The Environmental Defense Fund Touts State Successes in Cleantech
The economy is on everyone’s mind. What to do about it, however, probably depends on which way you lean politically. While the Chamber of Commerce, a conservative lobbyist group for American businesses, recently released a plan of action for the economy that includes a no-holds barred approach to developing the domestic fossil fuel industry, the solutions are very different in environmental circles.
The Environmental Defense Fund (EDF), a nonprofit environmental advocacy group, is proposing its own solutions. Its new Clean Energy Economic Development Series highlights the successful road map for three states that have implemented it: Ohio, Iowa and Colorado. These road maps are a mix of policy and economic development actions designed to stimulate demand for clean energy products and services; seed innovation in clean energy; and recruit and support new companies and the jobs they bring.
In recent years, Colorado has become a hotbed of green technology activity, much of it centered around the National Renewable Energy Laboratory (NREL), state universities and private companies. The state already had an advantage in the presence of NREL, which opened its doors in 1977 as the Solar Research Institute and is the only federal laboratory to focus on renewable energy and energy efficiency technologies. Colorado is also home to the new Solar Technology Acceleration Center, the largest solar test facility in the U.S.
The Denver area alone boasted about 1,500 green tech companies (and 18,000 workers) in 2011, and saw a 35 percent jump in direct employment growth since 2006. Cleantech is now 1 percent of Colorado’s employment base (twice the national average) generating about $1.3 billion in wages. Renewable energy installations have doubled since 2007.
The state and local governments have taken steps to stimulate market demand, seed innovation and capture the economic benefits, and the efforts have been unusually bipartisan. Colorado’s clean energy initiatives began early in the last decade with the establishment of regulatory standards designed to make the state attractive to green investment. Not long after, legislators passed a rule to allow third parties to sell customer-generated power, which led to the expansion of solar leasing companies as well as private solar installations.
In 2006, the state’s general assembly created the Colorado Renewable Energy Collaboratory (CREC), a research consortium of NREL and three Colorado universities, allowing state matching funds for research. The Collaboratory has become a driver of green tech innovation.
“Colorado got a head start by establishing a clean energy research collaboration in 2007, before most states were looking at clean energy as an economic opportunity,” said David Hiller, director of the CREC. “That early start helped the state attract existing clean energy companies, investors to support Colorado startups, and top researchers and students to our labs and universities, laying the groundwork for a self-sustaining cleantech industry.”
The state also implemented financial incentives to stimulate consumer demand for clean energy, including a property tax exemption and a sales and use tax exemption for renewable energy systems, and supplements to the $585 million granted to the state by the federal American Recovery and Reinvestment Act.
The state measures its success by the number of people employed in the green tech sector, the number of green tech and energy patents filed in the state, the increase in venture capital investment, and the amount of R&D activity in state universities. By all measurements, Colorado has become a leader in the U.S. green economy.
Ohio has always been a national economic powerhouse, and increasingly, it’s become a green powerhouse. The Advanced Energy Economy Institute estimates that more than 400 organizations and at least 25,000 workers are directly linked to the state’s green industry. While Ohio boasts many start-up companies, much of the growth is being generated by existing manufacturers that have launched green tech portfolios: Timken Co., Parker Hannifin, Rockwell Automation, and Owens Corning, for starters.
Ohio’s universities, together with public and private sector research organizations, have established research centers that encourage collaboration efforts. Ohio has one of the largest wind supply chain networks in the U.S., is a national leader in research activity for fuel cells and batteries, has developed a strong thin-film solar manufacturing cluster, and is home to the most energy-efficiency product manufacturers in the Midwest, according to the EDF.
The state government has been attracting the green energy industry for years and across political parties: governors from both parties have pushed for low emissions electricity sources, investment programs for advanced energy technologies including fuel cells and renewables, the codification of standards to reduce Ohio’s emissions, and a broadening of standards to include industrial waste heat recovery. Ohio is currently under a legislative mandate to generate 25 percent of total retail electricity from alternative sources by 2025.
Ohio’s efforts are working: since 1996, Ohio’s fuel cell, solar and electric vehicle patent registrations have doubled and wind-related patents have tripled. There are more than 400 establishments and 25,000 workers linked to the Ohio advanced energy industry, including wind, solar, fuel cell technology, energy storage, and ENERGY STAR energy efficient products.
While Iowa may bring an image of cornfields to most people’s minds, the state’s
flat landscape is ideal for wind, and wind is where Iowa is leading. The state has the second highest installed wind capacity in the nation (after Texas) and is one of only two states (South Dakota is the other) that derives more than 20 percent of its electricity from wind. The state has attracted more major wind industry manufacturers than any other, according to the AWEA.
Iowa’s progress comes from financial incentives to stimulate consumer demand for wind energy products and services, including a property tax exemption and a sales tax exemption for wind and solar equipment and materials. It’s one of the few states with its own renewable energy production tax credit (1-1.5 cents per kilowatt hour). The Iowa Energy Center administers the Alternative Energy Revolving Loan Program, which is funded by the state’s investor-owned utilities and state bonds. The program provides a zero percent interest loan to an individual or business for 50 percent of the cost of a renewable energy system.
In addition, the state established the Iowa Power Fund in 2007 to support R&D, commercialization and implementation, and the fund has invested more than $71 million in 50 competitive projects, leveraging over $604 million in matching industry funds. The state’s Research Activities Credit provides a refundable tax credit for up to 6.5 percent of R&D investment made in Iowa by private companies. The Iowa Alliance for Wind Industry Novel Development (IAWIND) is a partnership with state and local governments, community colleges, Regents Universities, the private sector, and the federal government to create a strong wind energy equipment, talent, and investment network in Iowa.
The state’s results, which are measured by the increase in green energy employment, investment, and patents, show that it is well positioned to maintain a leadership role in U.S. wind. The state has estimated that the 20-year impact of its green tech activities will be an additional 8,500 jobs with a total payroll of $3.8 billion as well as $475 million in state revenue and $390 million in local property taxes.
These states’ efforts aren’t to everyone’s taste, of course. The U.S. Chamber of Commerce, in its own economic stimulus plan, believes that governments shouldn’t “pick winners” (a fundamental disagreement with federal and state tax incentives and stimulus programs). Many states are actually going backwards in their green tech efforts: Virginia’s attorney general is pushing to repeal the state’s renewable energy incentives; and the Heartland Institute, an anti-manmade climate change group, together with the conservative American Legislative Exchange Council (ALEC), is making a push to write model legislation aimed at reversing state renewable energy mandates.
Given some of the two latter groups’ extremist actions as of late – the Heartland Institute recently compared people who believe in global warming to Unabomber Ted Kaczynski and accepts cash from oil and gas companies, and ALEC has lost corporate sponsors put off by some of its extremist stances – there seems to be little danger to state green initiatives. More and more states are coming to realize that they simply can’t afford not to do everything in their power to encourage green energy investment and jobs.