Chairman Bingaman this week detailed the ample job generating potential of the energy bill that this committee reported in June. In a Senate speech, Bingaman made clear that, in addition to helping shift our country to cleaner and more secure sources of energy, the bipartisan American Clean Energy and Leadership Act (ACELA) will create entire new career fields and skill sets for millions of Americans -- exactly the economic shot in the arm our country needs.
I would like to speak today about the need for additional policies to create jobs in the United States, and about how energy legislation can help accomplish that goal.
First, despite the recent positive economic news, Congress must take additional steps to create jobs in the United States. The economy has lost 7.2 million jobs during this recession -- one out of every 20 jobs in the country. In percentage terms, that is the biggest job loss since the recession in 1948 and 1949.
These job losses add to the jobs deficit that has been accumulating over the past nine years.
The country needs 12 million new jobs to bring employment back to where it was at the end of the Clinton administration. Economists expect the jobs report this Friday will show even more jobs were lost in October.
We should not, however, overlook the positive news about the economy that was reported over the past week. Gross Domestic Product jumped to 3.5 percent in the third quarter, a complete turnaround from the 6.4 percent decline in the first quarter. It is reported that the Recovery Act has created or saved one million jobs, 640,000 through direct spending alone. The Recovery Act is working, but Congress still must do more.
We need additional policies to create jobs if we are to prevent this recovery from being a jobless recovery like the previous two.
The change in the number of jobs during the recessions in 1990-91 and 2001, and during the months after those recessions ended. The economy continued to shed jobs for two months after the 1990-91 recession ended. After the 2001 recession, job losses continued for a staggering 18 months.
This is the paradox of the recoveries from the last two recessions. GDP grew but the country continued to lose jobs. When jobs finally returned, they did so slowly.
The unemployment rate rose for 16 months after the 1990-91 recession ended and 20 months after the 2001 recession ended. Even five years after the 2001 recession, more people were out of work than before the recession began.
Congress needs to take steps to ensure this recovery is different. The tax cuts enacted during the Bush administration were meant to stimulate job growth but it is apparent now that they failed to do so. Those tax cuts were too blunt an instrument to do the job, not focused enough on creating jobs, and the $4 trillion hole they dug in the federal budget has made it harder to recover from this recession.
The country needs policies that are more targeted on job creation. I outlined four ideas last week that Congress should consider: a Job Creation Tax Credit, a Manufacturing Tax Credit, emergency bridge loans to homeowners, and additional aid to states. It should be noted that aid to states has already been effective at saving hundreds of thousands of teachers’ jobs -- 325,000 of the 640,000 jobs created or saved by the Recovery Act were jobs in education. Congress should consider providing additional aid to states to help close their budget shortfalls, which are projected to total $178 billion over the next two years.
Let me turn now to another action we should take to create jobs.
To create jobs, Congress should also enact the American Clean Energy Leadership Act. This energy legislation has received bipartisan support in the Energy and Natural Resources Committee. The energy bill is a jobs bill.
The energy bill could create 350,000 to 500,000 jobs over the next decade. It would create jobs by increasing the amount of research and development supported by the Department of Energy. It would create jobs by increasing the demand for renewable energy by establishing a Renewable Electricity Standard. It would create jobs by financing the construction of new clean power plants through the establishment of a Clean Energy Deployment Administration. It would create jobs by promoting energy efficiency retrofits for homes and commercial buildings, jobs that cannot be outsourced. And it would create jobs by building new clean energy industries and improving energy efficiency in manufacturing. Reducing energy usage means reducing the cost of doing business, which will make American businesses more competitive in the global market and allow them to expand and create jobs in the United States.
This is part of what the energy bill is about – creating jobs and making the United States more competitive in the global economy. The energy bill would position the United States to lead in the development of clean energy technologies, a rapidly growing industrial segment that I believe will be one of the most important industries of the 21st Century. But it will also make our economy stronger by enabling businesses to flourish in other areas of the economy.
Before elaborating on some of the provisions in the energy bill, let me give one concrete example of how forward thinking energy legislation creates jobs for middle class Americans. In September of this year, the Department of Energy awarded Fisker Automotive a $529 million loan through a program that was created by the Energy Independence and Security Act of 2007. Just last week, Fisker announced that it will reopen a GM plant in Delaware that had been shut down, and use it to produce a plug-in hybrid car. The new Fisker plant will employ 2000 people, and indirectly create another 3000 jobs in the surrounding area. So, not only will consumers benefit from increased choices in energy efficient automobiles, American workers will benefit from increased clean energy jobs. Similar good news stories can be told about new or retooled factories in Michigan, Indiana, and Tennessee as well.
The American Clean Energy Leadership Act would provide more loans of this kind by creating the Clean Energy Deployment Administration, or CEDA. CEDA will be an independent agency within the Department of Energy whose mission will be to support the financing of low-carbon energy projects. For example, CEDA could provide loans, loan guarantees, or other credit enhancements to enable the construction of power plants that produce renewable energy or factories that make wind turbines and other components. CEDA will also create financial mechanisms to allow affordable financing for energy efficiency retrofits and distributed generation in entire communities. This new agency will give special focus to high-risk, high-reward technologies that are otherwise difficult to finance.
