Obama’s Green Stimulus Package

This morning, president-elect Obama offered some details about his proposed stimulus package, one that leans heavily on creating jobs via clean-energy-related projects. One notable project is a smart grid, which will be needed if the United States is to depend on intermittent sources of energy like solar and wind for a large share of its electricity. (See the cover feature in our current issue.)

Some of Obama’s remarks:

To finally spark the creation of a clean energy economy, we will double the production of alternative energy in the next three years. We will modernize more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills. In the process, we will put Americans to work in new jobs that pay well and can’t be outsourced–jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain.

To build an economy that can lead [to] this future, we will begin to rebuild America. Yes, we’ll put people to work repairing crumbling roads, bridges, and schools by eliminating the backlog of well planned, worthy and needed infrastructure projects. But we’ll also do more to retrofit America for a global economy. That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation.

Meanwhile, economists debate whether clean-energy jobs are the best way to stimulate the economy.

Here’s Robert Stavins, an economist at Harvard, as quoted in the New Yorker.

Let’s say I want to have a dinner party. It’s important that I cook dinner, and I’d also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I’m not going to get very clean and it’s not going to be a very good dinner. And that is an illustration of the fact that it is not always best to try to address two challenges with what in the policy world we call a single-policy instrument.

In one argument, subsidizing green energy could actually lead to increased energy consumption overall, without much benefit in terms of jobs.