2.7 million people work in the green economy nationwide, according to a Brookings Institution analysis that claims to be the first comprehensive report on the subject.
Call it "green," "clean" or "low-carbon economy", it’s defined as the sector of the economy that produces goods and services with an environmental benefit.
But since these goods and services are embedded in industries thoughout the general economy, pervading all industry sectors, it’s extremely hard to define it separately and therefore characterize its reach.
"In the absence of standard definitions and data, strikingly little is known about the green economy and its nature, size, and growth at the critical regional level," says the report.
Seeking to address these problems, the Metropolitan Policy Program at Brookings worked with Battelle’s Technology Partnership Practice to develop and analyze a detailed database that categorizes green economy industries and employment statistics.
"Sizing the Clean Economy: A National and Regional Green Jobs Assessment" concludes that:
At 2.7 million people, the green economy is smaller than IT, but a larger employer than the fossil fuel or bioscience industries.
Most green jobs reside in mature segments that cover a wide swath of activities including manufacturing and public services such as wastewater and mass transit. A smaller percentage of people work for renewable energy industries.
The clean economy grew more slowly in aggregate than the national economy from 2003-2010, but newer "cleantech" segments produced explosive job gains and the green economy outperformed conventional industries during the recession.
Green economy companies added about 500,000 jobs between 2003-2010, expanding 3.4% a year. This performance lagged national economic growth of 4.2% a year during that period (if job losses from company closings are omitted to make the data comparable).
Many established green companies – especially those involved in housing- and building-related segments – laid off large numbers of workers during the real estate crash of 2007 and 2008, while sectors unrelated to the green economy (mainly health care) created many more new jobs.
At the same time, newer green companies – especially those in young energy-related segments such as wind, solar PV, and smart grid – added jobs at a torrid pace, albeit from small bases.
The green economy is manufacturing and export intensive. Roughly 26% of all green jobs are in manufacturing, compared to just 9% in the broader economy.
On a per job basis, green companies export roughly twice the value of a typical U.S. job ($20,000 versus $10,000). Electric vehicles, green chemical products, and lighting segments are especially manufacturing intensive. Biofuels, green chemicals, and electric vehicles are very export intensive.
The clean economy offers more opportunities and better pay for low- and middle-skilled workers than the national economy as a whole. Median wages in green companies are 13% higher than general US median wages.
Among regions, the South has the largest number of green jobs and the West has the largest share relative to its population.
Seven of the 21 states with at least 50,000 green jobs are in the South. California has the highest number of clean energy jobs but Alaska and Oregon have the most per worker.
Most of the country’s green jobs and recent growth are concentrated in the largest metropolitan areas. Some 64% of all green jobs and 75% of its newer jobs created from 2003 to 2010 are in the nation’s 100 largest metro areas.
The green economy performs best when there are strong industry clusters in a metro area. Companies that are clustered near those in similar or related industries grew faster (1.4%) than more isolated companies from 2003-2010.
Examples include professional environmental services in Houston, solar PV in Los Angeles, fuel cells in Boston, and wind in Chicago.
Brookings concludes the picture is mixed: the diverse array of environmentally-oriented industry segments is growing modestly, but the sub-set of clean energy, energy efficiency, and related segments are growing much faster than the nation as a whole. They are producing desirable jobs and contributing to US exports.
"The fact that significant policy uncertainties and gaps are weakening market demand for clean economy goods and services, chilling finance, and raising questions about the clean innovation pipeline reinforces the need for engagement and reform," the Institute writes. "Not only are other nations bidding to secure global production and the jobs that come with it but the United States currently risks failing to exploit growing world demand."
The report concludes – as so many others have – that vigorous private sector-led growth needs to be supported by complementary efforts by all levels of government to ensure well-structured markets, a favorable investment climate, and a rich stock of cutting-edge technology – as well as a strong regional cast to all efforts.
Along these lines, the report recommends that governments:
1. Scale up the market by catalyzing domestic demand for green goods and services.
Besides strong green procurement, Congress needs to put a price on carbon, pass a national energy standard, and move to ensure cost effective transmission links for the delivery of renewable energy to urban load centers.
States can adopt or strengthen their own energy standards, reduce the initial costs of energy efficiency upgrades and renewable energy adoption, and pursue electricity market reform to facilitate the use of clean, efficient solutions.
Municipalities can expedite permits for green projects, adopts green building and other standards, and adopt innovative financing tools to reduce the upfront costs of investing in clean technologies.
2. Ensure adequate finance by addressing the serious shortage of affordable, risk-tolerant, and larger-scale capital that now impedes the scale-up of numerous clean economy industry segments.
Congress should create a financial entity that helps emerging companies commercial technologies and avoid the "Valley of Death." It should also reform the myriad tax provisions and incentives that currently encourage capital investments in clean economy projects.
States can provide loan guarantees and/or initial capital for revolving loan funds that target clean economy projects.
Regions and municipalities can reduce the costs and uncertainty of projects by expediting their physical build-out, whether by managing zoning and permitting issues or even pre-approving sites.
3. Drive innovation by investing in research and demonstration projects.
The current Congress clearly isn’t interested in scaling up investment, but it could still faciliate growth by investing in key energy and environmental research, development, and demonstration (RD&D) budgets.
It should continue its recent institutional experimentation through measured expansion of such recent start-ups as the Energy Frontier Research Centers, ARPA-E, and Energy Innovation Hubs programs.
Two worthy additional experiments would be the creation of a water sciences innovation center and establishing a regional clean economy consortia initiative.
States should maintain and expand their own RD&D efforts, perhaps by tapping state clean energy funds where they exist.
All should be focused and prioritized through a rigorous, data-driven analysis of the nature, growth, and strengths of local clean economy innovation clusters.
In addition, the Sizing the Clean Economy report emphasizes that in working on each of these fronts federal, state, and regional leaders need to:
Focus on regions, meaning that all parties need to place detailed knowledge of local industry dynamics and regional growth strategies near the center of efforts to advance the clean economy.
While the federal government should increase investment in new regional innovation and industry cluster programs such as the Economic Development Administration’s i6 Green Challenge, states should improve the information base about local clean economy industry clusters and move to support regionally crafted initiatives for advancing them.
Regional actors, meanwhile, should take the lead in using data and analysis to understand the local clean economy in detail; identify competitive strengths; and then move to formulate strong, "bottom up" strategies for overcoming key clusters’ binding constraints. Employing cluster intelligence and strategy to design and tune regional workforce development strategies will be a critical regional priority.
The full report, as well as an interactive map and metropolitan and state profiles, are available here.
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