Why Clean Energy and Climate Legislation?

Leaders in economic development view clean energy and climate legislation as a path to an American manufacturing renaissance and a bright spot in our economy.

Clean energy and climate legislation creates customers for climate solutions across the country, including new customers for the component manufacturers, final product manufacturers, installers and service companies.

In December of 2007, McKinsey & Company released an analysis¹showing that the U.S. has the technologies available today to significantly cut U.S. emissions. In fact, the report identifies more than 250 climate solutions within the U.S. that cut emissions using conservative assumptions.

Only clean energy and climate legislation rewards innovation

No fewer than 80 percent of these reductions can be had with technologies that have already been proven to work at a commercial scale, while the remainder can be achieved by existing technologies with high-potential for commercialization by 2030.

But clean energy and climate legislation is the only policy tool that rewards innovation and drives demand for a whole new generation of climate solutions that will also require labor, components and installation.

These technologies fall into five key sectors. Each sector has the potential for job creation not just directly, but much more vastly in the supply chains that are necessary to deliver clean energy solutions.

For example, look at just one opportunity – wind energy. A typical wind turbine is made of more than 8,000 parts². Think of the skilled workers needed to make these parts, weld them together, deliver them to the site, and construct the facility.

A small-scale wind project (44 MW, with 29 individual wind towers) uses at least 6,500 tons steel, 609 tons composite fiberglass, and 12,470 tons concrete³.

And, there is more good news. In each of the sectors identified by McKinsey, the U.S.’s economy can benefit.

1. Buildings and Appliances

Increasing energy efficiency in buildings and appliances can cut up to 870 million tons of annual emissions – and actually save consumers money in doing so.

• Alpen Energy Group LLC located in Boulder, CO was acquired last year by Serious Materials. It manufactures super-insulating windows with an R-factor four times the Energy Star requirement. The windows reduce heating and cooling energy costs by up to 49%, but sell for a competitive price. Serious Materials is now negotiating additional acquisitions to ramp up its window manufacturing capacity 10-fold.
• Cree, Inc. (company snapshot), based in Durham, NC, is a world leader in energy efficient LED lighting technology. The company was founded in 1987and has recently experienced tremendous growth, improving LED technology and working with other companies to apply LED chips and lighting in new ways. The company’s revenue grew from $228 million in 2003 to $423 million in 2006, declining slightly to $394 million in 2007. Cree holds patents on a large number of LED technology improvements, and as demand for its innovative products has increased, the company’s work force has nearly quadrupled, from 893 people in 2002, to 3,168 regular full and part-time employees in 2008.
• Insulspan (case study) of Blissfield, MI manufactures energy efficient structural insulated panels. According Governor Jennifer Granholm this company has seen steady growth in the demand for their products. It currently has about 100 employees up from 65 about 10 years ago⁴.

2. Electric Power Production

A variety of options exist for the utility sector—including the expansion of renewable energy like wind and solar, improving the thermal efficiency of electric generation as well as co-firing fossil fuel with biomass. Combined, these steps could cut up to 1,570 million tons of carbon pollution each year.

• United Solar Ovonic of Auburn Hills, MI produces flexible thin-solar laminates used on rooftops; since 1990, has rapidly expanded to five plants in Michigan and created hundreds of jobs.
• Dowding Industries Inc. (profile of president Jeff Metts), of Eaton Rapids, MI is investing in a new facility to machine components and platforms for wind turbines; they will create 258 jobs and employ many laid-off auto workers.
• AE Polysilicon just broke ground in 2009 on a new manufacturing facility in Fairless Hills, PA. The company manufactures high-purity polysilicon used in the solar power industry. The company plans to create 145 jobs.
• Vestas Blades (case study) of Windsor CO, is a wind turbine manufacturer that started out making agricultural equipment in the 1800s. In 1978, on the brink of the second oil crisis, Vestas began to explore the potential of wind turbines as an alternative, clean, renewable energy source. Today more than 1,500 of the company's employees are located in the U.S, with over 1,000 workers at Vestas Americas and 650 workers employed at the Vestas turbine blade plant in Windsor, Colorado. Although, the company is Danish, Denmark currently accounts for less than one percent of the company's sales.
• First Solar, LLC (company snapshot) of Perrysburg, OH produces photovoltaic (PV) modules And is the world‘s largest maker of thin film solar modules. It employs more than 700 workers at it’s Perrysburg facility, but plans to expand operations and add at least 100 more workers. The firm owns 28 patents relating to thin film PV module manufacturing and related processes, and it has significant international sales.

3. Transportation

Lowering the carbon intensity of fuels and improving the efficiency of transportation can reduce carbon emissions by up to 660 million tons each year.

• ThermoKing in Bloomington, Minnesota manufacturers and sells the "TriPac" auxiliary power units (APUs), one of the leading APUs on the market. ThermoKing supplied Wal-Mart with almost 7,000 APUs last year – they are now waiting for the rest of the market to arrive.
• Azure Dynamics Corporation (AZD) (case study) is a leader in the development and production of hybrid electric and electric components and powertrain systems for commercial vehicles. In 2007, AZD made a strategic decision to relocate its headquarters from Toronto, Canada to Oak Park, Michigan (Detroit). The rationale was supported by the company’s relationship with Ford Motor Company and the hybrid work on the E450, as well as the high concentration of talent in Detroit with expertise in production and supply chain management.
• Advanced Vehicles Systems Inc. in Chattanooga, TN, is a leader in developing hybrid and electric hybrid buses and employs over 120 workers.

4. Industry

Deploying a variety of existing technologies in the industrial sector, like expanding the practice of combining heat and power, recycling, and recovering non-CO₂ greenhouse gas emissions, could cut up to 770 million tons of pollution annually. Many of these savings will also show up as dollars saved in American companies’ bottom lines.

• As one example, the potential for capturing waste heat is tremendous. In fact, last fall, a private-equity fund backed by Bill Gates and Harvard University made a $1.5 billion investment in a waste heat recovery company (Recycled Energy Development), and these systems rely on familiar parts such as heating coils and turbines.
• Manure management reduces greenhouse gases and generates electricity from the captured methane.
  • Bridgestone Associates, Ltd., in Chadds Ford provides consulting in the evaluation, design, financing, construction and operations of manure anaerobic digestion.
  • Orgo Systems, Inc located in Selingsgrove is a ‘farrow-to finish’ biogas recovery project with a 24 KW engine supplying electricity.
  • STM Power in Ann Arbor designs and develops commercial-scale external combustion engines. These are used for on-farm biogas recovery systems.
  • Coffman Electrical Equipment in Grand Rapids offers digester consultation, electrical production and hot water absorption chilling for single and multiple stage digesters.

5. Carbon sinks in agriculture and forest land

Expanding and enhancing the ability of farms and forest lands to store carbon can decrease emissions by up to 590 million tons each year. These same methods can also save farmers money and create new habitat for wildlife.

• Converting to precision agriculture is a win-win for farmers – fewer greenhouse gas emissions but also lower fertilizer costs. A market for carbon can help offset the capital costs of moving to precision agriculture for the farming industry.

Sources:

¹ Reducing US Greenhouse Gas Emissions: How Much at What Cost?, conducted by McKinsey & Company and published jointly with the Conference Board in November , 2007.

² American Wind Energy Association, communication with Liz Salerno, policy analyst, March, 2008.

³ PPM Energy, Fact Sheet on "Flying Cloud" project.

4 Announcement from Governor Jennifer Granholm [PDF]