Economist Debate: Green jobs

economist

Economist Debate: Green jobs

March 9th 2010

Green jobs

This house believes that creating green jobs

is a sensible aspiration for governments.

Economist Debates


Economist Debates: Green jobs

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Economist Debates: Green jobs

Table of contents

The Motion .................................................................. 5

Opening statements .................................................... 6

The moderator, Oliver Morton .......................................6

The moderator’s opening statement...............................7

Defending the motion, Van Jones ................................10

The proposer’s opening statement ...............................11

Against the motion, Andrew Morriss.............................16

The opposition’s opening statement .............................17

Featured guest, Robert Stavins ...................................22

Rebuttal statements.................................................. 28

The moderator’s rebuttal statement .............................29

The proposer’s rebuttal statement ...............................32

The opposition’s rebuttal statement .............................37

Featured guest, Daniel Weiss ......................................42

Closing statements.................................................... 47

The moderator’s closing statement ..............................48

The proposer’s closing statement ................................51

The opposition’s closing statement ..............................55

Winner announcement .............................................. 59

Winner announcement ...............................................60

Our sponsor’s perspective......................................... 62

About Siemens .........................................................63

Interview with Eric Spiegel, President and Chief Executive

Officer, Siemens Corporation ......................................64

Background reading .................................................. 70

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Economist Debates: Green jobs

March 9th – March 19 th 2010

The Motion

“This house believes that creating green jobs is a

sensible aspiration for governments.”

Fighting climate change means transforming the energy

infrastructure; transforming such a huge infrastructure

requires the labour of a great many people; new sources of

employment are particularly appealing in a recession.

Bringing together climate policy and employment policy

seems to some to offer a double whammy, with more green

jobs in a cleaner economy. But is this more than a cynical

attempt to repackage climate measures that on their own do

not appeal to voters and businesses by constraining business

and distorting labour markets? Can the interests of labour,

capital and the environment ever really come together?

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Economist Debates: Green jobs

Opening statements

Opening statements were originally published on

March 9th 2010. They can be viewed online at

http://www.economist.com/debate/days/view/477

The moderator

Oliver Morton

Energy and Environment Editor, The Economist

Oliver Morton is the Economist's Energy and Environment

Editor. He was previously the Chief News and Features Editor

of Nature, the leading international scientific journal. He

covers the energy business, climate science and policy, and

other green issues. He is the author of "Eating the Sun: How

Plants Power the Planet", a study of the meanings and

implications of photosynthesis, and "Mapping Mars: Science,

Imagination and the Birth of a World".

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Economist Debates: Green jobs

The moderator’s opening

statement

March 9th 2010

Given the long-term and in some cases rather intangible

benefits of environmental prudence, people arguing for

measures that will reduce global warming and bring about

other desirable but distant ends tend to look for near-term

benefits, too. Unsurprisingly, in a recession and its

aftermath, jobs have recently had pride of place on that

benefit list. As Nancy Pelosi put it when defending the capand-trade

bill on greenhouse emissions which passed the

House of Representatives last year, the American people

should be glad of such legislation for four reasons: "jobs,

jobs, jobs and jobs".

Leaving aside the possibility that some Americans might be

glad of such legislation because it stands a chance of

reducing carbon-dioxide emissions, how much of a real

reason for joy are those green jobs?

That government investment, subsidy and regulation can

produce green jobs is not in any doubt. No one would have

built a solar power industry in Germany on the basis of its

sizzling noon-day sun. The fact that Germany now has such

an industry, with tens of thousands of people employed in it,

is an act of fiat. So is most, though not all, of the rest of

Germany's renewable energy sector, which now employs

more than a quarter of a million people. A similar story can

be told about Spanish renewable energy. The American

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Economist Debates: Green jobs

renewables energy lobby is endlessly keen to point out how

many jobs rely on its turbines, ethanol refineries and the

like.

The question is whether those jobs represent a net benefit,

or whether they are being created at the expense of other

jobs elsewhere in the economy. Green jobs created by

government intervention have opportunity costs, in that

some part of the money used to provide or promote them

might otherwise have created jobs in some other sector.

There is also the risk of jobs being counted as created by

government intervention when they would have been created

anyway, thus inflating assessments of the effectiveness of

the policy.

These problems should not lead to the conclusion that a

green jobs policy is necessarily foolish. It is quite possible for

policies to serve different ends at the same time: the

creation of the US freeway system in the 1950s and 1960s

was to some extent seen as a case in point, providing

economic benefits and defence benefits—the ability to move

equipment quickly and easily—at the same time (the

programme is still known officially as the National System of

Interstate and Defense Highways). Synergies and

possibilities for leverage do exist in the world, and

policymakers may be able to spot and use them. But those

who claim to be doing so have an obligation to explain

carefully the evidence for believing that their approach really

will produce net benefits.

It is not for moderators to specify too closely the terms of

the debate, but it may be useful to point out that the motion,

and in particular its key word "sensible", can be read in a

more economic context or a more political context. In terms

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Economist Debates: Green jobs

of economics, the key issue is efficiency: do the policies

increase net employment at justifiable costs? Politically,

things may be a little less well defined.

Does green investment allow specific sorts of jobs to be

created in a way that has social value, for example, in a

particular area? Is it right to allow employment outcomes to

influence the choice between types of green policy? It would

hardly be unreasonable if, given two policy options with

equivalent environmental benefits, it might make political

sense to go with the one that had clearly defined

employment benefits too. But what about the risk that the

green jobs associated with a programme might in time come

to outweigh its actual greenery? In such cases you can end

up with a non-green jobs programme benefiting from

unjustified subsidies that are hard to get rid of.

These are some of the issues that I look forward to hearing

our debaters, and you their audience, weigh in on over the

next few days.

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Economist Debates: Green jobs

Defending the motion

Van Jones

Author, "The Green-Collar Economy"

Van Jones is a globally recognized, award-winning pioneer in

human rights and the clean-energy economy. He is a cofounder

of three successful non-profit organisations: the Ella

Baker Center for Human Rights, Color of Change and Green

For All. He is the bestselling author of the definitive book on

green jobs, "The Green-Collar Economy". He served as the

green jobs adviser in the Obama White House in 2009. He is

currently a senior fellow at the Center For American

Progress. Additionally, he is a senior policy adviser at Green

For All. He also holds a joint appointment at Princeton

University, as a distinguished visiting fellow in both the

Center for African American Studies and in the Program in

Science, Technology and Environmental Policy at the

Woodrow Wilson School of Public and International Affairs.

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Economist Debates: Green jobs

The proposer’s opening

statement

March 9th 2010

The private sector—not the government—can and must be

the main driver in creating green jobs. The scale of the

transition to cleaner, lower-carbon energy sources is simply

too large for public-sector resources and programmes to

tackle alone. Only a tidal wave of private investment,

innovation, invention and entrepreneurship can get the job

done.

But that wave will never rise unless the government becomes

a constructive partner in the effort. Therefore, it is perfectly

sensible for national governments to aspire to create policies

that produce green jobs.

After all, John Doerr, a leading light of Silicon Valley who

knows a thing or two about innovation and technology,

having placed early bets on Sun Microsystems and a little

company called Google, has gone so far as to call clean

energy "the largest economic opportunity of the 21st

century".

The benefits of moving toward clean energy are potentially

sweeping: helping to restore infrastructure, rebuild

neighbourhoods, retool factories and ignite innovation.

Additionally, energy security, climate stabilisation, pollution

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Economist Debates: Green jobs

reduction and expanded economic opportunity are all

legitimate aims for policymakers to pursue.

Critics of green jobs recoil at the notion that governments

might somehow tamper with the natural energy market to

promote renewables. They sniff and generate a host of

objections to market-distorting mandates and wasteful

subsidies. But energy markets are already the product of

policy, mainly those that support incumbent energy sources

like coal, oil and nuclear power. These incumbent

technologies benefit from subsidies, regulatory structures

that shut out distributed generation of renewable power and

pricing schemes that undervalue the economic contributions

of energy efficiency.

The critics conveniently ignore the truth that all forms of

energy are heavily regulated and often subsidised. This is

because energy is the lifeblood of the economy. The precise

mix of energy sources being developed and deployed within a

country is never the result of pure market forces, but always

a result of both private and public choices. It reflects a mix of

innovation and investment on the one side, and of

regulation, taxation and subsidy on the other.

Because we place no value on our atmosphere, the market

acting alone cannot achieve the public interest in a stable

climate and human health. Therefore, the question is not

whether we will pursue policies to shape energy markets, but

what sort of energy markets we want to achieve. It is

sensible for governments to enact policies that will maximise

the use of clean, renewable and low-carbon energy sources

within and beyond their borders.

