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The Greening Economy

In municipalities across the country, an unusual phenomenon is gaining momentum. It is the merger of two ideas traditionally believed to be opposites of each other—economic development and environmental protection—to create  strategies for “green economic development,” or “sustainable development.” The creation of a “sustainable economy” is an attempt to find effective solutions to our country’s dependency on fossil fuels, while simultaneously boosting local economies through job creation. Now investors and policy-makers everywhere are pleasantly surprised to discover that green economic development promotes both, environmental protection and production performance.

  Minneapolis: 20 “Clean” Megawatts, 220 Possible Jobs
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In Minneapolis, Minnesota, the Green Institute, a non-profit organization, is leading the city towards developing community-based clean energy, thus addressing both, the supply and demand sides of the energy equation. Specifically, the Community Energy Program generates solar and biomass heat and power (supply) while concurrently promoting conservation and energy-efficiency (demand).  
The Green Institute’s Phillips Biomass Community Energy Project is employing biomass technology to achieve sustainable energy production for Minneapolis residents. The Project will use urban tree trimmings and agricultural residues to generate 20 megawatts of energy and heat—approximately one percent of the energy demand in Minneapolis. (One megawatt would supply enough energy for 1,000 homes.) The electricity will be sold to the electric grid, and the heat will be used for a Phillips-area community heating system. 

Most importantly, it is estimated that the Phillips Biomass Project will create 20 long-term, full-time jobs, half of which are likely to be filled by personnel trained at an existing apprenticeship program with a partnering community college. Additionally, nearly 200 construction jobs and other indirect jobs for wood waste generators, farmers, and those in the transport sector are forecasted. As evidence to its commitment to local economic development, the Green Institute also pledges to hire locally and pay its employees a living wage—a minimum of over $15/hour. 

Critical to the Green Institute’s success has been its ongoing partnership with city and county governments. Recognizing early the ways in which the Green Institute’s work supports their goals of reducing waste and diverting storm water into productive uses, Hennepin County provided financial support to the organization, while the city of Minneapolis granted a variance to an existing building code.

Green Economic Development 

There is no universally agreed upon definition of green economic development, but the concept usually encompases the three tenets of sustainability—environment, economy, and equity—viewed within a continuum, whereby meeting the needs of the present does not compromise the ability of future generations to meet their own needs.[1]  In other words, green economic development integrates economic development—tax base expansion, wealth creation, and job creation—with the values of sustainability.

The City of Toronto, Canada, states that, “green economic activity promotes healthy environments, vital economies, and social equity.” [2]  A healthy environment is brought about by lowering greenhouse gas emissions through a reduction in resource input and waste output;  a vital economy increases a city’s global competitive advantage; and social equity provides a healthy working environment, preserves and creates gainful jobs, and plans for a community’s future quality of life.

Implicit here is the idea that financial profitability and social and ecological responsibility are mutually reinforcing goals. [3]  An idea whose credibility is borne out by research that shows greater cost efficiencies and better performance in green economies.

Green economic development, as practiced across the U.S., may include: green building (the use of energy efficient technologies and recycled materials in construction); green procurement (purchasing supplies and equipment made from recycled or renewable resources); and waste reduction (devising means to recycle output streams). The Green Guide to Healthcare, for example, purports to be a toolkit for “integrating enhanced environmental and health principles and practices into the planning, design, construction, operations and maintenance of [medical] facilities.” [4]

Policy-makers have also been looking at clean technology to develop a greener, “high performance” economy.  In a 2004 report by Clean Edge produced in partnership with San Francisco’s Department of the Environment, clean technology is described as “an emerging sector that comprises a diverse range of products, services, and processes that harnesses renewable materials and energy sources, dramatically reduces the use of natural resources, and cuts or eliminates pollution and toxic wastes.” [5] It includes, but is not limited to, solar photo voltaics (PV), wind power, hybrid electric vehicles, fuel cells, bio-based materials, and advanced water filtration. The report outlines a 10-step plan for attracting new jobs and businesses into San Francisco while concurrently reducing its resource dependency. 

The Economic and Policy Outlook
In recent years, investment in clean technology industries has increased dramatically at the national and global levels, proving that environmental reasons apart, “going green” is also a sound economic strategy. 

Last year, State Treasurer Phil Angelides, announced his commitment to California’s environmental future with his Green Waves Initiative, a robust pension-backed investment program, which would channel approximately $500 million dollars into the green technology sector. A 2004 study co-authored by the Natural Resources Defense Council (NRDC) and Environmental Entrepreneurs (E2), shows 29 percent ($339 million) of the North American venture capital investment in new “clean” technologies occurring in California, and projects the creation of up to 114,000 jobs in “cleantech” start-ups in the next five years. 

