"Climate change. What's the solution? A green jobs revolution." So chanted thousands of protesters who braved the frigid cold Monday in Washington to demand aggressive government action on alternative energy. They have reason to be optimistic. The recently passed economic stimulus bill promises to create thousands of green jobs. Vice President Biden's new Middle Class Task Force devoted its first meeting, last Friday in Philadelphia, to praising their virtues. President Obama contends that his policies will deliver 5 million green jobs in the next two decades.
Indeed, for a nation facing dire economic and energy challenges, green jobs seem to be an ideal solution. But just because "green" and "jobs" are both in demand doesn't mean that policies focused on creating "green jobs" make sense. In fact, a close look at the economics of "green jobs" suggests that if we try to find a lasting solution to these challenges with a single set of policies, we might fail to deliver on both fronts.
The fundamental problem is that there's no solid evidence that green policies—even those aimed explicitly at creating jobs—will actually lower the long-term unemployment rate. Most of the research on how these sorts of programs might build up the work force simply tallies the payrolls, current or projected, of companies in renewable energy and other sectors. (Analyses typically include not only jobs installing solar panels or engineering algae for biofuels but also secondary activities like making widgets for use in windmills.) This approach is a natural winner: Green policies inevitably generate jobs in green industries, so the studies inevitably deliver good news. But skeptics argue that simple windmill-counting ignores an important fact: Every unit of energy generated from alternative sources displaces a similar amount generated by traditional means, so forgoing those other energy sources means giving up whatever jobs they were providing. This doesn't mean that greening the economy will have no net impact on jobs, but it muddies the math considerably.
Hence another level of sophistication from the green jobs community, which now points out that a dollar spent on renewable energy or higher energy efficiency will generate more U.S. jobs than a dollar spent on traditional power. That's probably true, since many green jobs are labor-intensive and clean energy is more likely to be generated at home rather than to be imported. But this misses a critical point, too: The dollar spent on green sources also generates less energy. (Renewables will be more expensive than traditional power for the foreseeable future.) Part of the gap can be closed by energy conservation, but other money will need to be diverted from elsewhere in the economy to make up for the remaining energy shortfall. The result is a loss of jobs somewhere else.
Indeed, most comprehensive economic models that look at the long-term effects of aggressive climate policies consistently forecast a small net decrease in national job growth. (The models predict robust growth under all scenarios, but the positive effect is diminished slightly if green policies are pursued.) These studies are far from perfect, but they suggest that the burden of proof lies with those promising a major expansion in jobs.