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Economist Debates: Green jobs

Public policies are now necessary to correct existing market

failures and put clean energy on an even playing field with

fossil fuels; to establish the market certainty that businesses

need to make long-term investment decisions; and to

provide stable, long-term support for clean-energy research,

development and deployment, just as they have done in the

past for the medical, aeronautical and information technology

sectors.

Public investment is also required to bring the ageing

electrical and transportation infrastructure that powers our

industries and facilitates commerce into the 21st century,

and to ramp up workforce and manufacturing infrastructure

to meet the enormous new demands for goods and services

that will result from new clean-energy markets.

Furthermore, governments will need to go beyond a simple

cap-and-trade system for global warming pollution.

Renewable energy standards and codes for energy efficiency

will help build markets. Green banks and new financing tools

will use public underwriting to help unleash private capital.

And public investments in infrastructure will create a

platform for innovative businesses to thrive and hire more

workers.

In this context, policy is not a restraint on trade. It is a driver

of innovation.

Fortunately, this approach has a proud and successful

history. We can look to the history of the United States for

good examples of what is possible. From the Tennessee

Valley Authority and rural electrification, to the interstate

highway system, to the telecom revolution, new investments

in transformative infrastructure have consistently opened up

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Economist Debates: Green jobs

access and opportunity, and brought more people into the

middle class. The internet didn't just create jobs for software

engineers; it created work installing fibre optic cable. It

created new office jobs in information technology and new

career ladders into skilled professions.

Given this aspect of American history, it is ironic that the

United States is falling behind in the global race for clean

energy. Doubly so, given that the United States invented

many of the key technologies that will power future growth,

from solar panels, to advanced lithium ion batteries, to the

modern wind turbine.

America's economic competitors in Asia and Europe see the

opportunity and are driving hard to secure competitive

advantage. China by some estimates invested $400 billion of

public and private capital in clean energy just last year.

Given the global competition to dominate clean energy

production, one need not believe that green jobs are a

panacea to believe that pursuing them is smart and sensible.

After all, practically everything that is good for energy

independence or the environment will create a job—a green

job. Solar panels don't put themselves up. Wind turbines

don't manufacture themselves. Homes don't retrofit or

upgrade themselves. The smart grid won't install itself, nor

will bullet trains lay their own tracks. In many places, trees

don't even plant themselves any more.

To argue against green jobs is to argue for government

inaction or abdication on some of the biggest challenges of

our time. That is not acceptable.

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Economist Debates: Green jobs

Great and mighty labours are required of humanity in the

new century. To mitigate climate chaos and avoid economywrecking

energy shortages, workers must repower, rewire

and retrofit whole nations. As men and women step forward

to achieve these ends and accomplish these tasks, their

hard-hats—in many cases—will be green.

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Economist Debates: Green jobs

Against the motion

Andrew Morriss

H. Ross and Helen Workman Prof. of Law and Prof. of

Business, University of Illinois College of Law

Andrew P. Morriss is the inaugural H. Ross and Helen

Workman Professor of Law and Professor of Business at

University of Illinois College of Law. He is also a Research

Fellow of the NYU Center for Labor and Employment Law, a

Senior Fellow at the Property and Environment Research

Center, Bozeman, Montana; a Senior Scholar at the Mercatus

Center at George Mason University; and a regular visiting

professor at Universidad Francisco Marroquín in Guatemala.

Professor Morriss is a Senior Fellow for the Houston-based

Institute for Energy Research (IER), which conducts historical

research and evaluates public policies in the oil, gas, coal and

electricity markets. He is the author or coauthor of over 50

book chapters and articles on environmental law, regulatory

policy, and employment law as well as a coauthor (with

Bruce Yandle and Andrew Dorchak) of Regulation by

Litigation (Yale University Press, 2008) and coeditor (with

Gerald Korngold) of Property Stories (Foundation Press,

2009).

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Economist Debates: Green jobs

The opposition’s opening

statement

March 9th 2010

Governments should not try to choose technological winners

and losers and so they should not promote "green" (or "red"

or "purple") jobs. Instead, we should leave that to the

marketplace. Here's why.

No clear definition of "green"

While the phrase "green jobs" evokes organic farmers and

wind turbine repairmen, there is no clear, common definition

of what a "green" job is. Without one, special-interest

lobbying will transform even well-intentioned programmes.

Consider corn-based ethanol, a technology with no

redeeming features. Corn-based ethanol is bad for the

environment, placing unsustainable demands on water

supplies and increasing harmful farming practices. It is bad

for people, raising corn prices for some of the world's poorest

people. It provides little, if any, environmental benefit, with a

net energy gain often close to or even below zero (the exact

amount depends on the weather during the growing season,

among other things). Yet corn-based ethanol has received

billions in taxpayer support and continues to be favoured in

so-called "green" energy legislation.

The ethanol problem is no accident. Such programmes draw

special interests as picnics draw ants. Beneficiaries of federal

largesse, such as Archers Daniels Midland, lobby to divert

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Economist Debates: Green jobs

public money for their benefit while Iowa corn interests

ensure that presidential candidates pledge fealty to ethanol

before the Iowa caucuses. This support comes at a high price

for ordinary Americans: a Cato Institute study found that

every dollar of ADM's ethanol profits costs taxpayers $30.

Despite these problems, federal policy has promoted ethanol

as a "green" technology for years. Many environmentalists

now disclaim corn-based ethanol but, because it has been

promoted as an example of the federal government's ability

to pick green technology, they bear the burden of showing

why their current proposals will not yield the same results.

Before we can be sure that a "green" jobs proposal is going

to improve environmental quality, we need to know how

those promoting it plan to avoid the problem of politics

diverting public resources into corporate welfare.

There are also deep disagreements over definitions that need

to be settled in order to have a rational allocation of public

resources. For example, is nuclear power "green"? If you

care about greenhouse gas emissions, it is one of the best

technologies available for power generation. If you worry

about the long-term disposal of radioactive waste, it isn't.

Which concern is more important? Who decides? Green jobs

proponents are all over the map on this. The Obama

administration is currently promoting certain nuclear

subsidies as a "green" investment; the US Conference of

Mayors counts existing nuclear facilities as "green" but not

new ones; most environmental groups do not consider

nuclear power "green" at all. These questions are not just

theoretical. Proponents want to allocate billions in public

resources based on someone's categorisation of some things

as "green" and some as not. The most basic principles of

transparency in government, a theme in Barack Obama's

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Economist Debates: Green jobs

campaign for president, require that we settle such issues

before we turn over the keys to the Treasury.

Proponents haven't done their homework

Physicians follow a principle of "First, do no harm".

Governments would do well to follow the same. Before

governments act on the scale that green jobs proponents

propose, we need evidence that the action at least won't hurt

the economy. I'd give an "F" mark to all of the major studies

supporting green jobs programmes if a student turned them

in for an undergraduate economics class. They do not

conform to the basic principles of policy analysis.

First, virtually none of the analyses supporting green jobs

programmes make calculations of net jobs. Shifting power

generation from coal to solar undoubtedly boosts

employment in solar energy but it also reduces employment

in coal industries. Since solar power is more costly than coal

power, the increase in energy prices wipes out jobs in other

industries. If their employment effects are a reason to

support these programmes, we need to know that the

expenditures will actually create more new jobs than they

destroy.

Second, most proponents use a technique called input-output

analysis. This technique requires three assumptions: (1)

constant factor prices; (2) constant coefficients production;

and (3) a jobs multiplier greater than one. Neither of the first

two applies to disruptive technological changes like shifting

the mix of energy production and radically changing energy

prices. There is almost no evidence to support the third and

many reasons to doubt its validity. I have written at length

elsewhere about these methodological flaws, but the point is

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Economist Debates: Green jobs

essentially "garbage in, garbage out". We cannot trust the

estimates of the benefits because they were done incorrectly.

Just as you would not make an investment based on the

calculations of an accountant who cannot add, we should not

spend billions of dollars based on economic predictions from

forecasters who do not know their craft or practise it with

sleights of hand.

Let the market decide

We know how to improve energy efficiency, develop new

technologies and create new jobs: unleash entrepreneurs and

take advantage of markets to solve what the Nobel Prize

winning economist Friedrich Hayek called "the knowledge

problem". Put simply, Hayek's point, on this issue, is that we

do not know enough to plan on the grand scale green jobs

that proponents propose.

Consider energy. In 1870, coal heated people's homes,

natural gas provided light, electricity had little practical

application and gasoline was a waste product from kerosene

refining. The great energy policy debates of that era were

concerned with whether the world would run short of coal. No

one in 1870 would have predicted that coal would become

almost entirely an industrial fuel in plentiful supply, that

natural gas would be used primarily to generate electricity

and provide residential heat, that electricity would be in

widespread use in homes and industry, or that gasoline

would become an expensive commodity. We know as little

about our energy future as our predecessors did about theirs

and so we must put a premium on strategies that can adapt

to new information, circumstances and ideas. That is what

entrepreneurs do best. We should let them do it.

