Like so many buzz phrases, "green economy" is an expression that is generously tossed around with little regard for its meaning.
In his State of the Union address in January, President Obama stressed the importance of nurturing America’s green economy to "strengthen our security, protect our planet and create countless new jobs for our people." For something said to be so crucial to growth and economic renewal, however, surprisingly little is actually known about the nature, size and growth of the green economy.
The Brookings Institution, in collaboration with the Technology Partnership Partnership of the research and development company Battelle, has compiled what it describes as one of the most comprehensive and up-to-date analyses of the nation’s enigmatic green economy.
The report, titled "Sizing the Clean Economy," collected data from every county and major metropolitan areas in the United States from 2003 to 2010. Defining a "green" or "clean" economy as the sector that produces goods and services with an environmental benefit, the study amassed numbers on mascots of green like wind, solar and hydropower and less glamorous sectors like public mass transit and waste management and treatment.
One point the article makes is that while green initiatives are driving growth and innovation, market and policy challenges are preventing them from reaching their full potential. Those obstacles include policy gaps that undercut market demand, shortfalls in financing that lead to uncertainty and instability for investors, and an inadequate system for supporting innovation.
According to the report, the green economy employed 2.7 million people in 2010, or about 2% of the American work force.
To put this number into some perspective, the health-care sector, the largest private job provider in the nation, employs 13.8 million people, or 10.2%. Despite its relatively modest size, the green economy is still larger than the fossil fuels sector (2.4 million jobs) or the biosciences sector (1.4 million jobs).
Over the last seven years, the green economy has grown at a rate of 3.4%, trailing the 4.2% growth achieved over all, but still noteworthy given the disproportionate impact of the housing crisis on the green sector. (Many housing and construction-related companies can be classified under the green rubric.)
The report also found that the green economy weathered the recession better than the nation’s economy did as a whole.
Where the green economy excels is at providing the kind of well-paid, low-skill jobs that are often lamented to be leaving the United States, the study suggests. These "green collar" jobs are manufacturing-heavy and export-driven and represent a substantial source of growth.
One of the greatest challenge facing the growth and development of the green economy, however, is that companies with promising patented ideas that have proven themselves in small-scale test production simply cannot secure the financing they need to scale up production.
To combat this financing obstacle, some experts advocate scaling up the Department of Energy’s loan guarantee program, and, more ambitiously, creating a tech fund that would parallel what crop insurance was for the agricultural industry.
Such a program would further the development of new green initiatives but take the risk out of investing in them for the first few years by offering different types of insurance until they demonstrated their long-term viability.