Additional financing is critical right now, when credit markets are still tight and private investors are reluctant to take on even low-risk commercial projects. In the first quarter of 2009, investments in renewable energy totaled only $500 million, just one-tenth of the $5 billion invested in the same period the year before. But even when financial markets recover, banks are leery of the risk associated with new technologies. Without CEDA to fill the gap we run the risk of these investments continuing to be made overseas where market conditions are better for innovative clean energy technologies.
CEDA initially will be capitalized at $10 in appropriated funds that can conservatively support federal lending of approximately $100 billion. Combined with funds from private partners, a reasonable estimate would lead to $20 billion worth of clean energy projects investment each year for 10 years.
CEDA could potentially be scaled up in the future, enabling it to create even more jobs.
The Energy Bill would also establish a Renewable Electricity Standard, or RES, for the entire country. This policy would require electricity companies to get 15 percent of their power from renewable resources by 2021, with an exemption for small-scale utility companies. By increasing the demand for clean energy, the Renewable Electricity Standard will promote the construction of new wind farms, solar power plants, and geothermal plants. A variety of other clean technologies will also qualify, technologies such as hydro, biomass, and ocean power. Constructing these plants and manufacturing the components needed could create 100,000 to 125,000 jobs by 2025.
In addition to the Renewable Electricity Standard, the Energy Bill includes policies to strengthen the nation’s electricity transmission grid and increase the production of renewable energy on public lands. These policies would complement the Renewable Electricity Standard.
Improving energy efficiency is a cost-effective way to reduce the energy costs of homeowners and improve the competitiveness of American businesses. The Energy Bill has programs targeted both at the manufacturing sector and at residential and commercial buildings.
For residential and commercial buildings, the bill creates a grant program that states could use to fund retrofit programs for residential and commercial buildings. A Home Energy Retrofit Finance Program would also be created. States could use this program to set up revolving finance funds to help homeowners pay for energy efficiency improvements. This support would be in addition to the support available through CEDA.
The residential and commercial energy efficiency programs in the energy bill could create tens of thousands of jobs. Overall, energy retrofits is potentially a large job creator. Rebuilding America estimates that retrofitting 50 million homes over the next ten years would create 625,000 jobs that could be sustained during that period. The programs in the energy bill would accomplish part of that goal.
The bill also includes programs to increase the energy efficiency of American manufacturers. Energy Department financing will help small and large manufacturers upgrade to energy efficient production equipment and processes. Public private partnerships will map out and develop the technologies needed by specific industries to reduce their energy intensity. The American Council for an Energy-Efficient Economy estimates these energy efficiency programs would at a minimum create 15,000 to 20,000 jobs by 2020.
But more important than this estimate is the competitive edge American manufacturers would gain by increasing their energy efficiency. This is a key step to revitalizing the manufacturing sector and ensuring it remains strong in the future.
I think nearly everyone agrees that research and development is vital to creating jobs and to the competitiveness of the United States. The energy bill would nearly double the authorization for the Office of Science in the Energy Department, to over $8 billion in 2013. At that funding level, the Office of Science could support over 27,000 Ph.D.-level researchers across the United States. The authorization would also double for applied energy research to $6.5 billion, research focused on Nuclear energy, Fossil Fuels, and Energy Efficiency. Other countries in Asia are well ahead of the United States creating research, development, and deployment roadmaps for clean energy technologies. With additional resources, this research will make American industries competitive in a carbon constrained economy.
All told, using both the specific estimates that have been made for policies in the American Clean Energy Leadership Act, and a midpoint estimate for jobs resulting from the retrofit provisions of the bill, the Act could create up to 500,000jobs over the next decade if it is enacted and funded.
This is just a part of the job creation potential in the energy sector. The National Commission on Energy Policy estimates that the country will need 400,000 new jobs in the electricity sector alone. If indirect jobs are included, the number of new jobs created could total 1 to 1.5 million. Similarly, the Center for American Progress has estimated the job-growth potential if both the public and private sectors combined were to invest $150 billion per year in clean energy. That’s the level of investment that the Center estimates would be mobilized by a comprehensive set of policies that include both what Congress has already enacted as part of the American Reinvestment and Recovery Act and a full suite of policies surrounding a cap-and-trade system for regulating greenhouse gases. In that larger context, the Center for American Progress has concluded that there is the potential to increase the number of permanent jobs in the economy related to clean energy by a net amount of 1.7 million
The energy bill is a down payment on reaching that target, and has significant potential to create jobs in the near term. It would strengthen the competitiveness of American businesses through energy efficiency improvements and investments in research and development. And it would position the United States to be the global leader in the development of clean energy technologies. I urge my colleagues to support this legislation when it does come to the floor for consideration. legislation and when the opportunity arises here on the Senate floor to support this legislation when it does come to the floor for consideration.
The jobs we can create as we transition to a clean energy economy are not the total answer to our job needs in the coming years. But they are an important part of the answer so, I urge my colleagues to legislation and when the opportunity arises here on the Senate floor to support this legislation, not only for what it will do to meet our energy needs and reduce greenhouse gas emissions, but for what it will do to create jobs and put our economy on a growth track in future years.
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