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Economist Debates: Green jobs

Featured guest, Robert Stavins

Robert Stavins

Albert Pratt Professor of Business and Government at the

Harvard Kennedy School

Robert N. Stavins is the Albert Pratt Professor of Business

and Government at the Harvard Kennedy School, Director of

the Harvard Environmental Economics Program and

Chairman of the Environment and Natural Resources Faculty

Group and Director of the Harvard Project on International

Climate Agreements. He is a University Fellow of Resources

for the Future, a Research Associate of the National Bureau

of Economic Research, Co-Editor of the Review of

Environmental Economics and Policy, and a member of

several boards of directors and editorial boards. Professor

Stavins' research has focused on diverse areas of

environmental economics and policy, and has appeared in

many articles and books. He is co-editor of several books,

including "Post-Kyoto International Climate Policy"

(Cambridge University Press, 2009), and the author of

"Environmental Economics and Public Policy: Selected Papers

of Robert N. Stavins, 1988-1999" (Edward Elgar, 2000).

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Economist Debates: Green jobs

Featured guest, Robert Stavins

March 11th 2010

In the January 12th 2009 issue of The New Yorker, Elizabeth

Kolbert wrote an article called "Greening the Ghetto: Can a

Remedy Serve for Both Global Warming and Poverty?" The

following passage appeared in the article:

When I presented [Van] Jones's arguments to Robert

Stavins, a professor of business and government at Harvard

who studies the economics of environmental regulation, he

offered the following analogy: "Let's say I want to have a

dinner party. It's important that I cook dinner, and I'd also

like to take a shower before the guests arrive. You might

think, well, it would be really efficient for me to cook dinner

in the shower. But it turns out that if I try that I'm not going

to get very clean and it's not going to be a very good dinner.

And that is an illustration of the fact that it is not always best

to try to address two challenges with what in the policy world

we call a single policy instrument.

That brief quote generated a considerable amount of

commentary on the internet, much of it negative and some

of it downright hostile. This surprised me, because I didn't

consider the proposition to be controversial, and I had

chosen my words carefully, simply stating that "it is not

always best to try to address two challenges with … a single

policy instrument". Two activities, each with a sensible

purpose, can be very effective if done separately, but

sometimes combining them means that one does a poor job

with one, the other, or even both.

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Economist Debates: Green jobs

In the policy world, such dual-purpose policy instruments are

sometimes a good, even great idea (gasoline/petrol taxes are

an example), but other times, they are not. Whether trying

to kill two birds with one stone makes sense depends upon

the proximity of the birds, the weapon being used and the

accuracy of the stoner. In the real world of important policy

challenges, such as environmental degradation and economic

recession, these are empirical questions and need to be

examined case by case, which was my point in the brief

quote above.

In 1990, when the US Congress sought to cut sulphur dioxide

(SO2) emissions from coal-fired power plants by 50% to

reduce acid rain, Senator Robert Byrd (West Virginia) argued

against the proposal for a national cap-and-trade system,

because it would displace Appalachian coal-mining jobs

through reduced demand for high-sulphur coal. He

recommended instead a national requirement for all plants to

install scrubbers, which would have increased costs

nationally by $1 billion per year in perpetuity.

Fortunately, the late Senator Ted Kennedy (Massachusetts)

recognised that these two problems (acid rain and displaced

miners) called for two separate policy instruments.

Simultaneous with the passage of the Clean Air Act

amendments of 1990, which established the path-breaking

SO2 allowance trading programme, Congress passed a job

training and compensation initiative for Appalachian coal

miners, at a one-time cost of $250 million. Acid rain was cut

by 50%, $1 billion per year in perpetuity was saved for the

economy, and sensible and meaningful aid was provided to

the displaced miners. Two different policies were used to

address two different purposes. Sometimes that is the wisest

course.

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Economist Debates: Green jobs

What about two current challenges: concern about the

environment, in particular global climate change, on the one

hand, and the need to revitalise economies, on the other

hand? Can "green jobs" be the answer to both?

Will economic stimulus packages, properly designed, lead to

job creation in the short term? Yes, but to some degree this

will be by moving forward in time the date of job creation, as

opposed to creating additional jobs in the long run. Of

course, at a time of recession and high unemployment, that

can be a sensible thing to do. So, by expanding economic

activity, an economic stimulus package can surely create

jobs, green or otherwise, in the short term.

But will a stimulus package, such as subsidies for renewable

energy, create net jobs from the change in the nature of

economic activity? The key question here is whether the

encouraged economic activities in green sectors are more

labour-intensive than the discouraged economic activities in

other sectors, such as with a shift to renewables from fossil

fuels.

This is considerably less clear, but there are cases where it is

likely to be valid. Solar rooftop installation, for example, is

labour-intensive. And the greatest consistency between

economic stimulus and greening the economy is within the

energy-efficiency realm, in particular, activities such as the

weatherisation of homes and businesses (President Obama's

cash-for-caulkers initiative comes to mind). Such projects are

highly labour-intensive, can be done relatively quickly and

will save energy. (Note, however, that the US Department of

Energy is having considerable trouble spending the stimulus

money fast enough.) And, importantly, they will reduce the

long-term cost of meeting climate objectives.

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Economist Debates: Green jobs

But some other areas, such as new green infrastructure, will

happen much more slowly, partly because of NIMBY ("not in

my backyard") problems, and so are much less consistent

with the purpose of economic stimulus. An example of the

challenge is presented by the current interest in expanding

and improving the US electricity grid.

A more interlinked and better grid is needed for increased

reliance on renewable energy sources, which will be needed

to address climate change. First, greater use of renewable

resources will require an expanded grid just to transmit

electricity from wind-power sources in the Great Plains, for

example, to cities with high demand for power. And, second,

this will also require the use of a so-called "smart grid", so

that greater reliance on intermittent sources of electricity,

such as from wind farms, can be balanced with cuts in

consumer demand when power is scarce.

But the timing of grid expansion, important for the use of

renewables and achieving climate goals, is not coincident

with the appropriate timing of the economic stimulus. As was

reported in an article last year in the New York Times

("Hurdles (Not Financial Ones) Await Electric Grid Update,"

January 7th 2009, p. A11), the CEO of the American

Transmission Company, which operates in four midwestern

states, said that the firm's most recent major project, a 200mile

transmission line from Minnesota to Wisconsin, took two

years to build, but eight years prior to that to win the

necessary permits.

Likewise, an article by Peter Behr in Climate Wire ("Green

Power Express line gets derailed by patchwork grid rules",

February 12th 2009, p. 1) focused on the dilemma facing ITC

Holdings, the nation's largest independent electric

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Economist Debates: Green jobs

transmission company, which has been seeking permission

from the Federal Energy Regulatory Commission to build a

line to bring wind power from the Great Plains to the Midwest

and East. The company's chairman and CEO, Joseph Welch,

indicated that a greater hurdle than the necessary money or

"even the ever-present citizen opposition to new

transmission projects" is a set of rules for interstate

transmission lines that effectively prohibits projects that are

not immediately required to maintain the grid's reliability. A

project intended to provide future green power does not

meet the test.

These are just two examples of the unpleasant reality of the

pace of investment and change in this important category of

green infrastructure frequently talked about in the context of

quick economic stimulus. Surely, economic recovery,

increased reliance on renewable sources of energy and a

smarter, interconnected grid are all important. But that does

not mean they are best addressed with a single policy

instrument: the economic stimulus package.

So, the strongest support for green job creation is with

regard to economic expansion, as opposed to changes in the

economy (which is why China is able to "green its economy"

as it rapidly expands). Of course, the key economic question

remains whether even more jobs would be created with a

different sort of expansion. In any event, while we seek to

expand economic activity through economic stimulus, it can

make sense to try to reduce any tendency to lock in new

capital stock that would make it more difficult and costly to

achieve long-term environmental goals. But that is very

different from claiming that all substitution of green activities

for brown activities creates jobs in the long term.

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Economist Debates: Green jobs

As governments use economic stimulus to expand economic

activity, they can and should tilt the expansion in a green

direction. But rather than a "broad-brush green painting of

the stimulus", this may call for some careful, selective, and

well thought through "green tinting".

Addressing the worst economic recession in generations calls

for the most effective economic stimulus that can be devised,

not some stimulus that is diminished in effectiveness through

excessive bells and whistles meant to address a myriad of

other (legitimate) social concerns. And, likewise, getting

serious about global climate change will require the

enactment and implementation of meaningful, dedicated

climate policies. These are two serious but different policy

problems, and they call for two serious, carefully crafted

policy responses.

