Climate Change Policy and Clean Energy Markets

1. Climate Change Policy and Clean Energy Markets Judi Greenwald Vice President, Innovative Solutions Pew Center on Global Climate Change NAM Public Affairs Conference March 22, 2010

2. Summary • About Us • “10-50” Update • New Pew Center Brief on Clean Energy Markets: Jobs and Opportunities

3. About the Pew Center • Founded in May 1998 • Independent, non-profit, non-partisan • Produces research on policy, economics, science & impacts, and solutions • Works with policymakers at state, federal, and international levels • Conducts education and outreach • Engages the business community through the Business Environmental Leadership Council

4. Business Environmental Leadership Council

5. USCAP Partnership

6. 10-50 Update • 2004 “10‐50” Workshop • enable low‐carbon future in 50 years • identify policy options for the next 10 years to help “push” and “pull” technologies into the market • 2010 Update • found significant policy progress in pushing low‐carbon technologies • the critical remaining need is for a policy that puts a price on carbon and “pulls” those technologies into the marketplace

7. 10-50 Update Major Policy Developments ’05-’09 • Energy Policy Act of 2005 • Energy Independence and Security Act of 2007 • Mandatory GHG Reporting Rule • ARPA-E • “Bailout” and “Stimulus” bills (‘08 and ‘09) Source: Pew Center , In Brief: Update on the 10-50 Solution: Progress Toward a Low-Carbon Future

8. Examples of important recent policies • Buildings: energy efficiency standards; building codes • Renewables: Federal ITC & PTC; state RPSs • Nuclear power: Loan Guarantees • Autos: Fuel economy standards; hybrid tax breaks • CCS: R&D and demonstration projects • Fuels: RFS2 • Smart grid: R&D, deployment, and standards‐setting

9. A Global Opportunity How will comprehensive climate and energy policy affect the ability of U.S. firms to compete in international markets? • Policy offers an opportunity to enhance the competitiveness of U.S. firms Global clean energy markets are expanding • GHG reduction efforts; energy security & independence concerns; rising fossil fuel prices; other environmental problems • International action = larger markets • Domestic policy can boost U.S. firms’ ability to sell into new markets; U.S. leadership can affect scope of global markets

10. Current Status of Clean Energy Markets Global cleantech markets are already substantial • From 2004-2008, global cleantech investment averaged a CAGR of 45% (investment = $155 billion in 2008) Global New Investment in Sustainable Energy, 2002-2008 ($ billions) Source: United Nations Environment Program and New Energy Finance

11. Outlook for Clean Energy Markets Potential sizes for cleantech markets are large Total global investment in renewables, nuclear, CCS, and fossil fuels (strong global action)  Source: International Energy Agency, World Energy Outlook 2009.

12. Falling Behind? • In 2009 Asia (led by Chinese spending on wind) invested more in clean energy technologies than the Americas; looking at asset financing, venture capital, and private equity ($billions): • Europe: $35 • China: $13.9 • North America: $12.2 • Only… • One of top 5 wind turbine  • One of top 10 solar panel • Two of top 10 advanced battery…manufacturers are U.S. firms

13. Falling Behind? 2004-2008 Financial Investment($billions) Source: UNEP and New Energy Finance. Excludes Gov. and Corporate R&D, and small/residential projects (combined, these add an additional $37 billion in 2008

14. Other Countries Are Taking the Lead China: 10 year, $400 billion program; world’s largest solar panel and wind turbine manufacturer (exports ~95% of PV production) South Korea: Investing ~2% of GDP ($17 billion/yr) EU: Led in clean energy investment in 2008 ($49.7 billion) and 2009 Denmark: Produces ~40% of annual global installed wind capacity; world’s largest wind turbine manufacturer is Danish Germany: By 2020, investment in German-made RE systems could be in range of $18-$27+ billion/year; firms could capture 15-20% of several clean energy technology markets (e.g. solar, wind components)

15. Why It’s Important to Move Now Where an industry is first established really matters • Economies of scale, spillovers  cheaper production (e.g. Detroit, Seattle, Silicon Valley); early-movers have greater chance of achieving these • Policy can create lead markets, give new industries a foothold Source: Airframer – The Journal of Aircraft Manufacturing (Stansted News Publishing 2010

16. Clean Energy Jobs Clean energy industries create, sustain jobs in many fields • Low-carbon electricity: more jobs per unit of energy delivered than conventional fossil fuel industries • CCS: Construction of next-gen coal plant w/CCS  13k-14k direct job-years; including indirect and induced jobs  total of 36k-38k • Energy Efficiency: H.R. 2454 EE provisions:  Existing: 600k+ net new jobs (direct+indirect in 2030);  Stronger:1 million+ net new jobs (direct+indirect in 2030) • Nuclear: +50,000 MW over 15 years  117k direct jobs; ~500k indirect and induced

17. Clean Energy Jobs Cumulative job-years over BAU from 2009–2030 due to EE, RPS, nuclear power, and CCS, for various RPS targets in 2030 and assuming 25% nuclear generation and 10% CCS in 2030, respectively • Source: Wei, Max and Shana Patadia and Daniel Kammen. “Putting Renewables and Energy Efficiency to Work: How Many Jobs Can the Clean Energy Industry Generate in the US?” University of California, Berkeley, 2009

18. Domestic Demand is Essential Some jobs in clean energy industries cannot be outsourced overseas • Many clean energy technologies are complex products with global value chains; some jobs must be located where demand is regardless of where a company is based • Benefits will be maximized only if strong domestic markets exist (supported by policy)

19. Seizing the Opportunities Policy  jobs and strong domestic lead industries • Climate & Energy Policy: price on GHGs using a market mechanism • International: Tackles climate change, can foster global markets • States: Provides a foundation for federal policy • R&D: R&D can support innovation, foster lead industries • Targeted Spending: Fosters industries, jobs in clean energy (e.g. ARRA) • Other: Production Tax Credits, Loan Guarantees, etc.

20. Conclusion Domestic climate policy will enhance the competitiveness of U.S. firms and create U.S. jobs • it drives innovation, steers investment towards clean energy technologies • it matters where industries are first established • these sectors create jobs, many of which must be located near demand We need to act now • clean energy markets are already large and growing rapidly • other countries are getting ahead of us International climate policy will expand global clean energy markets • will be good for everyone, including us • U.S. leadership can ensure a strong outcome

21. For More Information www.pewclimate.org Patrick Hogan hoganp@pewclimate.org

22. Clean Energy Jobs Other nations are seeing the benefits

23. Other Countries Are Taking the Lead China: • By 2020, reduce CO2 emissions per unit of GDP by 40-45%, 15% of primary energy from non-fossil fuels • 10 year, $400 billion cleantech investment program • World’s largest solar panel and wind turbine manufacturer – exports ~95% of PV production South Korea: • Investing ~2% of GDP ($17 billion/yr) in cleantech • GHG reduction goal of 30% below BAU by 2020.

24. Other Countries Are Taking the Lead European Union: • By 2020, GHG emissions 20% below 1990 levels; RE target of 20% • Led in clean energy investment in 2008 ($49.7 billion) and 2009 Denmark: • Produces ~40% of annual global installed wind capacity; world’s largest wind turbine manufacturer is Danish • Energy use has been stable, GDP has grown 56% since 1980 Germany: • By 2020, GHG emissions 40% below 1990; RE target of 30% • By 2020, investment in German-made RE systems could be $18-$30 billion/year; firms could capture 15-20% of several markets