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For a Long-Term Stimulus, Invest in Green Energy

A green stimulus bill that spurs innovation in energy efficiency, renewable energy and achieving a smart grid will help America get its swagger back. Consider energy efficiency, the lowest-hanging fruit for improving company bottom lines and slashing global warming pollution.
by Mindy S. LubberHarvard Business Review Posted on Jan 26, 2009

Robyn Meredith's The Elephant and the Dragon is a fascinating read on India and China's rapid rise as global economic juggernauts and what it means for America's future.

Meredith doesn't split hairs in her advice to U.S. CEOs and policy-makers: stop whining about losing jobs to Asia and concentrate on restoring America's competitiveness with new technologies that will spur new industries and jobs.

The economic stimulus legislation being debated in Congress is a golden opportunity to put Meredith's words into action, especially in staking out America's leadership in driving energy efficiency and the emerging clean energy global economy.

The United States' response to date on this mega business opportunity would have guaranteed us being voted off the show Survivor. We lag embarrassingly in our inefficient use of energy, even compared to developing countries. The world's four largest solar manufacturers are in China, Japan and England. Virtually all of the leading wind turbine manufacturers are in Asia and Europe.

"They're surging ahead of us, poised to take the lead in these new industries," President-elect Obama said earlier this month during a tour of a wind turbine plant in Ohio, outlining Europe and Asia's current advantage over the U.S. in clean energy innovation and job creation.

A green stimulus bill that spurs innovation in energy efficiency, renewable energy and achieving a smart grid will help America get its swagger back.

Consider energy efficiency, the lowest-hanging fruit for improving company bottom lines and slashing global warming pollution.

Significant investments in utility-based energy efficiency programs, coupled with smart policies such as an Energy Efficiency Resource Standard, would cut electricity demand, create hundreds of thousands of jobs, and eliminate having to build hundreds of new power plants, which are substantially more costly to build than achieving comparable energy savings through energy efficiency.

These activities would be a win-win for U.S. businesses: in addition to reducing their energy bills at home, they could apply energy-saving innovations to operations overseas. For companies such as Nike, which is fixated these days on cutting energy use at its overseas apparel factories, the latter point is huge.

Supporting renewable energy sectors such as solar would have similar benefits. The $50 billion solar market is dominated right now by overseas manufacturers of silicon crystalline panels that are being mass produced at large factories in China, Japan and Europe.

Where U.S. firms have a huge opportunity is in next generation thin-film technologies, which hold great promise to drive the solar industry in the future. U.S. companies such as First Solar are leading innovators at the moment and strong incentives in the stimulus bill would help them establish their technologies more quickly, ahead of overseas firms such as Honda and Sharp.

Time is of the essence. "Thin-film players have got to get into the industry in the next few years, and you (have) got to move to scale," said Nathan Furr, co-author of a new market research report surveying the North American solar industry.

The stimulus bill could also kick-start the realization of a smart power grid. Our antiquated power grid now loses about $150 billion of energy a year due to power outages and other disruptions, and it's also ill-equipped to provide efficient transmission of renewable energy. Significant investments to digitize and automate the power grid would greatly reduce energy wastage, carbon emissions and other costs. Building hyperconductive power lines would make it easier to link wind and solar power sources, usually located far from population centers, to the national grid.

These investments are steep. But it will help restore American companies to the forefront of global competitiveness. And that is priceless.

Mindy S. Lubber is president of Ceres, a leading coalition of investors, environmental group and other public interest organizations working with businesses to address sustainability challenges such as climate change.

Read the post at Harvard Business Review

Meet the Expert

Carol Lee Rawn

Carol Lee Rawn directs the Transportation Program at Ceres. She is an environmental attorney with over twenty years of experience working with federal and state regulatory agencies, companies, and nonprofit organizations on a wide variety of environmental issues.

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