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Economist Debates: Green jobs

Rebuttal statements

Rebuttal statements were originally published on

March 12th 2010. They can be viewed online at

http://www.economist.com/debate/days/view/478

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Economist Debates: Green jobs

The moderator’s rebuttal

statement

March 12th 2010

The two sides are clearly agreed on the fact that the private

sector will be responsible for actually producing jobs, green

or otherwise. What they differ on is the extent to which

government should, by means of policies intended to provide

environmental benefit, seek to shape the decisions that

surround that job creation. In the helpful metaphor

introduced by Robert Stavins, those who want to hit two

birds with one stone need to show that the birds are close

together, and that their stone throwing skills are up to the

task. (Demonstrating that there are no nearby glasshouses

at risk might also be a help …)

Van Jones makes the undeniable point that within the energy

sector there is no question of green jobs policy distorting an

otherwise free market; the market starts off hugely

influenced, perhaps compromised, by legacy subsidies and

other interventions of all sorts. He also points to studies

saying that investment in various green technologies and

industries produces more employment than investment in

those subsidised hydrocarbons, though it is not obviously the

case that investment would come at the expense only of

fossil-fuel investment. (On this issue of opportunity costs, if

either side would care to look a little further at the study of

Spanish green jobs by researchers at King Juan Carlos

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Economist Debates: Green jobs

University, it seems to me that many of the commenters

would be grateful.)

Mr Jones might give further attention, though, to the implicit

message of the existing distorting subsidies, a message

brought up by commenter Kenavi: they show how long such

incentives can outlive their useful purpose, if they ever had

one, and warn that green job policies may do the same. Both

Andy Morriss and Mr Jones agree that jobs created by

American ethanol policy are not very green. It seems to me

that Mr Jones needs to address the question of how future

green jobs interventions that prove un-green might be dealt

with, in the face of the political truth that the green failures

of ethanol policy have not been.

Mr Morriss is inclined to limit his shaping of the market

response to offering prizes for certain types of innovation

deemed necessary. In the comments MapJim stresses,

rightly I think, the need for basic research as a government

priority beyond such technological demonstration. But Mr

Morriss's belief in innovation and markets alone seems to

stretch too far in some respects. To bolster his arguments

that governments cannot pick winners, he points to the very

different energy economy of the 1870s, and suggests that

people today can no more guess at their energy futures than

people back then could have guessed at the realities of

today.

This seems implausible. Today's scientific understanding of

the earth and its resources, and of the nature of the physical

world, is genuinely and qualitatively, as well as

quantitatively, more advanced than that of the 1870s, when

educated analysts were only beginning to get to grips with

the laws of thermodynamics. Forecasters today cannot be

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Economist Debates: Green jobs

sure of future technology costs, but they can be fairly sure

that they have thought of them in a way that the people of

the 1870s had not thought of mass motorised transport,

nuclear power or domestic electricity services. On the scales

of cosmology and string theory, physics certainly still has

revolutions to offer. When it comes to practical matters of

energy generation and supply, surprises as huge as those

that followed from the understanding of the atom are surely

unlikely. Innovation, including that provided by novel

scientific insights garnered through fresh research, is vital to

the improvement and evolution of technologies, and some

technologies—including perhaps those behind biofuels—may

change a lot.

But the idea that there can be no picking of winners because

not all the horses have yet reached the track seems to take

historical relativism too far. The next decades of energy and

climate policy will be largely about deploying, sometimes in

improved forms, technologies and strategies already

reasonably well known. It does not seem a priori

unreasonable for governments to make some choices

between those options on the basis of externalities not

captured by the market.

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Economist Debates: Green jobs

The proposer’s rebuttal

statement

March 12th 2010

In a world of precarious energy supplies, mounting climate

concerns and a global race for clean-energy jobs, Andy

Morriss suggests that Americans should sit back and leave

our energy security solely to the magic of the marketplace.

I share Mr Morriss's preference for market-based solutions,

but in this case his prescription is not rooted in the reality of

today's distorted and dysfunctional energy markets. He

claims that the marketplace is best at pricing energy and

picking technologies, but that is simply not so when the

market is so heavily tilted in favour of fossil fuels.

Nor do today's energy markets allow us to respond

effectively to the critical challenge of our time: global

warming. Our energy troubles arise from a whole series of

government policy failures and staggering market failures.

We simply cannot rely solely on the market to fix our

problems without first taking steps to repair our markets.

The markets for new energy sources are being strangled by

government support for old energy sources. For instance, the

true costs of burning dirty energy are not properly accounted

for. Governments spend billions of dollars subsidising Big Oil

companies and other polluters. And power grids were

designed to service huge, centralised power plants, not to

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Economist Debates: Green jobs

link multiple points of distributed, intermittent renewable

sources of energy

We need deft government action to address these challenges

and create the conditions for a multibillion-dollar clean-tech

energy boom.

To build support for his position, Mr Morriss raises a series of

concerns. Most of them miss the mark. I share in Mr

Morriss's critique of corn-based ethanol, for example, but I

would reject the implication that we should therefore just

accept the status quo and avoid future missteps by never

again trying to diversify our energy supply.

Mr Morriss claims that the work of moving to a cleaner

economy is hampered by the lack of a universal and timeless

definition of the term "green jobs". This is a red herring. In

public policy, we continually debate, revisit and reshape what

should be included under any important label, whether the

term is "American made", "organic food" or "green jobs". In

a democracy, these kinds of debates are continuous and any

resolution only provisional.

What is important is that, in practice, governments and

businesses today, at all levels, are crafting definitions and

versions of the term "green jobs", definitions that correspond

to their own specific challenges, needs, preferences and

opportunities. And they are moving forward, on that basis, to

create the jobs of tomorrow.

Mr Morriss claims that "virtually none of the analyses

supporting green jobs programs make calculations of net

jobs". Not true. Many studies show green investments

resulting in a net increase in jobs.

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Economist Debates: Green jobs

A June 2009 study by the Center for American Progress, for

example, looked at the impact of $150 billion in annual green

investments and concluded that it would generate about

2.5m jobs. These investments were contrasted with a

comparable level of spending on traditional fossil fuels, which

would generate roughly 800,000 jobs. The net effect is

therefore 1.7m jobs, assuming that every dollar spent on

clean energy is redirected from fossil fuels.

Similarly, data culled from the US Department of Commerce

suggest that money invested in efficiency and renewable

energy produces roughly four times as many jobs as the

same dollar amount invested in producing energy from oil.

Clean-energy investments produce roughly three times the

number of jobs as investing in coal. There are simply more

jobs per dollar and per kilowatt hour in producing clean

energy and rebuilding for efficiency than there are in

producing dirty energy and wasting energy.

A more diverse energy supply would reduce price volatility

and blunt our nation's vulnerability to fossil-fuel price shocks.

Fluctuating energy prices can stunt economic growth, costing

a country jobs.

Over time, countries with policies that limit carbon emissions

and promote clean energy will likely generate more patents

in clean energy and more intellectual property, further

underscoring the importance of proactive policy to ensure

long-term competitiveness.

Mr Morriss jokes that he would give an F grade to a college

freshman who authored some green jobs reports. And yet his

own analysis ignores the Econ 101 matter of externalities

and market failures, making no mention of (nor offering any

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Economist Debates: Green jobs

solution for) the fact that dirty energy offloads pain and costs

on to innocent third parties, now and into the future.

Mr Morriss also implies that inaction is costless. The majority

of 144 economists polled by New York University's Institute

for Policy Integrity, or 84%, agree that global warming's

effects "create significant risks" to the economy, and 94%

agree that the United States should join climate agreements

to limit global warming.

Mr Morriss claims to be opposed to picking winners. But he

apparently has no compunction about guaranteeing losers.

Unless we act boldly, our present course will lead to disaster,

not just ecologically but also economically.

Mr Morriss does make one valid point, citing a conservative

economist, Friedrich von Hayek, that we have limited

knowledge. That is true. But just because we don't know

everything doesn't mean we don't know anything. In fact, we

know two important things.

One, we do not have infinite amounts of carbon in the

ground to burn. At some point, our earth will run out. Thus,

it is sensible for governments to create incentives for

alternatives to carbon-based fuels on a grand scale, now.

Two, our atmosphere does not have infinite capacity to

absorb all the carbon that humanity could potentially extract

and burn. If we emit too much, we will do irreparable

damage to the climate.

So to avoid inevitable shortages of dirty energy and

inevitable surpluses of carbon pollution, humanity must get

off the present path. Governments helped lay the tracks

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Economist Debates: Green jobs

toward this looming disaster. Governments can now throw

the switch to point us in a more sustainable direction. Only

then can the genius and dynamism of private capital power

us toward a better future.

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Economist Debates: Green jobs

The opposition’s rebuttal

statement

March 12th 2010

Van Jones and I agree that "the private sector, not the

government, can and must be the main driver in creating

green jobs". We agree that government subsidies for coal, oil

and nuclear power are a serious problem. We interpret that

agreed baseline in quite different ways, however.