Recent research by the Renewable Energy Policy Project also forecasts that the state is especially poised to benefit from the expected growth in renewable energy industries. In the PV industry alone, California could gain approximately 6,800 jobs in manufacturing and 3,500 jobs in construction and installation of PV components.[6]  Similarly in the wind turbine industry, California could add nearly 13,000 new manufacturing jobs, totaling over $4.2 billion in investments.[7] Furthermore, even firms that do not currently work within these industries could incorporate PV and wind turbine development in future production, thus benefiting from these renewable, clean tech industries.

Last January, the California Public Utilities Commission, passed a $2.9 billion California Solar Initiative to create incentives for commercial and residential customers to install 3,000 megawatts of solar energy before 2017. As state and local policies like these begin to prioritize clean technologies, the demand for them will go farther and deeper and encourage greater participation in green economic development.
 
Evaluating the Current Definition
As green economic development gains legitimacy and momentum in the public and private sectors, it is important to assess its criteria for success and identify the true beneficiaries of green policies and practices, before the current mode of operation becomes the norm.  Specifically, to what extent are low-income, and communities of color benefiting from green economic development?  Do the policies explicitly include marginalized populations?

As currently defined, green development aims for the three goals of traditional economic development—generate revenue, create wealth, create jobs—with the additional goals of social equity and a healthy environment.  However, even the City of Toronto’s definition of social equity falls short of talking about it in individual, human terms.

Some Recommendations with a Clean Edge
The 2004 Clean Edge report for San Francisco prioritizes the creation of a vision for a clean tech future, communicated and implemented by a clean-tech manager. It emphasizes the importance of marketing San Francisco as a “ready and willing” place for clean tech industries and of creating partnerships with and providing financial incentives to business. All steps clearly useful in establishing a warm climate for launching a greener economy but obviously biased towards business rather than the community. The plan provides no assurance that job creation for residents with varied backgrounds is a key aspect of green economic development.

In recent years, attracting biotechnology firms has been a popular economic development strategy. Small and large cities alike have developed incentives for biotechnology firms to locate in their jurisdictions. Biotech jobs, however, tend to be in research and development, requiring levels of education that are bound to exclude the lower income segments of the population. Such mismatches between job opportunities and the skills of the local workforce will force residents to either travel out of the city for appropriate jobs or stay and work at low-paying jobs with no career prospects.

What sets green industries apart from biotechnology and software industries, is that they present an unique opportunity to develop a range of well-paying skilled jobs locally. In addition to manufacturing wind turbines, for example, there are installation, maintenance, and operation jobs to be had.

However, cities have to proactively encourage the development of jobs across all skill sets, in order to achieve equitable outcomes for residents.Embedded within the concept of equitable outcomes in green economic development, is the process by which such outcomes are achieved and decisions made. Full and fair participation by affected communities should be incorporated into the crafting of workfore development programs that meet the needs of all stakeholders. This is especially important as green economic development matures, otherwise the success of the strategy will be compromised. In summary, any definition of green economic development should include a commitment to social equity and make explicit its beneficiaries. To achieve the goals of equitable green economic development, policies should create incentives that not only attract new business but also create new jobs that are accessible to and evenly distributed among city residents with different skill sets.  In short, green economic development should ensure that “individuals and families in all communities can participate in and benefit from economic growth and activity” [8] and have access to quality jobs.   ?


Endnotes
1    World Commission on Environment and Development (WCED). Our common future.
2    City of Toronto, Canada. The Green Economy Plan. 
3    Pamela Lippe  and Nixon, James. “Building the Sustainable Economy I” quoted in: http://www.ci.austin.tx.us/sustainable/workplan.pdf
4    Green Guide for Health Care.  http://www.gghc.org/about.cfm
5    Ron Pernick, Joel Makower, and Arthur de Cordova.  “Harnessing San Francisco’s Clean-tech Future, A Plan for Attracting Businesses and Creating Jobs.”
6     These figures are based on the PV Industry Roadmap, which balances likely trends with industry objectives.  California is projected to have installed 9,600 MW of PV energy by 2015 from its current capacity of 340 MW.
7    Job and investment figures assumes development of 50,000 MW of wind energy.
8    Policy Link. Equitable Development. http://policylink.org/equitabledevelopment/
 

Jackie Tsou was an HUD Community Development Fellow at Urban Habitat. She now works at Seifel Consulting Inc., analyzing economic developments for local governments and other client. 

 

Download or view a pdf of this article (272 KB).


 

 Getting Ready for Change: Green Economics and Climate Justice      |      Vol. 13 No. 1    |       Summer 2006      |      Credits
 

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