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The President's Charge on Clean Energy

Welcome to President Obama’s second term.

The relatively brief inaugural address laid out the main elements of the President’s agenda for the next four years, including immigration reform, curbing gun violence, and taking appropriate steps to ensure the economic recovery continues. 

Many of the headlines from the President’s Inaugural address talked about his commitment to climate change. Indeed, the President talked about climate change at some length, but the actual text of his speech committed to clean energy.  Note the excerpt below:

We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.  (Applause.)  Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms. 
The path towards sustainable energy sources will be long and sometimes difficult.  But America cannot resist this transition, we must lead it.  We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise.  That’s how we will maintain our economic vitality and our national treasure -- our forests and waterways, our crop lands and snow-capped peaks.  That is how we will preserve our planet, commanded to our care by God.  That’s what will lend meaning to the creed our fathers once declared.

Note that the President commits to action on clean energy, not necessarily on climate. Although many of the President’s supporters would like to see action on both, the policy sets associated with these sectors have some variance. The Administration can take a wide range of actions that can help the emerging clean energy sector take root – and those actions would help mitigate some of the effects of climate change. But direct action on climate change – a cap on carbon in some fashion – is a different animal.

The President clearly views investing in innovation and clean energy as a critical near-term mechanism to address climate change. As noted in this space, recent reports indicate that the clean energy industry is now a trillion dollar entity globally. Taking appropriate actions to ensure that this industry continues to grow in America is critical for the economic recovery. Americans want clean energy jobs and believe they represent the next stage of our economy. Helping the clean energy sector get anchored in the United States should be the first step President Obama takes for the economy - and to combat climate change. 

Defining Innovation Infrastructure

The beauty of Twitter is that it forces you to write concisely. The downside of Twitter is that it forces you to write concisely – maybe a little too concisely. We sent out a tweet recently that probably deserved a little more than 140 characters.

At the Next Economy Partnership Project, our extensive opinion research shows that Americans want critical emerging job creating sectors of the economy to become the engine that drives our economy for the next generation. As we’ve discussed at every opportunity, Americans believe jobs in the fields of clean energy, advanced manufacturing, and innovation infrastructure are the future of the American economy.

A common question that we get is ‘What do you mean by innovation infrastructure?’ 

Our definition of innovation infrastructure includes all of the networks that companies and startups need to grow. That includes all of the elements of traditional infrastructure networks like roads, bridges and transit.  Additionally, our definition of infrastructure includes varied and growing innovation networks like smart grid, broadband and wi-fi, and the best and most powerful wireless networks. (See Rob Shapiro’s analysis of the great employment impacts generated by advancements in wireless technology here.)

Investment is the key to ensuring innovation infrastructure – particularly in the telecommunication network - thrives moving forward. Much like the electrical network, the telecommunication network in the United States was built (and is being rebuilt) entirely through private investment. To ensure our entrepreneurs have access to the newest and best telecommunication network, we need a proper regulatory structure so private investment can continue to raise the bar.

Another Call for Innovation Investment

A new report by the Pew Charitable Trusts provides even more evidence of the importance of the clean energy sector to our economy.  The last few years have been critical to accelerating the clean energy sector, but we also know that we have plenty of work to do to keep the sector growing and competitive.


On the heels of yesterday’s report by AEE, the Pew study also illuminates the degree to which the sector is growing, both domestically and globally. 2011 saw record investment in clean energy in the US, coupled with falling prices and increased deployment. 

Yet we are also lacking in a few key areas:  overall deployment, manufacturing, and investing in innovation. We trail China, Germany and even Italy in deployment of photovoltaics. China is dominating in wind installation. 

As noted in this space many times, the role of policy in establishing a playing field for clean energy is critical. Policy uncertainty, tight credit markets for financing clean energy and emerging global competition represent significant – but conquerable – obstacles for clean tech to thrive domestically.

Pew’s policy recommendations are consistent with our own research. A strong federal policy signal in the vein of a Clean Energy Standard would be a good place to start. Building out a stronger ecosystem - continued investing in innovation, STEM education and support for American manufacturing - are critical for clean tech to continue to emerge. 


A Trillion Dollars of Opportunity

Some people argue that clean energy that is a ‘nice to have’ but not a ‘need to have.’

In other words, clean energy is sitting at the kids table when it comes to our energy portfolio.

Clearly, the clean energy sector isn’t window dressing – it’s a critical component of our economy, a sector that is growing even in the difficult economy that we live in. 

A new report from business group Advanced Energy Economy shows how important clean energy is for economic growth. It's an interesting read.

Globally, the advanced energy sector produced $1.12 trillion dollars in revenue in 2011.

The US portion of that is $132 billion – 12% of the global market.

As a point of comparison, that’s more revenue than the pharmaceutical manufacturing industry.

Real advancements in the clean energy sector will require breakthroughs in three critical areas: technology, financing, and policy. In 2013, we have some serious work ahead of us in all three of these areas to continue growing this critical sector of the next economy.  America already has 12% of this important swath of the economy. With a greater investment on the federal, state and municipal levels, America can become the global leader in clean energy.



A Pre-Inauguration Discussion About Energy



We’re just a few days away from Inaugural parties and parades in Washington.

In the midst of the celebrations and excitement, there is still a little time for some substance.

Energy is one of the core issues facing America in the President’s second term.

The Department of Energy is sponsoring an event on Saturday that provides some interesting perspectives on this critical issue.

"Energy All Stars" features six energy visionaries doing TED-style talks. 