Mr Jones sees subsidies as inevitable: it is a "truth" that "all

forms of energy are heavily regulated and subsidised".

Rather than get rid of wasteful subsidies that transfer money

from consumers to special interests in fossil fuels, his

solution is to give others their chance at the trough. And that

has what has happened. Far from levelling the playing field,

these new subsidies dwarf the old ones: solar and wind

receive subsidies of over $23/Mwh compared with the

$0.44/Mwh for conventional coal and $0.25/Mwh for natural

gas.

He may be right about the politics—Republicans and

Democrats quickly lose their zeal for ending the special

interest subsidies and tax breaks they campaigned against

once they get elected—but he couldn't be more wrong on the

merits. That the [name your villain] industry was successful

at getting subsidies in the past does not mean we should

give subsidies to others today, it means we should stop all

the subsidies.

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Economist Debates: Green jobs

Public choice theory identified a key insight about

government in the 1960s and subsequent work has

repeatedly demonstrated its truth. Concentrated, organised

interest groups (oil companies, solar power companies, etc

get benefits from governments at the expense of diverse,

dispersed groups (the general public). Special interests have

the advantage because the benefits received are

concentrated and valuable enough to make hiring lawyers

and lobbyists to manipulate the legislative and regulatory

processes worthwhile. The general public, on the other hand,

loses too little on each subsidy to motive a lobbying trip to

Washington. As I noted in my opening, we see this in Mr

Jones' field of alternative energy: the wasteful,

environmentally damaging corn-based ethanol programme

now deeply entrenched in our regulatory system is the result

of the 1990s versions of the arguments for green energy Mr

Jones makes now.

Mr Jones and I agree that the key to our energy future is

innovation. We disagree about the role of the government in

fostering innovation. Ironically, Mr Jones's examples of

successful federal spurs to innovation involve considerable

environmental degradation. For example, he points to the

interstate highway system, which is usually classified as a

subsidy to the oil industry by alternative energy proponents

since it facilitated the dramatic growth of the car industry

after the second world war and helped Americans move from

cities to the suburbs green advocates routinely criticise. Even

more amazingly, he cites the Tennessee Valley Authority,

one of the most environmentally damaging federal

programmes ever created and one repeatedly charged with

violating the environmental justice norms for which Mr Jones

is famous.

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Economist Debates: Green jobs

To take just one example, the Institute for Southern Studies

reported in 2009 that the TVA received EPA approval "to

dump 3 millions of tons of coal ash that spilled from a

Tennessee Valley Authority power plant in eastern Tennessee

in an impoverished, largely African-American community in

Alabama". In February 2010, the dump owner declared

bankruptcy, a step that halted lawsuits by local residents

against the dump but did not stop TVA shipments. More

broadly, the 2009 report "Outside the Law: Restoring

Accountability to the Tennessee Valley Authority" by the

Environmental Integrity Project, an environmental group Mr

Jones might heed, concluded that "TVA's environmental

record and conduct in recent years mock the vision that

inspired its founding".

There are examples of government programmes that foster

innovation without political manipulation. Our patent laws

make intellectual property rights accessible to ordinary

people and helped transform the United States from a rural

backwater on the margins of the world economy in 1800 to

the leading industrial power in 1900. Zorina Khan's The

Democratization of Invention (Cambridge University Press,

2005) details how much more widespread inventive activity

was among Americans than it was among Europeans during

the 19th century. Allowing inventors to reap the rewards of

innovation unleashes the wave of human creativity which Mr

Jones and I agree must be the source of the means of

meeting our society's energy needs.

We can spur innovation and investment without the problems

Mr Jones's special-interest approach creates. Professor

Jonathan Adler argues in Eyes on a Climate Prize (working

paper) that if Congress provided prizes modelled on the

Ansari X Prize for spaceflight, it would avoid many problems

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Economist Debates: Green jobs

of political manipulation because prizes impose costs only

when they produce results. Thomas Kalil of the University of

California at Berkeley, and a former Clinton administration

official, explained, in Prizes for Technological Innovation

(Brookings Institution, 2006), prizes offer a means to "help

to blend the best of public purpose and the creativity,

energy, and passion of private sector entrepreneurial teams"

without committing the government to choosing a particular

recipient or strategy. Prizes "allow the government to

establish a goal without being prescriptive as to how that

goal should be met or who is in the best position to meet it".

As we do not know what technology will deliver a new energy

source, prizes offer the advantage of not precluding solutions

the way bets on ethanol do.

We do not live in a world where wise and benevolent public

officials thoughtfully allocate resources to benefit the public

at large. We live in the real world. Special interests mobilise

armies of lobbyists and lawyers, deploy rivers of campaign

favours for politicians and bureaucrats, in pursuit of a chance

to feed from the public trough. James Madison said it best in

Federalist 51, "If men were angels, no government would be

necessary. If angels were to govern men, neither external

nor internal controls on government would be necessary."

We must take into account the imperfections of human

institutions and knowledge. Political frailties dictate that we

disclaim the power Mr Jones seeks to mobilise and instead

build institutions resistant to the disease of self-interest.

Dictating our energy future from Washington, DC flunks that

test.

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Economist Debates: Green jobs

Featured guest, Daniel Weiss

Daniel Weiss

Senior Fellow and Director of Climate Strategy at the Center

for American Progress

Daniel J. Weiss is a Senior Fellow and the Director of Climate

Strategy at the Center for American Progress, where he leads

the clean energy and climate advocacy campaign. Before

coming to CAP, he spent 25 years working with

environmental advocacy organisations and political

campaigns. Most recently, he was a senior vice-president

with M+R Strategic Services, where he oversaw collaborative

campaign efforts by 15 major national environmental

organisations working to oppose anti-environmental

legislation. Before that Mr Weiss served for 16 years at the

Sierra Club, and he was also chief strategist and lobbyist for

legislative campaigns concerning the Clean Air Act, the Clean

Water Act and the Food Security Act. Mr Weiss is an expert in

energy and environmental policy, legislative strategy and

tactics, and advocacy communications.

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Economist Debates: Green jobs

Featured guest, Daniel Weiss

March 16th 2010

"Providing incentives for energy efficiency and clean energy

are the right thing to do for our future … because the nation

that leads the clean energy economy will be the nation that

leads the global economy. And America must be that nation."

—President Barack Obama

"Every day that we delay trying to find a price for carbon is a

day that China uses to dominate the green economy."

—Senator Lindsay Graham (R-SC)

Pundits and pollsters bombard beltway denizens daily,

begging for bipartisanship. President Obama and Senator

Graham, the one a progressive and the other a staunch

conservative, demonstrate that there is great bipartisan

potential to solve immediate and long-term economic

problems via investments in clean energy programmes and

pricing the cost of carbon pollution. These measures would

create jobs, enhance economic competitiveness, increase US

energy independence and improve our national security.

By 2020, clean energy "will be the 3rd industrial sector in the

world". And while the Senate ponders its options, other

nations are already seizing this economic opportunity. China

boasts the most installed renewable electricity capacity.

Germany has 20% more employees in renewable energy

than in conventional energy. Spain's investment in energy

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Economist Debates: Green jobs

efficiency reduced its energy intensity (energy consumption

per unit of GDP) by 11% in just four years. These and other

nations understand that the transformation to a low-carbon

economy has strategic benefits, including broad-based

economic prosperity and energy security.

A clean energy economic transformation is one of President

Obama's top domestic priorities. He believes that our

immediate economic recovery and sustained job creation in

the 21st century depend on it. The green jobs that result

from investments in clean energy programmes are typically

in existing fields, such as plumbing, construction,

manufacturing and sales. These are clean energy jobs

because they would either increase energy efficiency or help

build or instal renewable energy technologies such as wind

turbines, solar panels or geothermal heat pumps.

The 2009 American Recovery and Reinvestment Act includes

$90 billion for clean-energy investments and tax cuts, and

will create nearly 900,000 new clean-energy jobs. After a

slow start, 1m low-income homes will be weatherised in this

critical economic recovery programme. ARRA investments

saved 40,000 wind industry jobs, and will lead to doubling

wind, solar and other renewable electricity generation by

2012.

To complement these efforts, Senator Graham and Senators

John Kerry (D-MA) and Joe Lieberman (I-CT) are developing

"business-friendly climate legislation" that would put a

declining limit on carbon air pollution. This would make dirty

coal-fired electricity more expensive and drive investment

toward cleaner alternatives, including natural gas, efficiency,

and wind and solar power.

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Economist Debates: Green jobs

The US Climate Action Partnership, which includes Duke

Energy, Dow Chemical, Honeywell International and other

major corporations, also supports this approach. They

believe that long-term innovation and growth require cleanenergy

investments and reductions in carbon pollution. The

business alliance notes that "by putting a price on carbon,

the United States can spark major investments in new

technologies … action on climate will strengthen the US

economy and generate meaningful employment for

Americans".

