Obama sticks with clean-energy goals

Washington Post Staff Writer
Tuesday, July 13, 2010

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.

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