Growing a new, clean energy economy requires just the kind of bold, forward-thinking energy policy that the Obama administration has pursued since taking office. Bolstering innovation, administering strong efficiency standards, and creating thousands of green-collar jobs, President Barack Obama's policy initiatives to date have been spot on.
Still, the administration’s energy platform has suffered some hits to its popularity of late. The most divisive issue in the Obama administration’s repertoire of energy policies has been its continued support for renewable energy and its commitment to reduce the United States’ demand for fossil fuels. In playing up the recent collapse of Solyndra, conservatives have managed to frame the debate over energy subsidies in terms of party affiliation. That is, Republicans have convinced a good portion of the civic community and the American public that Democrats are reckless risk-takers who exploit taxpayers in order to achieve what conservatives say is a naïve dream of a clean energy economy.
I would like to debunk this myth. Federal government subsidies for energy are nothing new; they have existed as long as the fossil fuel industries have had lobbies and would not go away with a change in office. Subsidies, in the form of tax breaks, for American oil companies amount to about $4 billion per year.
Proponents of these oil subsidies — even those who are not receiving campaign contributions in exchange for their support — cite domestic gas price stabilization and jobs protection among their justifications. With gas hovering around $4 per gallon, and oil company revenues coming in at record highs, it is safe to assume that the supply of crude has now reached critical levels and that prices will continue to rise as supply shrinks. Moreover, oil extraction is a capital-intensive process that requires oil companies to hire relatively few workers (800,000 industry-wide, or less than 1% of all American jobs). Given the $10.33 billion in profit that Exxon Mobil alone raked in during the third quarter of this year, it is clear that these tax breaks are not being used for job creation, but are instead being used to protect and grow corporate profits.
By comparison, investment in the renewables sectors produces far more yield, in terms of long-term jobs creation and the attainment of national security goals. The adoption of renewable energy technologies will require a great deal of research and development, capital replacement initiatives, and infrastructural upgrades. All of these activities are labor-intensive, meaning that they will require the hiring of thousands of workers across the country with a variety of skill-sets. The Union of Concerned Scientists estimates that 355,390 new jobs will be created in the renewable energy sector by 2020, versus the 197,910 jobs that they expect to be added to the fossil fuels sector.
Conservatives have been circulating a myth that the Obama administration’s 2009 stimulus package allocated over $1 million for each green job created. This estimate is calculated by simply dividing the amount of funding that the American Recovery and Reinvestment Act allotted to green jobs creation and dividing it by the number of jobs created as a result of that piece of the legislation. This figure is misleading, as the money to which skeptics are referring went to renewable energy firms that were hiring trainers and implementing training programs that will ultimately allow for the hiring of additional workers. Looking at this investment in terms of the amount of stimulus funding that went to initial jobs-creation in this sector is short-sighted.
Additionally, for those looking to supplant oil imports from the Middle East in the name of national security, the recently-nixed Keystone XL oil sands project was not the answer. Interim solutions like these only prolong the inevitable complete depletion of the world’s supply of fossil fuels. That is to say nothing, of course, of the social costs of the multi-billion dollar project to the American citizens whose livelihoods and quality of life depend on the land that the pipeline would transect. The long-term solution to the United States’ dependency on foreign fossil fuels is to cut our dependence on fossil fuels across the board.
The transition from a fossil fuels-based economy to a clean energy economy is not going to happen through market forces alone. Too much political and physical capital are tied up in the success of Big Oil for the markets to shift to renewable energy by themselves. The very fact that we are participating in this debate demonstrates the uncertainty that Americans feel about a shift to clean energy production and infrastructure. Add the effects of campaign contributions to popular uncertainty and artificially propped-up oil companies, and we have an oil industry that is too big to fail until the supply of oil is no more.
The loan guarantees that the Obama administration has made since the President took office in 2009 are the only form of protection that these nascent industries have as they go about the necessary steps toward growth. In a market that has been artificially skewed toward the production and consumption of fossil fuels, renewable energy technologies need the extra support in order to take root. Initial hires, tech research, and capital investment are prohibitively expensive for a young start-up renewable energy firm. It is the role of the government to facilitate the entry of these future jobs-creators and heralds of national security into the market.
The Obama administration should be applauded for rejecting conservatives’ short-term, electorally conscious decision-making paradigm and embracing a continued commitment to protecting the long-term economic, environmental, and national security interests of Americans.
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