The Economics of Clean Energy

PubliCola exclusive: Governor-Elect Jay Inslee outlines his environmental agenda.

By Governor-Elect Jay Inslee December 11, 2012

The environment was a pressing issue during the election cycle four years ago, but it didn't come up much during this year's gubernatorial race. The focus, thanks to the halting economy, was on jobs.

However, PubliCola endorsed Jay Inslee for governor this fall precisely because of his longstanding, ahead-of-the-curve commitment to environmentalism. Inslee, for example, pushed a cap-and-trade bill through the U.S. House in 2009 and helped pass Washington state's own renewable energy initiative, I-937, in 2006. 

We believe, as Inlsee does, that taking action on the environment is the key to economic recovery. Sadly, not only has the pitch from environmental advocates in Olympia to turn green programs into blue-collar jobs been ignored during the recession, but adding insult to incompetence, environmental programs and protections have been slashed.

We believe Inslee's election will bring environmentalism back to center stage. We asked the governor-elect to cue up his environmental agenda with a PubliCola editorial.

Here, in his first post-election exclusive op/ed, Inslee identifies five ways that environmentalism and the economy dovetail at the center of his agenda.—Eds.

Inslee on the 2012 campaign trail, photo by Lucas Anderson

Washington voters recently answered the question of whether we could move on a vision that embraces both job creation and protection of the natural beauty of our state.
Washington said, yes we can and yes we will.
I believe deeply that Washington is an innovative, forward-looking state. We have a diverse assortment of innovative industries that can help us lead the world, from aerospace and maritime to life sciences and agriculture.

Denial is not a strategy. Delay is not an option. There are people who refuse to accept science no matter how many storm surges, torrential rainfalls, droughts and demise of ocean species occur. We can’t wait for them.But nowhere is the ethos of innovation more promising and more powerful than at the intersection of our economy and our environment. The time to grow jobs and a sustainable environment is now.
Climate change is altering the landscapes and weather patterns of our planet and our region. This disruption puts our economy at risk. Water and power supplies, forest health, and coastlines and flood-prone communities are threatened. Our shellfish industry is already suffering from the documented impacts of ocean acidification from carbon pollution. Our oceans today are 30 percent more acidic than in pre-industrial times and, if we fail to act, will be 100 percent more acidic by the end of this century.
Denial is not a strategy. Delay is not an option. There are people who refuse to accept science no matter how many storm surges, torrential rainfalls, droughts and demise of ocean species occur. We can’t wait for them.
The urgency to address this challenge calls on us to think big, act boldly and put that innovation in gear. We need to take action now. This is the perfect time for our state to call up the confidence, the ambition, and the innovative thinking that makes us who we are. I know we have what it takes to deliver sustainable new ways of fueling a strong economy. We just need to bring it.
When we passed Initiative 937 in 2006 by a vote of the people, Washington became the second state in the nation to approve a renewable portfolio standard. The RPS was a ground-breaking new policy that has helped generate a portion of more than $7 billion in economic activity while helping us move away from polluting fossil fuels.
By 2020, we’ll have increased by 500 percent the electricity we use in our homes and offices generated by renewable sources such as biomass, wind, and solar—building on the “renewable edge” we get from hydropower to lead the next generation of clean energy technology. And the law’s energy efficiency provisions are reducing energy bills, growing jobs, and increasing the competitiveness of our economy by reducing waste.
Today, more than 30 states have adopted RPS requirements or goals. Washington helped lead the way, and we can do it again. We can pioneer the kinds of forward-thinking policies that create good jobs and healthier communities. And we can protect our children from the spiraling economic and environmental costs of fossil fuel dependence. We can make clean energy investments that deliver jobs now while creating a foundation for clean prosperity for decades to come—just as our grandparents did when they built the mighty dams on the Columbia River.
Here are five areas where I think we can take big steps forward in improving both our economy and the environmental legacy we leave our children.
Ocean health – reducing carbon pollution to preserve our waters and marine industries
Canaries in coal mines used to be the metaphorical indicators of unsafe environmental conditions. Today, we talk about shellfish in our oceans. Acidification of the waters of Puget Sound has already caused the disruption of our shellfish industry, forcing certain operations outside the state's waters.
Scientific research tells us the single most important thing we must do to save our oceans is reduce carbon pollution. We can address runoff and other issues, but it’s all for naught if we don’t significantly reduce carbon dioxide emissions.

