufacturing ecosystem is workforce and our most valuable resource is the American worker. A major national initiative devoted to retooling our workforce could help bridge the skills gap for workers with 20th century skills. A major commitment to retraining workers to gain 21st century workforce skills, STEM education from kindergarten to graduate school and enhancing community colleges across America will all be necessary steps to rebuild the American workforce for the challenges of the next economy.

Our great nation faces many challenges, but making investments in these three areas could change the face of the economy for decades to come. We can’t wait any longer.

Crossposted at GE's Ideas Lab

Americans want clean energy. Recent polling shows that 92% of Americans believe developing clean renewable energy like solar power is important. Our own research at the Next Economy Partnership Project shows that Americans think clean energy – along with advanced manufacturing – will be one of the top sectors for job creation in the coming years. And the public is right.  The domestic advanced energy market is expected to grow to $157 billion this year, making up 15% of the one trillion dollar global advanced energy market, according to AEE.

Clean energy is clearly beginning to take root domestically. According to a new report by the Business Council for Sustainable Energy, America’s total installed renewable capacity DOUBLED in the five year period between 2008 and 2012. As you might expect, as renewables get deployed at a larger scale, the price of renewable electricity plummets.  Electricity generated by large solar plants has dropped from 31 cents per kilowatt hour to 14 cents per kilowatt hour, a price reduction of over 50%. Wind energy had its strongest year ever in 2012, now generating enough electricity to power almost 15 million homes – the equivalent of every home in Colorado, Iowa, Maryland, Michigan, Nevada and Ohio combined. 

Let’s not forget that the 5 year period covered by this study is also the worst five years for the American economy since the Great Depression.  Despite these headwinds, the clean energy sector is growing. This has tremendous implications not only for the economy, but for climate change. According to BCSE, from 2008 to 2012, energy related carbon emissions dropped by 13%. Although that’s not enough, it’s a step in the right direction to mitigate the damaging effects of climate pollution.

By making clean energy one of the handful of issues to spotlight in his second inaugural address, President Obama has made clear that he believes it to be a big part of our economy’s future, and that investing in innovation in clean energy will be a critical near-term mechanism to address climate change. Helping ensure that the clean energy sector gets firmly anchored in the United States is clearly a priority for President Obama, as it pushes forward jobs growth, economic recovery, and medium-term climate change mitigation. 

So what does this have to do with manufacturing? Quite a bit, actually. As domestic clean energy grows, domestic advanced manufacturing will grow along with it. That’s why the Obama Administration has already undertaken a range of innovative initiatives that combine clean energy and advanced manufacturing, including the Advanced Manufacturing Partnership, Energy Innovation Hubs, and the National Network for Manufacturing Innovation. 

A great real world example of the symbiosis between clean energy and advanced manufacturing is a Michigan based company called Energetx. Formerly in the yacht construction business, the company decided to shift gears and began production of wind turbine components. (It is worth noting that this transition was made possibly largely due to a $3.5 million grant from the U.S. Department of Energy via the American Recovery and Reinvestment Act.) By harnessing both of these trends simultaneously, a 20th century company was reborn at the height of the Great Recession. Energetx is now a 21st century enterprise which has not only survived, but grown and thrived.

Many of the policies that are good for the development of clean energy also provide support for advanced manufacturing. Building out a stronger manufacturing ecosystem, continued investment in innovation, and near term investment in workforce retooling coupled with long term investment in STEM education are all critical for both clean energy and advanced manufacturing. Our colleagues at the Brookings Institution have called for a designation of 20 colleges as ‘manufacturing universities,’ allowing them access to federal grants specifically geared towards manufacturing engineering. Similarly, smart energy policy that includes a federal Clean Energy Standard or a carbon tax would also significantly boost advanced manufacturing and 21st century jobs growth. At the end of the day, policies like these may be oriented towards clean energy and advanced manufacturing, but they’re also critical for job creation, American competitiveness, and workforce development – an important factor in this conversation that is often overlooked.

