Building a Clean Energy Economy: The IMPACT Act

The Waxman-Markey Clean Energy and Security Act [3]squeaked through the House of Representatives late last week (219-212). Although some expressed doubts [4], many people consider the bill a terrific breakthrough [5]and important step in the right direction. But one unheralded addition to the Manager’s Amendment in the closing hours makes the bill even stronger and more important — the IMPACT [6]provision to support clean energy manufacturing in America.

Manufacturing is critical for both the American economy and our move to energy independence. America lost nearly a third [7] of its manufacturing jobs since 2000, accelerating a downward trend [8]that started in the 1980s. The production of goods represented nearly half of America’s gross domestic product in 1960, but it’s below 10 percent of GDP today. These were the rock-solid middle class jobs that built America into an economic powerhouse, and spread the prosperity to our people as a whole.

The disappearance of these jobs is more than just nostalgia. [9] We can’t replace manufacturing jobs with check-out clerks at Walmart. And it turns out that medical, engineering, and financial services jobs can also be outsourced to India and Indonesia. We need to rebuild our economy. We need to move beyond a bubble economy [10]based on high-consumption, low-wages and foreign borrowing.

Energy is a place to start. We can’t just swap our dependence on foreign oil for dependence on foreign manufacturing.

President Obama [11]said it in his February address to the Joint Session of Congress: “We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it…. Well I do not accept a future where the jobs and industries of tomorrow take root beyond our borders – and I know you don’t either. It is time for America to lead again.”

Right now, more than half of our wind turbines come from overseas. Roughly 90 percent of our solar cells are imported from China.

America can make this transition. Gear boxes for automobiles aren’t all that different from gear boxes for wind turbines. A company that makes one can make the other — but the transitional costs are formidable, especially in an era of tight credit and slack demand.

The IMPACT Act [12] added to Waxman-Markey will help solve those problems. IMPACT (Investments for Manufacturing Progress and Clean Technology) creates a $30 billion Manufacturing Revolving Loan Fund to help small and medium-sized manufacturers finance retooling, shift design, and improve energy efficiency. It also adds $1.5 billion to the existing Hollings Manufacturing Extension Partnership, to include specific support for clean energy retooling.

The Apollo Alliance — a coalition of business, labor and environmental groups concerned about clean energy — estimates that the IMPACT Act could create 680,000 direct manufacturing jobs [13]nationally and 1,972,000 indirect jobs over the next five years. “It is critical that Congress enact legislation that provides direct and substantial investment [14]in clean energy component manufacturing to ensure that jobs are created in the U.S., and to wean us from our dependence on other nations to meet our energy needs,” said Apollo Alliance Chairman Phil Angelides

Credit Senator Brown (D-Ohio) for conceiving this legislation and introducing the original bill in the Senate. Credit Representatives John Boccieri (D-Ohio) and Zack Space (D-Ohio) for adding the IMPACT language to the Waxman-Markey bill. And yes, credit Apollo for putting wind in the sails.

This IMPACT amendment is good on the substance — for manufacturing and for clean energy independence. And it’s good politics — to help both coal mining and industrial states make the transition to the clean energy economy.

Manufacturers and environmentalists looking ahead to the future. Trade unions and scientists developing new technologies. Ohio and Kentucky both coming out ahead. Go, team.