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Q&A: Brookings' Jonathan Rothwell on Ohio's green jobs outlook

Jonathan Rothwell, senior research analyst at the Metropolitan Policy Program.
Jonathan Rothwell, senior research analyst at the Metropolitan Policy Program.
Environmentally conscious "green" jobs range from energy efficient home construction and solar panel installation to "smart appliance" development and windmill manufacturing. Ohio particularly is poised to benefit from green job growth, says "Sizing the Clean Economy: A National and Regional Green Jobs Assessment." Among its findings: a half-million green jobs were created from 2003 and 2010, with 16,973 of those in Ohio; new green jobs are a small, but significant percentage of overall growth; and the industry shows great promise, with higher-than-average salary potential for Blue Collar workers.  We decided to ask the Brookings Institute's Jonathan Rothwell about the report.

Why did the Institute think it was important to issue this report at this time?

The green economy has been something talked about quite a bit as a hope for job creation coming out of the recession. It's also been a source of solutions for long-term environmental challenges. These are jobs that solve major environmental problems. The U.S. faces considerable problems with importation of energy. To the extent that we can diversity our energy sources, we can have a more stable, and more prosperous economy. This is an area that has received major investments internationally and in the U.S. in recent years, and we want to look at how well the U.S. is doing in channeling this investment and look at which parts of the country are doing the best in succeeding.

What is the potential of green jobs in the U.S.? Are they a way to replace jobs that aren't coming back?

There are some exciting trends. Venture capital money in clean tech has increased from less than $100 million in 1994 to $4 billion in 2010. It's a leading indicator for sector growth. When you look at international trends and patents and venture capital, you see the U.S. doing very well. The problem is generating these new ideas and products into large-scale job creation. There were 2.7 million green jobs in 2010, and that is a modest but significant part of the U.S. economy today. It's not enough by itself to replace 8 million jobs lost during the recession, but it can play a helpful role. About a half-million jobs were created between 2003 and 2010 (nationwide) and the fastest growing areas that received most venture capital money are really sources of excitement: solar and wind, biofuel, smart grid, batteries and electric cars. Those sectors grew about twice as fast as the national economy. The scale just isn't there yet to solve the problems of losing 8 million jobs. There are some policies that could be adopted by Congress that could really help these newer companies.

What are most important policy changes that could really make a difference?

On the demand side, we could tax the environmental damage that is caused by fossil fuel production. That would spur demand for clean energy technology and a variety of green goods and services. That would be one comprehensive approach. With the polarization of Congress, that type of policy seems unlikely. An alternative is setting a clean energy standard for the nation, something many states have done already. You can mandate that a certain amount of electricity is generated from renewable sources. On the supply side, there are some policies as well. One is dealing with the financial difficulties that these companies face. Currently, new firms with breakthrough technologies are doing very well in attracting venture capital money to develop products in early stages. But when it comes time to scale up, by building new factories or by participating in large installation projects, banks are very reluctant to put up the money necessary to do that. We've seen the U.S. falling behind other countries like China on measures of projects financed. The federal government could provide some type of warranty insurance in the first few years of a product's deployment into commercialization so an operating history could be observed by private insurance companies. Then they could feel comfortable enough to offer their own insurance. Then that would take away the risk faced by large lenders and spur major investment in these large technologies and create jobs.

The report pulled out Northeast Ohio and (technology-based economic development organization) NorTech as examples of things interesting to look at and follow. What was most impressive or what can other regions learn?

One of the things that NorTech provides is information and consulting for companies that are in the clean economy and want to expand or learn about potential suppliers and export opportunities. They provide some important information and knowledge-sharing activities. They also help provide finance for certain projects and look for ways to partner with the private sector to help steer investment into these new companies.

You talk about industry clusters in the report. Are you finding that one size doesn't fit all when it comes to green job creation by state or even by region in a state?

What we found is that establishments located in the same county as other business that do similar activities grew faster from 2003-2010 in terms of job creation. We think that having a cluster or being a part of a cluster provides a number of advantages. But they depend on the particular metropolitan area. Toledo has some cluster companies in solar photovoltaic, green chemical products and green consumer products, and that is helpful for those companies going forward. It provides them an advantage in the Toledo metropolitan area. In some cases is will be access to a high quality research institution that is doing research in particular area that biz participates in, other cases access to important infrastructure whether that be an airport or a port that is helpful for an export company or a company that has a lot of overseas relationships. In other cases it will be the supplier networks. You see that in the auto manufacturing sector. Electric vehicle manufactures do better if they are located near producers of batteries that fuel the power for those electric vehicles. They can work together to create more innovate technologies when they collaborate together and compete against one another.
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