Obama sticks with clean-energy goals

By Michael D. Shear and Steven Mufson
Washington Post Staff Writer
Tuesday, July 13, 2010; A09

President Obama is looking again to convince voters that the billions of dollars he has pumped into embryonic clean-energy firms will build a better economy even if they generate only a modest number of jobs before the middle of the decade.

The White House compares the effort to the government's investment in the Internet several decades ago, and Obama will highlight startups that make electric batteries for future fleets of zero-emissions cars and trucks.

In a report due Wednesday, the president's economists say the loan guarantees and grants extended under the Recovery Act -- matched by billions of dollars in private investment -- have the potential to "stand up" new industries that could employ thousands of Americans by 2015. They estimate that for each dollar in federal investment translates to $3.50 of total investment.

On Thursday, for the second time in two weeks, Obama will visit a battery-making plant, this time in Michigan, and Cabinet officials will fan out to similar facilities across the country.

"There's a view that crisis sometimes provides opportunities," said Jared Bernstein, the chief economist for Vice President Biden. "One of the things we have to do with Recovery Act funds is plant the seeds for ongoing opportunities. We could have had the same conversation about the Internet several decades ago."

But it is too early to say whether early bets on electric vehicles, solar power and "smart" electric grids will create the booming industries the White House envisions. Politically, it is all but certain that the benefits of those efforts will not be visible in time to make voters feel better about the economy before the fall elections.

Cars and trucks powered solely by electric batteries remain unproven in the mass market, and efforts to build a smarter power grid are opposed by 11 Northeastern governors, who say they are leery of subsidizing a $160 billion electric transmission line from their states deep into the population centers of the Midwest.

Job prospects

Even Obama's Democratic allies say the investment in a clean-energy future is unlikely to provide a lot of relief to the unemployed.

"There are good reasons to create green jobs, but they have more to do with green than with jobs," said Alan Blinder, a Princeton University economics professor and former Federal Reserve vice chairman. "There is no reason on Earth to think that spending money on green jobs is more effective than spending on other things."

Like many economists, Blinder says that imposing -- and gradually increasing -- a carbon tax that would take effect just after the economic downturn would do more to create green jobs.

But given the dim prospects of a carbon tax, administration officials say that providing grants and loans is the best way to move forward. Top political aides inside the West Wing are convinced that the early success of the battery investments and other green-energy grants will help Obama sell the Recovery Act to voters.

They point out that nine new electric battery manufacturing plants have been funded from $2.4 billion in Recovery Act money -- but only four of them will be operating before 2011. By the end of Obama's first term, the United States should have the capacity to produce 20 percent of the world's advance electric batteries, they estimate, up from just 2 percent in 2009. Officials could not give a figure for current capacity.

There is so much demand for the clean-energy tax credits that the program is oversubscribed. The White House is asking Congress for an additional $5 billion.

"There's solar facilities that will mean 1,000 jobs here. Another plant there, that's another 300 jobs. These ultimately add up," said senior White House adviser David Axelrod. "And that's how you rebuild the economy and that's how you build the future."

Axelrod, who shapes the president's message, said countries such as China and India are betting big on clean-energy technology, making it imperative that the United States does too. And he said Obama's efforts contrast sharply with those of Republicans, who opposed the Recovery Act.

"They voted against these investments in clean-energy technology," Axelrod said of the GOP. "These may be bets, but they are very, very smart and educated bets."

Rocky starts

But there have already been rocky starts for some projects. A $535 million federal loan guarantee to a California solar panel firm, Solyndra, was supposed to support the construction of a manufacturing plant that would directly and indirectly employ about 1,000 people.

The firm has begun construction on new manufacturing lines, employing 3,000 people and hiring about 25 people a month. But the company does not expect to turn a profit until 2013, and recently had to scramble for enough cash to operate and expand.

In June, Solyndra went back to its original investors after dropping a plan to raise $300 million by issuing new shares. The auditing firm PricewaterhouseCoopers earlier said Solyndra "has suffered recurring losses from operations, negative cash flows" and cited "substantial doubt about its ability to continue as a going concern."

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