Governor Christine Gregoire recently announced recommendations to create a new center at the University of Washington to further study the effects of ocean acidification. But let’s be clear—we already have substantial research that shows acidification is a threat to the ocean’s food chains.Governor Christine Gregoire recently announced recommendations to curb carbon pollution and create a new center at the University of Washington to further study the effects of ocean acidification. Science is, without question, essential to diagnosing the problem and understanding how to solve it. The attention she has brought to this problem is heartening.
But let’s be clear—we already have substantial research that shows acidification is a threat to the ocean’s food chains. That, in turn, means a threat to our fishing and shellfish industries—industries that generate hundreds of millions in economic activity and support thousands of jobs.
And reducing carbon pollution means developing non-carbon sources of energy.  And that means we need a clean energy economy. Washington should be a leader, not a laggard, in building that economy.
A clean energy economy—leveling the playing field amongst multiple energy sources

One reason I’ve been so committed to establishing our nation—and Washington State—as a leader in clean energy technology is because this isn’t just an economic opportunity, but a moral obligation we owe our children.
We are addicted to oil in large part because of its cheap abundance resulting from historic subsidies to oil and gas companies. By assisting companies in the development of competitive clean energy, we are not distorting the marketplace. On the contrary, we are leveling the playing field for home-grown, future-oriented clean energy and jobs.
This isn’t a question of whether the next generation of energy-producing technologies will be created. The question is WHERE it will happen and WHO will lead in this effort. As governor, I intend to make sure it’s the entrepreneurs and innovators of Washington State who take up that mantle. The working people of Washington will win the good jobs and economic opportunity that follow from this innovation, and Washington energy consumers won’t waste so much of their paychecks on importing fossil fuels from out of state.

By assisting companies in the development of competitive clean energy, we are not distorting the marketplace. On the contrary, we are leveling the playing field for home-grown, future-oriented clean energy and jobs.
Washingtonians spend about $20 billion per year on energy. Over $15 billion of that goes to out-of-state oil and gas companies for transportation fuels. It’s time to bring those energy dollars back home. We can revolutionize the growing, processing, refining and deployment of advanced biofuels grown right here in our state. And we can deliver more and better transportation options—cleaner cars, better transit, and cleaner fuels—real, practical alternatives to fossil fuel dependence and the economic drain that goes with it.
The seeds have already been planted. Major companies such as Alaska Airlines, Boeing and Weyerhaeuser are working to facilitate the commercialization of locally produced fuels. Local companies have already made “bio-jet” fuel to power U.S. military aircraft like the U.S Navy’s F/A-18 Super Hornet.
The creation of an Advanced Sustainable Biofuels Center of Excellence, led by Washington State University, can bring together public, private, non-profit, local, state and federal resources for research, development, and commercialization of biofuels. Oil and gas companies are among the most heavily subsidized in America, and their R&D resources are vast. This is one way to help level the playing field for their clean fuel competitors.
Another way is to bring effectiveness to our state’s renewable fuel law, or join Oregon and California in adopting a low carbon fuel standard. Creating a common West Coast market for these fuels will only benefit Washington farmers, entrepreneurs and businesses, while giving consumers practical alternatives to oil. The Legislature already adopted this policy, but it hasn’t been implemented. Washington farmers are ready to grow and innovators are ready to invest; now Olympia needs to hold up its end of the deal.
Also, we intend to provide a tradable R&D tax credit that allows pre-revenue research-based companies to, within limits, accrue and sell R&D tax credits. This allows those companies to bring in capital by selling their R&D tax credits to companies with a B&O tax obligation.
Energy efficiency – easing financing hurdles