Speakers include former Michigan Governor Jennifer Granholm, Bill Nye the Science Guy, Susan Tierney, CPS Energy CEO Doyle Beneby, Bloomberg New Energy Finance CEO Michael Liebreich, and Los Angeles Mayor Antonio Villaraigosa.

Energy All Stars will take place Saturday, January 19th from 1:00 to 4:00pm in the US Department of Energy cafeteria. Tickets are limited – but free.

You can RSVP here - http://energy.gov/energy-all-stars



A Kickstarter for Clean Energy

For clean tech to really take off, three major elements need to be stable: technology, financing, and policy.

All three legs of the stool interact with each other, but particularly at the intersection of financing and policy. For example, the wind industry just got an extension of a key federal tax credit that will help keep them afloat in 2013. That’s good news for jobs in this emerging field.

(As an aside, there is an interesting discussion about the boom and bust nature of subsidies for clean energy here.)

Financing has always posed a unique challenge for the clean energy sector. But an interesting new company is trying to change the way solar power gets financing. In essence, Solar Mosaic is a kickstarter-esque platform for clean energy. Small investors can chip in at different pricing levels to buy a piece of a larger project. Solar Mosaic promises investors returns ranging from 4 to 12 percent. 

You might be asking ‘But what if no one buys in?’ 

This week, Solar Mosaic sold out all shares of its public projects - in less than 24 hours.

Looking at the Economy Locally

We all know Americans are concerned about the economy - especially with the fiscal cliff looming.

But how do they measure the relative health of the economy?

Our research shows that Americans tune out to big numbers like the national unemployment rate. Instead, they measure the economy based on what they're seeing in their communities. More specifically, Americans measure the economy by three metrics: gas prices, housing values, and most importantly, the job market.

With these guides as our measure, there are some signs of life for our economy.

First, gas prices are the lowest they've been in all of 2012.

Second, sales of existing homes are at their highest level in three years - with new housing construction up 21.6% since last November.

Finally, certain sectors of the economy - including 'next economy' sectors like clean tech - are ramping up hiring. I posted earlier this week about the record setting rate of installation for solar in 2012. In that vein, a California solar company is looking to hire 450 new employees.


The Year in Energy


It’s the time of year when media outlets and bloggers write year in review lists. 

Forbes recently wrote a great column about the top 5 energy stories of 2012. It’s a great read.

Some are stories you’d expect – the shale gas boom and the patchwork of regulation around it, ongoing efforts to mitigate carbon, etc.

However, I think two of the Forbes top five deserve a little more attention:  employment in solar and the vulnerability of the grid.

Very quietly, careers in solar energy are booming.  Although solar manufacturing didn’t have a great 2012, the jobs in solar mostly come from installation. Solar jobs grew 13% in 2012 – a rate 6 times higher than the national average. 

Since solar jobs are growing, it clearly also means that solar installation is increasing. As noted by the Solar Energy Industry Association, by the end of 2012, 3.2 gigawatts of solar will be installed – a *70%* increase over 2011.

The extreme weather of 2012 illustrated another important energy story – the vulnerability of our grid. After Superstorm Sandy, hundreds of thousands of Americans lost electricity for weeks. In the DC metro area where I live, the June derecho storm resulted in massive power outages during a brutal stretch of 100 degree temperatures. We need to rebuild our electrical grid to reflect 21st century energy realities, yet investment in grid architecture is stunningly low.  

A silver lining in this scenario is increased emphasis on local distribution. As noted by Forbes, some industries are interested in ditching the grid altogether, preferring to get their electricity from local generation that they control. (Perhaps this has something to do with the uptick in solar installation.)

Stay tuned for predictions about possibilities for energy in 2013.


Who is Responsible for Energy Innovation?

The corner of the internet that thinks about things like energy innovation is having an interesting discussion.

Michael Grunwald's excellent book 'The New New Deal' sparked a conversation about the role of government regarding energy technology.

Mr. Grunwald makes a strong and convincing case - that we agree with - that investing in clean energy is something the government must do to help an emerging market get strong footing in America. In particular, Grunwald argues:


(The Recovery Act) is leaving behind a half dozen of the world's largest solar farms, America's largest wind farm, America's first cellulosic ethanol plants, a new battery industry for electric vehicles, and much more. It has doubled the generation of renewable electricity during Obama's first term, and is helping to drive down the costs of clean energy.'

In a review of Grunwald's book, Republican iconoclast David Frum argues that investing in clean tech results in the government picking winners and losers - something private investors are much better at.

Forbes columnist Matthew Stepp defends public investment in clean energy, noting 'change comes slowly in the energy sector...Nevertheless, Stimulus funds have made tangible, positive impact in that short time.'

While the back and forth is interesting, we think there's no question that government investment in an emerging sector is critical to maintain competitiveness. Other countries are making tremendous investments in clean energy - we need to not only keep even, but pull ahead.

As noted by Mr. Grunwald, the American clean tech sector is now in a considerably better position than three years ago. That didn't happen by accident. Government investment can be the catalyst that will allow a 21st century innovation economy - driven in part by clean energy - emerge.

Where Does Your State Rank in the Innovation Economy?

At the Next Economy Partnership Project, we're advocates of building an economy fueld by locally led innovation.

However, when it comes to transitioning into the next economy, some states are further along than others.

A fantastic new report by our friends at the Information Technology and Innovation Foundation ranks states by their adoption of an innovation fueled economy.

Not surprisingly, states with robust innovation economies like Massachusetts, California and Virginia rank in the top ten.

States that rank lower on ITIF's scale represent economies that lack some of the infrastructure needed for innovation. By adopting a regional innovation strategy, these states might help accelerate the innovation economy - and acquire the jobs associated with it.

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