General Electric, another member of the partnership, warned

senators that inaction would harm businesses and the

economy. "Policy uncertainty not only inhibits growth, it

causes disinvestment," says the company. "Not acting …

sends a signal to industry—one that may have economic

ramifications for a generation."

Independent assessments confirm that clean-energy jobs

and pollution reduction legislation would expand

employment. An analysis by Yale University, University of

California-Berkeley and University of Illinois determined that

the American Clean Energy and Security Act, passed by the

House of Representatives in 2009, would create nearly 2m

jobs by 2020. Another study by the University of

Massachusetts projects that the legislation passed by the

House combined with the Recovery Act spending would

generate a net 1.7m jobs.

Despite the evidence of clean-energy job growth in other

nations and the United States, Big Oil and other special

interests continue to oppose this economic opportunity. They

base their case on the thin reed of a study by a right-wing

Spanish professor working at an institute partially funded by

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Economist Debates: Green jobs

ExxonMobil. The study claimed that investments in clean

energy reduce total employment.

Two former senior Spanish government officials debunked

these bogus findings. They determined that the study "fails

to meet even the minimum standards of academic integrity …

Official figures from the Spanish Ministry of Labour prove

that the sector of renewable energies has created 175,000

jobs." The New York Times reports that despite some initial

missteps, the Spanish investments generally "fulfilled their

promise".

The US National Renewable Energy Lab also reviewed this

study, and found that "the primary conclusion … policy

support of renewable energy results in net jobs losses—is not

supported by their work".

Americans certainly understand the stakes. Recent polls

found that clean-energy investments and global warming

action have strong public support. A January survey by

Republican pollster Frank Luntz determined that an

overwhelming majority of respondents agreed that "we must

take this opportunity to use the emerging new energy

economy to create jobs and careers right here in America,

not overseas".

A 2010 poll of swing states by Joel Benenson, President

Obama's 2008 pollster, found nearly three-fifths of

respondents would support an "energy bill that limits

pollution and greenhouse gas emissions through what's been

called a Cap and Trade plan and also invests in clean,

renewable energy sources in America". This includes a

majority of independents and nearly 40% of Republicans.

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Economist Debates: Green jobs

President Obama rightly argues that "we can let the jobs of

tomorrow be created abroad, or we can create those jobs

right here in America and lay the foundation for lasting

prosperity". He has planted the seeds for this prosperity, but

to harvest sustainable long-term economic growth and

broad-based prosperity through robust job creation, the

Senate must adopt comprehensive, bipartisan legislation.

With leadership from Senators Graham, Kerry and

Lieberman, there is an unprecedented opportunity for

bipartisan cooperation in the Senate for comprehensive

clean-energy legislation that would boost investments to

create the jobs of tomorrow.

But the Senate must act now to keep pace with our economic

rivals, expand employment opportunities, enhance American

energy independence and improve our national security.

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Economist Debates: Green jobs

Closing statements

Closing statements were originally published on

March 17th 2010. They can be viewed online at

http://www.economist.com/debate/days/view/479

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Economist Debates: Green jobs

The moderator’s closing

statement

March 17th 2010

It has been an interesting debate, and a slightly surprising

one, at least to me, in that the votes have moved in a quite

different way from the comments. I haven't done a numerical

tally, and some comments are nuanced, or gnomic, enough

to defy categorisation (I particularly appreciated

Suleymanovic's "I think this is wrong, but it may be

correct"). But my impression is that the comments from the

floor have tended to go Andrew Morriss's way. The votes,

though, tell a different story, with a pretty good majority for

Mr Morriss turning over the first few days into an even better

majority for Mr Jones, and from then on pretty much refusing

to budge. You still, though, have a chance to change that,

should you wish to.

The debate has not moved on particularly far from its

opening, with the parties looking for different, more telling

reiterations of their positions rather than taking them in new

directions. A difference in emphasis, though, was introduced

by Dan Weiss's comments, which put the job creation that

can be ascribed to green policies into the context of American

competitiveness, a frame very popular at the moment with

those trying to move climate legislation through the

American Senate.

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Economist Debates: Green jobs

This approach—crudely put, the idea that green jobs are a

finite resource, and that America is being outrun in the race

to get as many of them as possible by China, which intends

to dominate this part of the economy—adds a new element

of fear and urgency to a side of the debate which otherwise

has a win–win feel. Commenter Ellis Lee gave the point

resonance by pointing to the greenery with which some

Chinese companies are now trying to endow their

skyscrapers. That said, the idea of competing for green jobs

rather hides the more important difference between the two

countries in this regard. Those skyscrapers are a reminder

that China has a robustly growing economy, on the basis of

which green job creation, like job creation of all sorts, will be

considerably easier.

Another commenter, SonofBaraka, makes the interesting

point that while government commitment to green jobs

means some level of interference in the market, it might in

the end reduce that interference by moving more and more

people off grid and into self-sufficiency, obviating the need

for much of the paraphernalia of regulations. This is not

perhaps a compelling argument, but it did strike me as a

fresh one in this context.

In its image of regulation withering away it would certainly

not compel Mr Morriss, who has continued to make strong

points about the enduring and often baleful legacy of past

intervention. The distortion and subsidy endemic in the

energy sector, which green-jobs advocates seek to shift to fit

their agenda, have a history. That history is one of earlier

policy entrepreneurs attempting to adapt the sector to their

own needs, and special interests capturing those attempts.

The inductive argument that what happened then, again and

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Economist Debates: Green jobs

again, will happen now is not conclusive: induction never is,

because things do change. But it is definitely powerful.

At the same time, Mr Jones has returned to the point that

there is a separate, and prior, need to change the energy

sector in response to fears about climate change, among

other things. Given that this has to happen, and that the

market will not bring it about unaided, seeking at the

margins to increase employment as it does seems a nobrainer

(which is not to say that the point's elaboration is not

thoughtful). At the moment, he seems to be commanding

your assent. And he might well have done so if the motion

had been more precisely formulated, perhaps along the

admirably clear-thinking lines that commenter KTehJE94S7

suggests: "It is desirable that governments adjust the policy

environment in such a way such that jobs which consume

fewer natural resources than they produce increase in

number."

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Economist Debates: Green jobs

The proposer’s closing

statement

March 17th 2010

It is important to understand the real question and not get

caught up in hyperbole. I believe that it is sensible for

government to explore the economic development potential

of building a low-carbon economy. Andrew Morriss does not.

I respect his arguments, but I believe passionately that he is

mistaken. Here is why.

Today, we are challenged to rein in global warming

emissions. The task is urgent and inescapable. But we can do

it in any number of ways. We could wait before adapting our

infrastructure, allowing our economic competitors to rebuild

the foundation of their economies first and ceding the market

for clean technology. We could put a price on carbon, but let

the chips fall where they may in the rest of the economy,

making no provisions for predictable adjustments on the path

to transition. We could simply stop using energy altogether, I

suppose. Or we could keep our heads in the sand, ignoring

climate science, and suffer the costs of inaction.

We could do any of these things. Or we could do what I

propose as a sensible path. We could take the tools that

government already uses to encourage economic growth,

and apply them to the challenge at hand. In so doing, we

could help marshal both public and private resources to

reinvent our energy system.

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Economist Debates: Green jobs

Governments already regulate and manage disputes through

the judicial process. Mr Morriss concedes that this is a good

thing. He praises environmental justice advocates for suing

the TVA when it violated the Clean Water Act and threatened

human health. But it is interesting to note that the courts are

not a product of the market, and the right to clean water is

not codified in the bylaws of a corporation. These are the

foundations of public trust, upheld by government. They also

allow for enforceable contracts, intellectual property rights

and the protection of human health.

Governments already make public investments as well. In my

last post, I mentioned rural electrification and the interstate

highway system. Mr Morriss dismissed these examples, but

look again. The environmental harms he cites are the

product of our success in meeting our stated objectives:

advancing mobility, and in providing affordable and reliable

energy for all. Those were tough goals, and we met them.

The problem was not that government failed to achieve its

ends. The problem was that the goals were incomplete and

insufficient. There is nothing stopping us today from

achieving equal success in rebuilding our energy system for

affordability and reliability, while we pursue sustainability,

community reconstruction, and greater access and

opportunity.

Mr Morriss cites the benefits of cash prizes that use public

funds to create incentives for clean cars, as a government

tool that creates incentives for private investment. Is this a

distortion of the market? Maybe, but it is an effort to

encourage new business problem-solving in areas of great

public need.

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Economist Debates: Green jobs

I am glad that we both agree that public prizes can help

reduce dependence on oil. I would also add that passing fuel

economy standards doubled the miles per gallon achieved by

the nation's fleet. And they did this even as auto safety laws

dramatically cut fatalities for our nation's drivers.

