Energy Jobs Debate Intensifies in Washington

Our nation’s capital is swirling with hot air about the fate of energy-related jobs, from fossil fuel (the high-profile Keystone XL pipeline) and wind energy, specifically the expiration of the federal production tax credit (PTC) for wind and geothermal power facilities.

February 21st was the deadline established by Republicans in Congress for a decision on the controversial Keystone project, designed to carry oil from tar sands in Alberta, Canada south to the Gulf of Mexico. Keystone XL proponents frequently tout the American Petroleum Institute’s claim that $7 billion investment in the pipeline will create 20,000 jobs. According to a study performed by Cornell University’s Global Labor Institute, though, the real American employment numbers are closer to 10 percent or 20 percent of that amount: 2,500 to 4,650 jobs. In official filings with the State Department, pipeline proponents acknowledged that only several hundred of these jobs will be permanent.

While President Obama has already signaled his lack of support for Keystone, expect plenty of heated rhetoric on the matter, as presidential politics increasingly focus on the role of future energy supplies on job growth in the U.S.

According to the American Wind Energy Association (AWEA), the job consequences of the PTC will be much greater. According to a study performed by Navigant Consulting on behalf of AWEA, as many as 37,000 jobs could be lost over the next four years if the PTC is not extended. Budget negotiations to extend the payroll tax extension failed to include an extension of the PTC, so chances for a near term extension of this 2.2 cent-per-kilowatt-hour subsidy are looking slimmer and slimmer. This is at least the 10th time this federal subsidy has come up for a vote over the past two decades, highlighting the stop-and-go nature of U.S. energy policy, buffeted by ever-shifting political winds.

State Renewable Portfolio Standards (RPS) are the primary driver of future electricity resources, so the overall renewable sector will still grow, but wind – usually the lowest cost resource – will decline as an overall percentage of the power mix, raising the cost of power for ratepayers.

The wind power industry is actually one of the few success stories when it comes to the “inshoring” of jobs, as the domestic content of wind turbines has been going up, not down, over the past decade. The loss of the PTC would hit an industry already showing signs of a shake-out akin to what’s been happening in the solar space. For example, Vestas of Denmark, the world’s leading wind turbine manufacturer, has already laid off workers overseas and has threatened to also cut jobs in the U.S. if the PTC is not extended.

One solution is to actually develop a long-term energy strategy that would phase out as many subsidies as possible in exchange for some level of support certainty that would decline over time. California tried this approach with solar PV, establishing a 10-year program with declining subsidies known as the California Solar Initiative. Imagine if we did this with all energy sources – including fossil fuels, which have historically enjoyed the largest amount of government subsidies.

Article by Peter Asmus, appearing courtesy the Matter Network.

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