Without the American Jobs Plan, clean energy jobs will go to China and Europe
While attention has primarily focused on the infrastructure negotiations, many people failed to notice a rare moment of bipartisanship when the Senate passed legislation that directs nearly a quarter-trillion dollars towards research and development, aimed at bolstering competitiveness with China. But even if the newly negotiated infrastructure deal also passes, it still won’t be enough to ensure the clean energy future is built in America. To succeed in the global economy, we must pass significantly more support for clean energy industries in President Biden’s American Jobs Plan.
The opportunity cost of inaction is particularly acute for clean energy technologies. With or without global action on climate, renewable energy and electric vehicles (EVs) are the technologies of the future. By 2024, EVs will cost the same upfront as their gasoline counterparts (with much cheaper fuel), and wind and solar energy are already the cheapest electricity on the planet.
Even as COVID-19 was ravaging the world economy, clean energy technologies continued to thrive in 2020. Renewable electricity construction shattered records and accounted for 90 percent of the entire global power sector’s expansion, according to the International Energy Agency (IEA). Electric vehicles did the same, increasing sales 43 percent year over year.
Perhaps counter-intuitively, industry support can be paired with industry regulation to super-charge domestic clean energy manufacturing and create millions of American jobs. That is the American Jobs Plan’s vision — beating China and Europe to the clean energy future by pushing businesses to innovate while incentivizing them to capture this opportunity.
China’s policies will continue to support the domestic manufacturing of solar panels and batteries, which are key components of the clean energy economy. Though China emits more planet-warming pollution than any other country, President Xi has also set goals to build more wind and solar power in the next nine years than today’s entire U.S. grid has online.
European countries have cornered the international market on another emerging renewable technology: offshore wind. Proactive government support to build transmission lines, hold competitive auctions, and expand port infrastructure have allowed European companies to manufacture over 80 percent of the world’s offshore wind turbines and develop and own the majority of projects. Meanwhile, the technology now competes subsidy-free in European electricity markets and employs 110,000 Europeans. Because they command the market, virtually all major offshore wind turbine manufacturers reside in Europe — meaning any U.S. offshore wind farm built in the near-term will have to rely on European manufacturing.
The American Jobs Plan is a national strategy to bring these jobs back home. Pairing a national clean electricity standard, which requires utilities to buy clean power, with high-road labor standards and domestic manufacturing support, will expand the middle class by creating jobs that pay wages higher than the national average while reducing air pollution and enhancing environmental justice.
A recent report from the University of California, Berkeley, and Energy Innovation, where I serve as director of electricity policy, found the American Jobs Plan would generate $1.5 trillion in investments and up to 1 million jobs by 2030 in every corner of the country. It should also be noted that I helped author the report.
Renewable energy is cheap and plentiful enough to replace 80 percent of existing coal-fired power plants locally at no additional cost to consumers. And Princeton research shows high-road labor standards can push wind and solar salaries higher than average fossil fuel jobs, without meaningfully increasing customer electricity bills.
The American Jobs Plan also positions the U.S. to lead on the next generation of clean electricity technologies by investing $50 billion in emerging technologies including offshore wind, green hydrogen, advanced nuclear, carbon capture, and battery storage. China and Europe are investing in these opportunities, why aren’t we?
The story is similar for electric vehicles. In 2020, Europe’s electric vehicle registrations grew more than any major economy, nearly catching China’s market share. They did it by combining government investments in charging, customer incentives, and the world’s most stringent regulations on auto manufacturers. For Europe, dealing with climate change and air pollution also means leading the electric vehicle revolution.
While China leads the world in battery manufacturing and electric vehicle deployment, its true competitive advantage is its leadership on electric buses and trucks. China owns 95 percent of the electric bus market and 90 percent of the global heavy-duty electric truck market. According to IEA, China’s local air pollution standards account for induced demand for these technologies and could save transit and shipping companies trillions in fuel costs by 2035.
It’s clear U.S. auto manufacturers see the writing on the wall: GM pledged to sell 100 percent electric vehicles by 2035 while Ford plans to invest more than $22 billion in EVs through 2025. Federal infrastructure investment and market support can empower these stalwarts of American industry to recapture domestic and international leadership.
The American Jobs Plan invests in charging infrastructure and consumer incentives for electric vehicles to keep pace with Europe and China. It creates a tax credit to support the market for electric and fuel cell trucks and other heavy vehicles. It also invests $25 billion in electric buses, and $20 billion in electrifying school buses, reducing kids’ exposure to pollution.
California shows the payoff of these types of policies — electric vehicles were the state’s top export in 2020. More than 275,000 people work in California’s electric vehicle industry, earning more than $90,000 annually on average, more than the statewide average manufacturing salary of $80,000 per year. California and other states with zero-emission vehicle regulations deserve substantial credit for U.S. electric vehicle leadership to this point.
If we do nothing to stimulate domestic production and demand for clean energy technologies, we forfeit any chance to maximize our share of the jobs they are already creating in other nations. The demand for these technologies is surging globally, regardless of U.S. policy. It’s up to Congress to determine if we will lead the world in supplying these technologies or sit back and let China and Europe do it.
Passing the clean energy investments in the American Jobs Plan would give American businesses the support they need to expand the middle class and win the 21st century.
Mike O’Boyle is the director of Electricity Policy at Energy Innovation.