This is Part 1 of two in a conversation about the Green New Deal. Read Part 2.
Chloe Holden, Wood Mackenzie Power & Renewables: For the most part, cleantech policy battles are being fought state by state, with all the painstaking coalition- and consensus-building that requires. It was in this context that the Green New Deal burst into public consciousness this past December like a comet through the sky. The GND, which Alexandria Ocasio-Cortez and several dozen congressional allies support, is a proposed strategy for tackling climate change that combines a job guarantee and green stimulus package to decarbonize energy, transit, agriculture and industry.
With limited exceptions, clean energy advocates are enthusiastic about this strategy. But what would the specifics be, and what would the deal mean for the players who are currently shaping the energy transition?
Political feasibility aside, there are many unanswered questions about what a Green New Deal would mean for clean energy. Broad regulatory change and federal stimulus could drive the continued growth of cleantech, but specific policies could result in big wins — or losses — for industry players. Below, analysts suggest some policies that could emerge as part of a Green New Deal, and the implications of those policies for industries tracked by Wood Mackenzie Power & Renewables.
A note on the “Green New Deal policies” listed below: No draft legislation of the Green New Deal that features specific policies currently exists. The potential policies below are presented as hypotheticals by Wood Mackenzie, influenced by materials released by GND advocates. The list does not include all potential Green New Deal policies.
Green New Deal policy: Provide technical workforce training for cleantech (installation, engineering, etc.)
Daniel Finn-Foley, Senior Energy Storage Analyst at Wood Mackenzie: Job training programs are shown to work and could offer real pathways for workers to transition from “dirty” industries to clean. A 2016 study by MDRC reviewed WorkAdvance — a partially federally funded training program for low-income workers in New York, Oklahoma and Ohio — found that after two years, program participants made 14 percent more money than the “control” workers. The program was hailed for providing job skills in high-demand sectors. Renewable energy qualifies as high-demand today and would be even more high-demand under a Green New Deal.
Dan Shreve, Director of Wind Energy Research at Wood Mackenzie: There are unique regional opportunities for transitioning fossil fuel focused jobs to cleantech jobs. For instance, Wyoming accounts for more than 40 percent of U.S. total coal production. Wyoming also boasts some of the nation’s best wind resources, with the Chokecherry/Sierra Madre wind project by itself representing the potential for 3 gigawatts of wind power. It will take over 100 technicians to operate that wind facility by itself. Imagine the opportunities if additional investments were made to support long-haul, high-voltage transmission to West Coast load centers.
Ravi Manghani, Director of Energy Storage Research at Wood Mackenzie: Thanks to conservative think tank the American Enterprise Institute, we know that it takes roughly 79 solar workers to produce the same amount of electric power as one coal worker (or two natural gas workers).
Dan Shreve, Wind: Any idea how far down the value chain their analysis dove? Wondering if they are accounting for the fuel extraction. Guessing no…
Wade Schauer, Director of Americas Power Research at Wood Mackenzie: Let's say we get to 100 percent renewable energy in 2030 (or 2035). At that point, what if every solar, wind and storage installer job goes away except what is required for incremental demand growth?
Anthony Logan, Wind Energy Analyst at Wood Mackenzie: Limiting installer jobs to incremental demand growth is unfair. Wind and solar plants retire and need replacement just like others always have, albeit for less cost and labor pull. Of course, this transition may well lead to net job losses. It certainly will in some regions, which is why politicians who don’t keep their word about retraining programs ought to get shoes thrown at them in a West Virginia town hall.
Daniel Finn-Foley, Storage: The jobs question recalls the U.S. interstate highway system, first conceived in the Federal-Aid Highway Act of 1956. When Eisenhower signed it into law, he could not have conceived of the business models that would come to depend on it. The construction workers who laid the asphalt for the interstate didn’t have permanent jobs, true — but once the system was complete, they could get jobs that didn’t exist before, say as truck drivers (and later as Uber or Lyft drivers).
The interstate system allowed people to drive farther to shop, creating the shopping mall; people could then get jobs there, or building the items that were sold there. Perhaps their children and grandchildren were programmers for satellites to help navigate the interstate system or were simply able to get a job out of town because the system connected cities to each other. A Green New Deal must fundamentally transform the electric grid into a platform for innovation and allow new business models to flourish.
Green New Deal policy: Fund clean power infrastructure (transmission lines, EV charging, investments in public transportation, etc.)
Ravi Manghani, Storage: The Green New Deal seems to propose traditional debt investment and even an active equity role from the government. That makes sense, because one of the biggest challenges facing mainstreaming of a new distributed, clean and resilient infrastructure is the availability of patient capital.
That means that while there are several new technologies that could transform the grid for the better, very few viable business models currently exist for those technologies. For example, electric buses are almost as cheap as diesel buses on a total cost of ownership basis (and are even cheaper in some operating conditions). Yet we don’t have more than a few hundred electric buses in the entire country. Similarly, the biggest impediment to larger-scale EV adoption is the lack of widespread charging infrastructure.
Dan Shreve, Wind: The cleantech industry has been exceptionally focused on the need to accelerate the deployment of large-scale energy storage assets to complement an ever-increasing fleet of wind and solar farms. The need for new storage assets is real and should be a core focus of regional utilities and power producers.
However, the need for long-haul bulk transmission requires as much, if not more, attention. Here, we are faced with more of a state and federal policy conundrum versus a technology and economic readiness issue. Wood Mackenzie’s power analysts have rightfully pointed out that exceptionally high levels of renewable energy penetration would require massive storage deployments to guard against reliability threats from weather-related events.
A higher level of integration for regional grid systems could alleviate some of that risk and allow for the development of the nation’s best natural resources. Without strong federal leadership on clean energy, environmental groups have been known to fight regionalization, fearing that it will actually undercut state clean energy goals. But ideally, regional systems are the type of infrastructure that could really drive bipartisan action and best reflects the spirit of the GND.
Replacement and augmentation of infrastructure at a national level increases the resiliency of the grid in a time of increasing frequency of weather-driven outages, while helping the nation guard against the increasing threat of cybersecurity risks, and even driving substantial job creation.
Green New Deal policy: Ambitious renewable portfolio standards in the 15+ states that currently do not have them (or a national RPS)
Daniel Finn-Foley, Storage: A national RPS may be the only politically feasible way to transition the entire economy to clean energy. The issues of energy and climate have fallen victim to dramatically expanding partisan entrenchment over the past three decades, making inroads in heavily conservative states even harder. This doesn’t mean it’s immediately feasible at the national level, but it bears repeating that any full decarbonization strategy would almost certainly require action at the federal level.
Further, a national RPS would create a spectacular number of jobs. A 2015 UC Berkeley study on California’s 50 percent RPS estimated that the existing RPS created 130,000 jobs, measured in job-years, while expanding it to 50 percent by 2030 would raise it to more than 1 million jobs. Extrapolating from this, it is easy to arrive at numbers similar to those presented by Data for Progress, which estimates a 2 percent GDP investment would lead to 15 million jobs over five years.
Dan Shreve, Wind: A national mandate is needed to move the needle in the fashion that is being called for by the GND. The RPS dynamics that have driven demand over the past 10 years can only go so far, with states like New York and California leading the nation.
A federal carbon tax that could be applied to multiple sectors (power, transportation, etc.) has been called for by industry leaders and policymakers have yet to deliver. Utilization of tax revenues would be a key focus area and should be directly tied to job creation/job training to satisfy the basic social justice ideology behind the GND.
Read Part 2 of this Wood Mackenzie Power & Renewables analyst roundtable.