A new report by the National Governors Association (NGA) showed that 28 states enacted more than 60 new “clean” economic development policies between June 2010 and Aug. 2011. Among those states, more than half, or 16, have Republican governors. In five of the states, the policies were started under Democratic governors and were continued by Republicans who replaced them.
State efforts have almost always focused on propelling demand for renewable energy, but clean economic development goes far beyond this, by trying to build local supply chains to meet America’s growing demand for clean power. Policies include tax breaks for renewable energy manufacturers, grants for cleantech startups and training programs for green jobs.
Though relatively new, every state except Georgia, Montana, Rhode Island and Wyoming has passed at least one clean development policy, according to NGA, which has published a rundown of states’ green energy activities on a biannual basis since July 2008. All together the group has identified nearly 250 such programs across the country.
The NGA findings offer a sharp contrast to the debate in Washington and on the presidential campaign trail, said Joshua Freed, a climate specialist with the centrist Third Way. “The discussions that governors are having in virtually every state are, ‘How do we pursue clean energy?’ The debate in Washington, driven by the House majority, is whether we should pursue clean energy at all,” he said in an interview.
Freed said the difference can be explained by the fact that governors are more directly responsible than Congressional policymakers for providing business opportunities and boosting employment in their states—and they’re blamed more by voters if they fail to do so.
With the economy still struggling—and with think tanks quantifying the economic impacts of the clean economy for the first time— more and more governors are considering green growth to drive economic revival and innovation. “That’s why we’ve seen … clean energy policies being implemented in all 50 states,” Freed said. Currently, 30 states have Republican governors.
The report, which was released on Feb. 1, found that every state enacted some type of renewable energy and energy efficiency policy in the 14 months between June 2010 and Aug. 2011, such as energy-savings targets for government buildings and tax breaks for installing solar panels.
Sue Gander, director of NGA’s environment, energy and transportation division, said the findings show a continuation of a trend. “What we saw across the board is a pretty high level of activity, consistent with what we’ve seen in past years.”
A closer look, however, reveals a more nuanced picture, especially of Republican governors’ support of green initiatives. Several have had to strike a balance between demands of conservative voters reluctant to boost state-sponsored clean energy spending and their states’ economic needs.
Arizona: Brewer Dumps Cap and Trade, Solar Subsidies a ‘No-Brainer’
Arizona Gov. Jan Brewer, a conservative Republican, has both repealed and expanded the clean energy policies of her Democratic predecessor, Janet Napolitano, who resigned after being appointed U.S. Secretary of Homeland Security in 2009.
In February 2010, Brewer pulled Arizona out of the Western Climate Initiative’s cap-and-trade program. Sticking to her party’s line, Brewer said cap and trade would impose higher costs on businesses and would place Arizona at a competitive disadvantage compared with its neighbors. Congressional Republicans have vilified cap and trade as “cap and tax.”
Last month the state withdrew from California’s Advanced Clean Car program, which would have required Arizona to put thousands of electric cars and other zero-emissions vehicles on its roads, citing a lack of public charging stations to support a roll-out of the cars. Environmentalists and the state’s electric car startups chided the decision.
But, notably, since taking office Brewer hasn’t abandoned tax breaks and other state subsidies to nurture Arizona’s booming solar sector.
The economic benefits are too alluring, said Matthew Benson, a spokesperson for the governor’s office. The industry has helped breathe life into the state’s stagnant economy, which in 2011 created more jobs than it lost for the first time since 2007, according to state employment data.
“It’s really a no-brainer to try and do everything we can to encourage solar companies to locate in the state,” Benson said.
Arizona now ranks third in solar jobs, behind California and Colorado, according to a recent study by The Solar Foundation, a nonprofit group. In 2011, about 980 solar manufacturers, installers and vendors in Arizona employed 4,800 people, up from 3,800 jobs and 230 companies in 2010.
The new jobs were a crucial factor in Arizona’s economic turnaround. In total the state last year gained about 15,000 jobs after losing a nearly 300,000 positions between 2008 and 2010.
Since 2010, the state has budgeted $70 million per year for tax incentives to attract renewable energy companies to Arizona. The program helped lure Tempe-based First Solar, the world’s largest maker of thin-film solar panels, to build its second U.S. manufacturing facility in Mesa. The $300 million factory is expected to come online in 2013. The firm has plants in Malaysia, Germany and Perrysburg, Ohio.
The state also has three massive solar power plants under construction, including a $1.4 billion desert solar thermal installation.
Last March, Brewer launched a solar energy task force—a group of local solar executives, industry advocates and city officials—to develop strategies to lower solar installation costs, open up public lands to large-scale solar plants and build new transmission lines to connect green electricity to communities.