Mr Morriss is right that we should guard against the capture

of government by special interests. But this is not a problem

only in the energy sector. And the solution is not to throw up

our hands. If we need a new round of lobbying and campaign

finance reform, I would be happy to work with Mr Morriss to

achieve that end.

Mr Morriss and I both like markets, but I fear he has too

simplistic a view of their operation. Market failures are real,

and no business acting alone can fix them. Today,

information failures and negative externalities mean that

people investing in coal plants do not bear their true

economic costs. Split incentives mean that building owners

outfit offices with inefficient boilers, even if it means higher

costs for tenants and vastly more pollution for community

members.

On the flip side, we systematically underinvest in good

things, because the benefits are external to the investor. So

each day we undersupply our economy with public goods like

the skills of workers, community stability and, yes, clean

renewable energy that benefits society at large.

As Nicholas Stern said in his famous study, climate change is

likely to be one of the greatest cases of market failure in

world history. We cannot just let the market decide, because

the market is failing in the case of clean energy and carbon

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Economist Debates: Green jobs

emissions. But we have a responsibility to help the market

work better. So yes, creating green jobs is a sensible

aspiration for governments.

Can we build a green economy strong enough to lift poor

people out of poverty and put the economy on a road to

recovery? Absolutely. Will we get the job done? That depends

on leaders acting wisely in both the private and the public

sector. As for me, I don't believe it is ever a good idea to bet

against the ingenuity, hard work and decency of the

American people, and I believe in the American tradition of

good government on the side of innovation and enterprise.

The moderator has encouraged us to discuss the infamous

(and now debunked) "Spanish study", which last year alleged

that every green job in Spain destroyed two other jobs in the

economy. That notion went viral and was even cited in

Congressional testimony. The "study" was subsequently

exposed as a rigged-up set of prefabricated conclusions,

based on dodgy calculations, ideology and guesswork. It is a

testament to Mr Morriss's commitment to methodological

rigour that he has thus far refused to attempt to revive or

play that fraudulent card. For that, too, I applaud him.

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Economist Debates: Green jobs

The opposition’s closing

statement

March 17th 2010

In his reply, Van Jones repeats the mistakes of his opening.

He still doesn't talk about net jobs since he still doesn't count

jobs lost, he still doesn't have a coherent definition of

"green" so that we can debate just what he is planning to

spend our money on, he still doesn't address the long history

of failed government involvement in energy markets, and he

still doesn't understand how markets work.

Mr Jones says we cannot leave "our energy security" to the

"magic of the marketplace" because existing markets are

"distorted and dysfunctional". He asserts that we should

instead have wise government officials make decisions for us.

But those "distorted and dysfunctional" markets that Mr

Jones worries about are "distorted and dysfunctional"

precisely because wise people in government made choices

about how to intervene to promote "our energy security" in

earlier years. Governments have been talking about "energy

security" and massively intervening to promote it since the

first world war. They have been doing the same on

environmental grounds since the 1960s. Today's "distortion"

was yesterday's policy choice.

Mr Jones disagrees with those choices; that is why he says

we have "distorted and dysfunctional" energy markets rather

than "wisely designed" ones. He is right; we do indeed have

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Economist Debates: Green jobs

distorted and dysfunctional energy markets. But for us to do

better today, either government officials now must be wiser

than their predecessors or special interests must have less

influence today. Neither is true.

Are we wiser?

Since we are smarter and know more today, this argument

goes, today's officials will make better choices than

yesterday's. This may be true; even if they aren't smarter,

today's government officials certainly know more than did

the officials in the 1960s who designed the Mandatory Oil

Import Programme (MOIP) (intended to reduce our

dependence on foreign oil through import quotas), the

officials in the 1970s who launched the synfuels programme

(designed to create a substitute for gasoline to reduce our

dependence on foreign oil), or the officials in the 1990s who

insisted that gasoline include methyl tertiary-butyl ether

(MTBE) and ethanol as oxygenates (to improve air quality).

Today's officials at least know that import quotas do not

reduce our dependence on foreign oil, that the technologies

backed by the synfuels programme don't work, and that

MTBE and ethanol are environmental disasters.

One problem with this explanation is that we will know even

more tomorrow. Instead of enshrining today's imperfect

knowledge in statues and regulations on top of our past

mistakes, as Mr Jones proposes, our efforts today are better

devoted to undoing those past mistakes: We don't need to

put our thumbs on one side of the scale if we take them off

the other.

Are we less susceptible to special interests today?

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Economist Debates: Green jobs

Perhaps those past mistakes are the result of special

interests manipulating governments rather than ignorance.

It's true that energy programmes have historically been

grotesquely distorted by special-interest lobbying even

compared with other areas of government, from MOIP's

incentive for investment in wasteful "tea kettle" refineries

that added no value beyond qualifying their owners for

quotas for today's environmentally damaging corn-based

ethanol programmes. Mr Jones waves his wand and,

somehow, we have scrubbed all those interests out of the

public policymaking process and an ethical, disinterested,

wise set of experts and public officials are going to distribute

public funds without falling into these traps.

But other than assuring us that today's officials are

disinterested public servants, Mr Jones hasn't addressed any

of the structural features of our government that help special

interests raid the public's wallets. Campaign contributions,

lobbyists, entrenched members of legislatures, secretive

committee mark-ups, closed-door White House meetings

with special interests—all of these shape the details of

legislation and regulations under Republicans and Democrats

alike and his proposals are no different. Corn ethanol is

entrenched in our energy policy not because the people who

back it are too stupid to see it is a bad idea but because

special interests like Archers Daniels Midland (ADM) have

ferociously efficient lobbying operations. Put the kind of

money Mr Jones wants to spend on the table for any form of

alternative energy and those same interests will influence it

the same way. Other than the naked assertion that his

proposals are different, Mr. Jones has nothing to say about

how we can do all the wonderful things he wants to use the

government to do without letting ADM have the keys to your

bank account. The reason he hasn't is that he can't.

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Economist Debates: Green jobs

Congress proves with every energy bill that special interests

drive US energy policy.

Yesterday's mistakes predict today's.

Mr Jones accuses me of wanting to leave things to the magic

of the market instead of letting wise government officials

direct policy. But there's no magic in markets: markets work

because people economise on expensive things. That

incentive has led to some impressive conservation. To take

just one example, the energy used in steel production fell by

80% from 1950 to 2006, a drop caused by firms' desire to

cut costs to stay competitive (my co-authors and I cite many

more in our work). No magic, just incentives.

Mr Jones, on the other hand, does want to rely on magic. His

magic is a spell that removes special interests from

government energy policy and allows government officials

special access to knowledge about the future so they can

choose technologies for us. This really would be magic

because we have recent and clear examples of governments

doing precisely the opposite. The corn ethanol programme is

exactly the kind of programme Mr Jones is advocating today,

even if he now dislikes it. It was a federal energy mandate

with the avowed intention of reducing our dependence on

foreign oil and improving environmental quality. It turned out

to do neither, and to damage both our environment and our

economy. That is a powerful indictment of the institutional

arrangement Mr Jones wants to use to shape our future and

one for which he had no response. We deserve better.

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Economist Debates: Green jobs

Winner announcement

The winner announcement was originally published on

March 19th 2010. It can be viewed online at

http://www.economist.com/debate/days/view/480

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Economist Debates: Green jobs

Winner announcement

March 19th 2010

It has been a great pleasure to chair this debate, in which

both sides have made good points—and have been making

them better, I think, as the time has gone by. We have not, I

think it is fair to say, seen much movement around the

issue; the battle lines remain much as they began, with little

outflanking or manoeuvre. But we have seen a distinct

movement in the voting, which has now confirmed Mr Jones

as the clear winner. I extend my congratulations to him, and

also to Mr Morriss, whose arguments, as Mr Jones agreed,

deserved and continue to deserve respect.

I might wish, and I think some of the commenters would be

with me on this, that the debate had got down to a few

more specifics. At times, in some of the statements and

some of the comments, the issues seemed to be reduced to

the fact that the market needs guidance, through price

mechanisms, regulation or in some cases subsidies, in order

to reduce the dangers of climate change. The industries

which benefitted from this would grow, and with them so

would green jobs. A little more stress on which industries

optimised the jobs and the greenery best, and on the

circumstances under which jobs should influence a decision

about which sort of green investment to encourage, would

have been welcome; this was, I think, the perspective that

Robert Stavins steered us towards. If efficiency gains can be

made through weatherising houses and also through some

sort of capital expenditure that doesn't produce so much

employment, how to make the choice between the two?

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Economist Debates: Green jobs

And we were not left with a clear sense of how to avoid

continuing support for jobs once deemed green but now not

so much. Mr Morriss's case that it was not possible, in

advance, to see what would be worthwhile and what would

be corn ethanol clearly did not convince the voters. We were,

however, given a keen insight into the way that the debate is

developing in Washington by Dan Weiss, who also looked at

links to net job creation, and to helpful lessons that could be

learned from overseas.

