Friday, November 26, 2010

Will Michigan Gain the Renewable Energy Jobs That Other Midwestern States Leave Behind?

Elections have consequences, some of them unexpected. If we play our cards right, Michigan may gain from our Midwestern neighbors electing right-wing leaders that vow to either stall or roll-back progress for their states when it comes to energy policy, the zeal to defy "big government" as the current excuse for embracing more drilling and fossil fuel use. Let's be clear here, this is not a good thing for them or for the country as a whole. It's a tragedy that threatens us all in the long run. It would be much better to see everyone move towards a clean energy economy and create jobs and opportunities for business and citizens alike, all across the region. That being said though, we have to focus on our state and not worry about things beyond our control - and if other states are going to drive this business away, we should be there to welcome it with open arms.

Let's start with Indiana. Sometimes it's fun to look outside our own Michigan media bubble and see how other states view us. In this case, Indiana sighs with envy at our booming renewable energy business, and laments the opportunity they have lost by not implementing a renewable energy standard. This story comes from the Post-Tribune, which serves the industrial northwest corner of Indiana:

When it comes to renewable energy, economic development officials in Michigan could be laughing all the way to the bank.

Michigan's renewable energy policy has attracted billions of dollars in investments over the last two years while neighboring Indiana sat idly by. The developments are expected to create thousands of jobs in manufacturing -- a blow to industrial areas like Northwest Indiana.

The strategy isn't a secret, although Michigan officials aren't keen on promoting something that would take away their competitive advantage: The boom started in 2008 when Michigan passed a law requiring utilities to get 10 percent of their energy from renewable sources and energy efficiency by 2015.

"Since the adoption of the renewable energy standard in Michigan, we have attracted more than $9 billion in new investment in new alternative energy manufacturing business," said Michael Shore, spokesman for Michigan Economic Development Corp.

Have to beg to differ on the "aren't keen on promoting" statement. Seems we will take the "Hey Sailor" approach to anyone who even blinks in our direction. And if anything, our RPS is too low, especially when you consider that both Ohio and Illinois have set a much higher rate than we have. Both of those states are strong in manufacturing, and they are shooting for 25% by 2025. So far we are at 10% by 2015, same as Wisconsin - but we will get to recent developments in those states in a moment.

Legislation for a renewable standard has stalled in Indiana's legislature, with lawmakers trotting out the same old arguments that held us up for so long. Electric rates will go up, we need to include nuclear, blah blah blah - but what environmentalists suspect is that the coal lobby is undermining any attempts that will bring them competition. Meanwhile, the manufacturing jobs are going to Indiana's neighbors who have instituted a RPS, and that means us and Illinois, as the story points out. Indiana is still getting some renewable energy projects of course, but Governor Mitch Daniels, while promoting the state as a green energy leader on one hand, is also doing things like fighting federal cap and trade legislation, throwing around scary buzzwords like "imperialism" and "piranha swarm of green lobbyists wangling special exemptions, subsidies and side deals" in a WSJ editorial. His goal is to make Indiana a leader in clean coal.

Most importantly, we are out to be the world leader in making clean coal -- including the potential for carbon capture and sequestration. The world's first commercial-scale clean coal power plant is under construction in our state, and the first modern coal-to-natural gas plant is coming right behind it. We eagerly accept the responsibility to develop alternatives to the punitive, inequitable taxation of cap and trade.

Sure he does. Daniels has his own "inequitable taxation" deal going on right at home, as Duke Energy's new coal gasification plant in Edwardsport, Indiana has incurred spiraling cost overruns that will be paid for from the pockets of Indiana ratepayers. The $1.985 billion project cost initially approved by the Indiana Utility Regulatory Commission is now approaching $3 billion - and accusations of an ethics scandal have broken out, as three people have recently been fired when a citizen's action committee exposed that one member of the IURC left the board to take a job with Duke Energy. Fears are that insider deals with the company mislead citizens on the costs, and that Duke has mismanaged the project. Why does it seem like every time you start pulling on these Republican "big energy" threads, it always leads to some sort of corruption?

While Indiana looks at our RPS with envy and deals with this energy scandal, the right-wing takeover of the Ohio state government may lead to the Buckeyes repealing their aggressive renewable energy standard. Governor-elect John Kasich is being urged by the extremists at the Heartland Institute to heed the "Tea Party mandate" and move the state backwards when it comes to energy policy. He has indicated he just may do that. Kasich has swaggered into office before he has even been inaugurated, vowing to cancel Ohio's high-speed rail project and eliminate those jobs in a stunt reminiscent of Wisconsin Governor-elect Scott Walker's move to do the same in the Badger state. Other states such as New York have indicated they are more than willing to take the rail money that Ohio and Wisconsin have declined - a pertinent lesson (and warning) when it comes to the energy business as well.

When it comes to Wisconsin, words has it that they also will be taking a second look at their 10% RPS, threatening to delay the time line of implementation on renewables as they turn an eye back towards keeping their old coal plants up and running, and perhaps lifting the moratorium on nuclear facilities. Pennsylvania is another state that is leaning away from green energy and back towards fossil fuel use, with a Republican-led legislature there embracing coal and Governor-elect Tom Corbett vowing to open state lands up for natural gas drilling. Need more? Iowa's Governor-elect Terry Branstad and House Republicans there have threatened to dismantle the state's "Power Fund", which was instrumental in growing Iowa's renewable energy business. In recent years, Iowa had jumped to 2nd in the country behind Texas in wind energy, drawing jobs and manufacturers to the state. Now that may be in jeopardy.

Between Indiana's reluctance to embrace a RPS, Ohio and Wisconsin threatening to turn back the clock on their standards, Pennsylvania embracing coal and gas, and Iowa putting a damper on its growth, it seems that Michigan has a great opportunity to move forward and sweep up the renewable energy business these states are going to deny. Back to those Hoosiers, and the steps we have already taken to gain ground...

Shore makes no bones about the fact that in terms of the renewable standard, Indiana's loss may be Michigan's gain.

"The renewable energy standard by itself is only a first step. It's like a high school diploma or GED. You're not ready to be a professional in any field, but you can't realistically get there, or easily get there, without it," he said.

In 2009, Michigan supplemented the standard with tax credits for renewable energy development. To get the credits, companies had to go through a review. That helped companies when the federal government later offered stimulus funding, securing Michigan $1.3 billion -- a sizable portion of the $5.8 billion total investment in advanced battery technology.

The wild-card in all of this is Governor-elect Snyder and our Republican legislature. Snyder has embraced our renewable energy law, and that is a very good sign that he will continue to explore business opportunities in that area. Michigan may find itself in a position to pick up the jobs that our neighbors turn down - if we are smart enough to recognize what is happening here, and move fast to beat other states to the punch.