The Republican-controlled legislature fought tooth and nail to repeal its cap-and-trade commitment. But there’s been no pushback against the state’s solar push, said Benson, the governor’s spokesperson, even amid rising conservative anger over President’s Obama’s clean energy programs. “The legislature has been on board” with policies like solar tax breaks, he said. “It’s been a team effort.”
Michigan: Big Support for RPS, Green Tax Subsidies Out
Michigan’s Republican Gov. Rick Snyder, who described himself as a “good green Republican” during his 2010 election campaign, has similarly ended and advanced existing clean energy policies, most of which were enacted under Jennifer Granholm, a Democrat who served as governor from 2003 to 2011.
Steve Bakkal, director of the Michigan Energy Office, said Snyder particularly supports the state’s renewable portfolio standard (RPS), which requires utilities to source 10 percent of their power from cleaner sources by 2015.
Other governors have tried to undo similar policies, Bakkal said.
Last year, Maine’s newly elected Gov. Paul LePage, who is backed by the local Tea Party, attempted to throw out the state’s 2007 law requiring utilities to increase their share of renewables by 10 percent in 2017. The legislature’s Energy and Utilities Committee voted unanimously to kill LePage’s measure.
In Ohio this month Republican lawmakers will consider legislation that axes the state’s 25 percent by 2025 clean electricity requirement.
Bakkal said both Snyder and the state’s Republican-controlled legislature continue to back the RPS because it’s bringing economic development. “There’s a clear tie to the opportunity it has brought to a lot of our manufacturers,” he said.
For instance, before the RPS passed in 2008, the state had a dozen companies that supplied components, raw materials or services to wind turbine makers. Today there are 120 turbine supply companies. Most have cropped up to meet demand for wind installations spurred by the state’s renewables mandate and growing demand in the region.
The companies were also lured by state and federal tax breaks for green manufacturers and by cleantech research grants. Michigan now employs more than 10,000 people in the wind and solar industries, according to a 2011 study by the Environmental Law & Policy Center, a Chicago-based environmental group.
While Snyder has offered low-interest loans to green manufacturers, Bakkal said the governor has decided not to offer new tax breaks for clean energy alone, and not to extend Granholm’s current subsidies when they expire.
The governor says such green-only incentives are unfair. Last year Snyder tweaked the state tax code to ensure that “any business in Michigan—not just clean energy companies—has a change to succeed here, without having to get a special incentive,” Bakkal said. That position jibes with that of many conservative Republicans who say governments shouldn’t use taxpayer money to pick energy technology winners.
The governor’s “main mission now is to help all businesses, and not try to pick the industries that we’re only going to support,” Bakkal said.
Virginia: Tea Party Stronghold, No. 2 in Clean Economy Policies
In the Tea Party stronghold of Virginia, Republican Gov. Bob McDonnell, who took office in 2010, has pursued the GOP’s “all-of-the-above” energy strategy.
He has called for building more nuclear and coal plants, ramping up the state’s natural gas use, opening offshore oil and gas resources, as well as putting wind turbines offshore and electric cars on its roads.
McDonnell’s energy agenda “does not have a partisan flavor to it,” Maureen Matsen, the governor’s senior adviser on energy, said in an interview. “We view energy … as a practical and critical issue for national security and our economy.”
According to the NGA report, Virginia has passed 16 clean economic development policies since 2008, the second-highest behind Michigan, which has passed 19. McDonnell enacted the five most recent policies, including a green jobs tax credit. Employers in the solar, biomass and geothermal industries can earn a $2,500 tax break for each green job they create that has a $50,000-plus salary. Under McDonnell, the state has also allotted $36 million in grants for renewable energy manufacturers.
Republicans have a substantial majority in Virginia’s House of Delegates, and in January they took control of the state senate, too. Still, the biggest challenge to McDonnell’s clean energy aspirations is not ideological but economic, said Matsen, especially for offshore wind. The proposed 130-turbine Cape Wind project in Nantucket Sound, Mass., for instance, is expected to cost $2.5 billion to build.
In his budget requests this year, McDonnell proposed trying to tackle some of the cost barriers by allowing utility companies to meet as much as 20 percent of their voluntary renewable energy goals by investing in R&D projects for clean technologies. Local environmentalists fighting to get more clean power on the grid slammed the move.
But Matsen suggested the governor is simply taking a longer view. “Research and development is critical to bringing the cost of alternative energy down,” Matsen said. High energy costs “would take the legs out from any kind of economic recovery.”