It remains for me to thank the participants and the guests for

their thoughtful contributions, the many of you who

commented, and those others who followed the debate.

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Economist Debates: Green jobs

Our sponsor’s perspective

Siemens

The question is not if tomorrow's green jobs will arrive, but

when. The engine of job growth in America's economy lies in

the entrepreneurial spirit of the private sector. But for the

greening of America's economy to truly take root,

government needs to send strong signals, create incentives,

and construct rules of the road so the private sector can

invest-and job growth can occur. Various government

incentives, such as tax credits, are already helping spur the

investment needed to begin creating the green jobs of the

future. More needs to be done.

Here in the U.S., Siemens is anticipating creating some 3,000

green jobs as part of current and ongoing investments across

the country. For example, Siemens Wind Power in the U.S.

has grown from zero employees in 2005 to more than 800

today and we plan to double that number in the next two to

three years. Siemens sees green jobs as win-win for

America: Much needed employment during difficult economic

times can help put America's economy back on track while

the environment also benefits from a reduced carbon

footprint.

Nearly one-third of our $104 billion global portfolio is

environmentally-related, and that share is growing. Last year

alone, we helped customers cut some 210 million tons of

CO2—the equivalent of the annual emissions of New York,

Tokyo, London, Munich, and Berlin combined—earning us a

spot as the best company in its class in the Dow Jones

62


Economist Debates: Green jobs

Sustainability Index.

Our commitment to the environment is already translating

into green jobs across America in power generation and

distribution, building modernizations, zero-emissions mobility

solutions such as light rail and other growth areas. With the

right public-private balance, Siemens USA is committed to

growing more green jobs for Americans while helping the

environment for everyone.

About Siemens

Siemens AG (NYSE: SI) is a global powerhouse in electronics

and electrical engineering, and operates in the industry,

energy and healthcare sectors. For more than 160 years,

Siemens has built a reputation for leading-edge innovation

and the quality of its products, services and solutions. With

405,000 employees in 190 countries, Siemens reported

worldwide revenue of $104.3 billion in fiscal 2009. With its

U.S. corporate headquarters in New York City, Siemens in

the USA reported revenue of $21.3 billion and employs

approximately 64,000 people throughout all 50 states and

Puerto Rico. For more information on Siemens in the United

States, visit www.usa.siemens.com

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Economist Debates: Green jobs

Interview with Eric Spiegel,

President and Chief Executive

Officer, Siemens Corporation

March 9th 2010

Q: How do you define a "green job"?

A: There's no single, definitive answer, so many prefer as

broad a definition as possible: i.e. any job that puts America

back on the path to a cleaner, more energy-efficient future.

At Siemens, a green job is one that helps support the

development / manufacturing / implementation of the

solutions in our environmental portfolio. For us, this means

technologies that produce energy more cleanly like wind,

solar, and clean coal or delivering that energy more

efficiently, like smart grid. It also means cleaning the

environment—pollution controls and water purification, as

well as energy efficiency applications such as building

technologies, light and high speed rail and lighting solutions.

64


Economist Debates: Green jobs

Q: Over the next few years, how much growth in green

jobs do you anticipate? Where will that growth come

from?

A: Based on current estimates, we anticipate as many as

3,000 new "green jobs" within the company. Most stem from

areas including renewable energy, building modernizations as

well as public transportation solutions, including high-speed

rail.

Q: What sort of factors will influence the growth of

green jobs?

A: We see three factors playing a role:

ENERGY EFFICIENCY as a private and public sector

imperative: An interesting trend we observe is the growing

acknowledgement of the economic benefits that derive from

more efficient technologies. Energy efficiency is an

environmental imperative—but it's also becoming an

economic one—as companies strive to find increasing

efficiencies in their manufacturing and industrial processes to

remain competitive in today's tough economy. [Replacing

your lighting with energy efficient products and controls can

reduce energy consumption up to 50%. Utilizing more

efficient motor systems can reduce costs by as much as

25%.]

PUBLIC POLICY SUPPORT: Most green technologies require

an up-front investment—which many are reluctant to make,

especially during times of economic and regulatory

uncertainty. In order for these technologies to thrive—and

we believe they will—there must be a focus on new policies

and standards that will remove the uncertainty. Once this is

65


Economist Debates: Green jobs

done the private sector can respond with the technologies

that make sense.

INNOVATION: The area of sustainability represents a new,

exciting industry that is taking existing technologies to a new

level—with an eye to minimizing environmental impact at

lower cost. The market is ever-changing and requires a

constant focus on innovation to support and facilitate

economic viability and market acceptance.

Q: What industries and sectors will benefit most from

the growth of green jobs?

A: Efforts to clean or "green" are occurring across all

sectors—as companies strive to identify greater efficiencies

to remain competitive and to increase market share. This

trend is clearly evident in the energy sector, but also in the

auto industry (which is now looking to develop more hybrids

and e-cars) as well as in metals and mining (which is turning

more to software and automation in order to make its current

processes more efficient and environmentally compliant.)

Q: What role should governments play in the creation

or facilitation of green jobs?

A: Governments need to send strong signals, such as a price

signal for carbon, to create policy incentives, and to

construct rules of the road so the private sector can invest—

and so job growth can occur. Various government incentives,

such as tax credits, are already helping spur the investment

needed to begin creating the green jobs of the future.

We have seen the long-term benefits of these technologies

pay off, but also recognize that many of them need

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Economist Debates: Green jobs

additional support and protection at the beginning until they

are able to thrive and grow on their own—similar to

"incubating" new businesses. This support should not last

forever, but without it, long-term viability would be slim at

best.

Q: How is Siemens promoting the creation of green

jobs?

A: We believe that technological innovation is a powerful

lever in building a more sustainable industrial base and we

devote over $1 billion annually into the research and

development of technologies that will strengthen our

environmental portfolio.

We also believe there has to be a broad, systemic awareness

and appreciation for sustainability and it needs to start with

education in STEM subjects (Science, Technology,

Engineering and Math) and in sustainability as a discipline.

That is why we are encouraging rewarding excellence in the

STEM subjects from kindergarten through graduate school,

through programs we sponsor at the Siemens Foundation

including the Siemens Competition, as well as an emphasis

on the development of a sustainability curricula and

awareness through the Siemens We Can Change the World

Challenge.

Q: What sort of new skills is Siemens looking to

acquire in this area?

A: Innovation is part of Siemens' DNA, so we need highly

qualified engineers in a variety of fields. In particular, the

new, cutting-edge skill sets we're looking for are those

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Economist Debates: Green jobs

involved in the energy business, especially in renewables; at

the intersection between biology and IT and in servicerelated

technologies, among other areas,

Technologies these days are often developing faster than the

workforce can be trained or educated to service them. It is

increasingly difficult to keep pace—this is an issue facing all

competitors.

Q: Where is Siemens finding skills shortages?

A: We're finding some shortages in the engineering side of

the business. It's hardly a new story, but the fact is, this

country is not graduating enough engineers each year. If you

take a look at the job openings we currently have—even in

the midst of one of the worst economic downturns—a

significant portion are engineering related as is the case with

other companies as well. It's one of the reasons why there's

a public policy debate about bringing in engineering talent

from overseas using H1B1 visas. Another factor is that some

of the engineers this country does produce end up going into

professions other than engineering. As a country, we need to

encourage them to stay in their chosen profession so they

keep America on innovation's cutting edge.

Eric Spiegel joined Siemens Corporation in January, 2010, as

its President and Chief Executive Officer. As CEO in the global

company's largest single market, Mr. Spiegel is responsible

for growing the U.S. business in the Industry, Energy and

Healthcare sectors. Ranked No. 1 in the Electronics, Electrical

Equipment Industry sector of the Fortune Global 500,

Siemens has more than $21 billion in annual U.S. sales;

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Economist Debates: Green jobs

exports $1.6 billion in products from the U.S.; and with more

than 64,000 American employees, is represented in all 50

states.

Mr. Spiegel brings to Siemens twenty-five years of global

consulting experience with complex organizations in the

energy, industrial and automotive fields. Before joining

Siemens, he had been at Booz & Company since 1986. An

expert on the global energy industry, Eric is a co-author of

the 2009 book Energy Shift: Game-changing Options for

Fueling the Future. The book has now been translated into

Arabic, Spanish and Japanese.

69


Economist Debates: Green jobs

Background reading

Hype about fuel cells: Flower power

Green jobs: Back to the City

A special report on climate change and the carbon economy:

The green slump

Leaders: Wanted: green engineers

Business: Asia's green-tech rivals

Solar power's bright future in Japan: Land of the rising

subsidy

Clean energy in the Midwest: Greening the rustbelt

"Green collar". Job creation, a critical analysis (PDF from The

Beacon Hill Institute at Suffolk University)

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