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Let's Get Serious: Fracking Jobs Cost Twice as Much as Green Jobs

The lesson is that creating jobs and protecting the environment can go hand-in-hand.

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Generally speaking, spending on green investments creates approximately three times as many jobs as spending the same amount of money on maintaining our existing fossil fuel sector. The reasons are straightforward. First, clean energy investments are simply more labor intensive. Also, a higher proportion of overall spending on the green economy remains within the domestic economy as opposed to purchasing imports.

Nevertheless, there was, indeed, a serious problem with the green stimulus program, which was that not enough money went out the door quickly enough. Given that the budget under President Bush for clean energy investments never even reached $2 billion per year, ratcheting up to $100 billion with the ARRA inevitably entailed major administrative bottlenecks. Indeed, the Congressional Budget Office had anticipated from the start that the green investment features of the ARRA would require five years, not two, to be fully disbursed, with the bulk of the overall budget being spent in the later years. However, by the end of 2011, with only about 40 percent of the allocated funds (at most) having been spent, the remaining allocations were cancelled as part of the new mantra in Washington for deficit reduction.

Lessons from the Solyndra Failure

There are certainly lessons that need to be learned from the spectacular collapse of Solyndra. But the broad-brush claim that all subsidies for renewable energy are boondoggles is not one of them. In fact, if the world is going to have a chance of controlling climate change over the next twenty to thirty years, renewable energy needs to become abundant and cheap. Among renewable energy sources, wind, geothermal, biofuels, and hydroelectric are already either as affordable or within range of oil, coal, natural gas, and nuclear power strictly in terms of costs. These renewable sources will therefore not require major levels of continued subsidies to establish and maintain commercial competitiveness.

Solar power is different. The costs of generating electricity from solar are still two to three times higher than those for conventional energy. The total share of U.S. energy consumption that is supplied by solar is correspondingly miniscule, less than 1 percent of total supply. However, over the long term, solar promises to be the cleanest, safest, and most abundant energy source. As such, solar deserves to be subsidized, in ways that parallel the research and development (R&D) programs that, for generations, have been housed in the U.S. Defense Department. These programs have led to some spectacular technological breakthroughs, including jet aviation, the computer, and the internet. Moreover, Pentagon supported R&D was further enhanced by the Defense Department’s procurement policies, which created and sustained huge guaranteed markets for the products emerging from its R&D programs. This is what enabled emerging technologies such as the internet to incubate slowly over time rather than having to prove their value prematurely to private businesses and consumers. The incubation period for the internet was about thirty-five years. We should not expect solar energy to be commercially viable without subsidies for some time to come. Solyndra did, indeed, fail the test of the market. But that is because this was never a fair test to begin with.

More Pipelines and Fracking: No Solution

There is a good likelihood that we could increase our domestic energy supplies by a substantial amount through building the Keystone Pipeline and extracting natural gas from shale through hydraulic fracking. Investments in these areas, especially fracking, could even lead to falling energy prices, though that is never a sure thing, no matter what the crystal ball says today. Of course, these projects will also create jobs, but only because spending money on anything creates jobs. As a case in point, investments in fracking create only about 6.5 jobs per $1 million in spending, about half the level of jobs per dollar generated by the green stimulus programs and less than one-third what would result through focusing green investments in relatively labor-intensive areas such as building retrofits and public transportation. But beyond this is the fact that both of these energy paths will deepen our dependence on burning fossil fuels long into the future. Greenhouse gas emissions from oil and natural gas are lower than those from coal. But they are still too high. If we rely increasingly on oil and natural gas as substitutes for coal, the U.S. will not be able to achieve anything close to the emissions reductions needed to control climate change over the next generation.

 
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