We spend about $5 billion a year to heat, cool and light our homes and offices. At least a third of that is wasted on energy lost due to inefficient systems. That’s money every family and business owner would rather spend on investing in their operations or health care for their employees.
But the upfront costs of efficiency upgrades are a hurdle that many can’t afford. Whether it’s installing solar panels, replacing windows or installing a new heating system, we can do a better job providing financing options that allow a property owner to pay for energy upgrades over time on their utility bill.
We also need to update the Utilities and Transportation Commission policies to better align utility business interests with those of their customers. We need to give utilities more flexibility to make investments in clean energy technologies and energy efficiency while ensuring protections for their consumer and industrial customers.
Puget Sound – using science as our guide

The health of Puget Sound waterways is at grave risk, right now. The Puget Sound contributes $20 billion of economic activity in our state and is linked to thousands of jobs in fishing, tourism and trade. It defines a big part of Washington—economically, environmentally, and culturally. There’s no other place quite like it.
Creation of the Puget Sound Partnership has helped us focus much-needed attention and resources on cleaning up this vital ecological and economic jewel.
Unfortunately, we don’t have nearly the resources to complete all the projects needed. The value of evidence-based decisions will be all the more important as we determine which clean-up projects and efforts yield the greatest benefit over the long-term.
Every dollar is precious and can only be spent once, so I will demand clear cost-benefit analysis to ensure we are making best use of those dollars. We’ve got a job to do here.  Science—rigorous, hard-nosed analysis—must be our guide.
Innovation in technology – unleashing our full potential

One of the most inspiring aspects of Washington State is our culture of innovation, which spurs new start-ups and entrepreneurial endeavors in all kinds of industries, from clean energy to biotech and IT.
While many start-ups form on their own, many form in the labs and classrooms of our universities. Our research institutions are home to an incredible wealth of research and development, and have already made strides in spinning off job-creating companies such as EnerG2 and Immunex.

But we can do more to speed up and facilitate their ability to enter into partnerships with the private sector and commercialize new technology. Current restrictions make the process too slow and burdensome. Other states are moving ahead of us on research-driven business development, which means billions of dollars left on the table.
If, for example, we sped up commercialization to just half the rate of the University of Utah, we could generate about $3 billion in economic activity over the next several years. This isn’t just a win for new innovative businesses, but for the universities as well, who will reap the benefits of new revenue resulting from their research.
In today’s world, we continue to face those who are frozen in antiquated ideology rather than embracing clear, scientific information. Pessimists and defeatists will continue to argue whether the world really needs to embrace a low-carbon based economy to solve our problems because they refuse to accept the unambiguous facts—facts as certain as gravity itself.
But there are two things we know.
First, a fact of both human nature and global history is that nothing ever happens unless someone goes first. We did not wait for China to lead on developing democracy or protecting free speech in 1776. And we will not wait for China or any other country to launch the next technological revolution in 2013.
Second, from a strictly mercantile and commercial viewpoint, it is an economic fact that the early actors have an advantage in any technologically dynamic marketplace. Our ability in Washington State to capture and lead emerging markets—in nanotechnology, electricity storage, advanced aviation biofuels, carbon fiber automobile auto parts, energy efficiency technologies from smart grid applications to new forms of building construction—will be advanced by our immediate action or thwarted by our passivity.
So we will act.
Everyone can play a role in this clean energy revolution, because everyone has so much to gain. Business leaders can help us identify policies that work in practice and not just in theory. Republicans and Democrats can work together to move past divisive rhetoric, demand accountability, and craft long-term solutions that will benefit our grand-children and future generations. Every Washingtonian can be part of the solution and share in the benefits of a more efficient, competitive, healthy economy and a more secure future for our kids.
Over the next four years, I am dedicated to doing everything I can to ensure we set an example for our children of a future that is sustainable in all ways – economically, environmentally and politically.
We Washingtonians don’t let opportunities pass us by. Let’s seize this one.
Governor-Elect Jay Inslee established a reputation as a leader on clean energy and job creation while serving in Congress. He co-authored “Apollo’s Fire: Igniting America’s Clean Energy Economy” and has made job creation in clean energy and other innovative industries a top priority for his Administration.
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