I have discussed the ability of green jobs to help stimulate our economy. However, that was before our energy crisis ended….temporarily. The Wall Street Journal discussed President Elect Obama’s plan to add 5 million new jobs through spending on clean energy. As shown below, the Article questions the economic theory behind that plan. Stating the Obama proposal does not account for the jobs that would be lost in the gas and coal sectors of the economy when such a shift occurs.
The green-jobs argument rests on the notion that big capital investments in new-energy technology today will be more than offset by savings in reduced fossil-fuel costs. Though oil prices have fallen, the International Energy Agency predicted Thursday that once the economy picks up again, they will resume climbing, potentially topping $200 a barrel by 2030. The IEA called the current energy system "patently unsustainable" and called for "radical action by governments."
Several studies estimate that $1 invested in renewable energy or energy efficiency would yield up to four times as many jobs as $1 invested in oil and gas, whose basic infrastructure of wells, refineries and pipelines has been around for years. Moreover, those studies say, clean-energy jobs are likely to be centered in the U.S., unlike jobs in the oil and gas industry, which increasingly are spread around the world.
Critics say analyzing only new green jobs misses half the story. "It’s not looking at the other side of the coin: You are spending more money for your energy," says Anne Smith, a vice president at CRA International. The consulting firm wrote a report for the coal-mining industry in April that concluded that, under a bill to cap global-warming emissions, gains in green jobs would be "more than offset" by job losses elsewhere in the economy. That bill failed, but Mr. Obama has said he supports capping emissions.
While the journal focuses on the loss in jobs in oil and gas, I think the main issue is the fall in commodity prices like oil and coal. When those prices were soaring everyone wanted to shift into alternative energy, however the energy crisis is temporarily over. I highlighted the statement in the article that "once fossil fuel prices climb again" the shift to clean energy will make sense. The key is…"once the prices climb again."
Once the world economy grows again we will be in the same place we were in this summer. It is a fact that there is just only so much oil to go around. However, as discussed in my last post, the failing economy will also temporarily take away the momentum behind the green jobs push. With oil down below $60 a barrel, the strong motivating factor that made everyone interested in alternative sources of energy is temporarily gone. Right now we will be going into survival mode. The question will remain for business- "What is the cheapest form of energy right now?"
When commodity prices climb again (and they will), businesses will again consider clean energy has a hedge against ever escalating commodity prices.
(Photo: Flickr Crashworks)