By viewing clean energy and advanced manufacturing as two sides of the same coin, we can accelerate job creation in both of these critical emerging sectors.

Advanced energy is changing the face of American energy.  A new report by the Business Council for Sustainable Energy spells out how advancements in natural gas and clean energy are transforming the sector overall.

From 2007 to 2012, natural gas rose to 27.2% of total energy consumption (including electricity, heat, and transportation) from 23.4%, while renewables including wind, solar, biomass and hydropower have jumped to 9.4% from 6.4%. Meanwhile, during the same period, coal declined to 18.1% from 22.5% and oil fell to 36.7% from 39.3%.

America’s total installed renewable capacity DOUBLED in the five year period between 2008 and 2012. As you might expect, as renewables get deployed at a larger scale, the price of renewable electricity plummets.  Electricity generated by large solar plants has dropped from 31 cents per kilowatt hour to 14 cents per kilowatt hour, a price reduction of over 50%. Wind energy had its strongest year ever in 2012, now generating enough electricity to power 15 million homes – the equivalent of every home in Colorado, Iowa, Maryland, Michigan, Nevada and Ohio combined. Electricity generated by wind has also dropped in price. (Check out this fun graphic that illustrates the clean energy transformation that we're undertaking.)

Let’s not forget that the 5 year period covered by this study is also the worst five years for the American economy since the Great Depression.  Despite these headwinds, the clean energy sector is growing. This has tremendous implications not only for the economy, but for climate change. According to BCSE, from 2008 to 2012, energy related carbon emissions dropped by 13%. Although that’s not enough (and almost certainly has some correlation with the economic downturn), it’s a step in the right direction to mitigate the damaging effects of climate pollution.

As the nascent clean energy sector continues to grow, prices will drop and more jobs will emerge. Perhaps the sector is even becoming more willing to throw some political weight around, dropping their memberships in ALEC after the organization pushed to kill state based clean energy legislation.  

The transformative effect of clean energy is only starting to be felt. 

Americans want clean energy. This is a fact.

Recent polling shows that 92% of Americans believe developing clean renewable energy like solar power is important – 92%! We can’t get 92% of Americans to agree that it’s 2013.

This begs the question: if so many people want it, why isn’t clean energy development exploding?

The short answer is that clean energy IS exploding. The domestic advanced energy market is expected to grow to $157 billion this year – 15% of the global advanced energy market, according to AEE.

And as we’ve said repeatedly, clean energy needs three things to thrive: technology, financing, and policy. Big strides have been made on all of these fronts in recent years. But any emerging sector is going to face some growing pains.

This LA Times piece shows how challenging energy markets can be.

California has a law that mandates the state get 33% of its electricity from renewable sources by 2020. That’s the type of policy that we want to see. Seeing an opportunity to provide some of California’s clean energy, an entrepreneur is developing a plan to bring wind power from the plains of Wyoming to the sprawling metropolis of Los Angeles.

(It’s worth noting that the entrepreneur in question, Phil Anschutz, is a part owner of the Staples Center in LA and is a conservative that comes from oil side of the energy business. He’s not investing in wind because it makes him feel good. He’s investing in wind because it will make money.)

Interior Secretary Ken Salazar approved plans for the wind farm in the fall of 2012. (The footprint of the project is largely on federal land.) Salazar described the project as the largest wind project in American history, possibly in the history of the world.

Despite solid financial backing, proven technology and a policy that is sparking development, California isn’t quite sold yet. In addition to the challenges associated with hundreds of miles of transmission lines, officials in California imply that although they like clean energy, they want the jobs in California.

To be clear, we’re not endorsing either the side in this context, simply pointing out some of the complexities that clean energy enterprises face as they enter a challenging market. These challenges are not too large to overcome. A strong federal policy could help ameliorate problems of this nature moving forward.