Clean energy policies and green jobs: An evaluation of green jobs in U.S. metropolitan areas
Highlights
► This study evaluates employment effects of state and local clean energy policies. ► We find state clean energy policies have moderate positive impacts on green jobs. ► We find local climate policies have moderate positive impact on green jobs.
Introduction
The transition towards sustainable and low carbon communities requires the development and deployment of a range of new and existing energy technologies. Globally, many nation states, such as European countries, China and South Korea, consider clean energy policies as strategic pathways to enhance national competitiveness in science and technology. In the context of the U.S., the federal government had not taken a proactive role in clean energy until President Obama took office in 2008. The lack of national leadership in this policy arena has resulted in greater reliance on state and local efforts in energy efficiency and renewable energy. State governments in the U.S. have adopted renewable portfolio standards, energy efficiency resource standards and various tax incentives to stimulate the growth of clean energy industry (Rabe, 2004, Rabe, 2008, Carley, 2011). At the local level, counties and cities are actively engaged in greenhouse gas emission reduction efforts through joining in ICLEI's1 Cities for Climate Protection (CCP) movement and U.S. Conference of Mayors Climate Protection Agreement (CPA), among various other local initiatives (Francis and Feiock, 2010). In addition to environmental motivations for these policies, an important rationale for adopting these policies is to stimulate economic development through creating green jobs. In many cases, the rationales for supporting the clean energy industry are based on economic development instead of climate protection (Rabe, 2004).
Despite the fact that green economic development and job creation are at the center of political rhetoric and academic discussion, much less attention has been directed to evaluating the extent to which existing clean energy policies have successfully created or maintained green jobs. Most existing literature on green jobs has focused on ex-ante forecasting of green jobs creation potential of different energy technologies (for example, Kammen et al., 2006, Wei et al., 2010) and government's direct spending (Pollin et al., 2009). Much less work has been done to conduct ex-post evaluation of the job effects of clean energy development, especially in the context of the U.S. Also, the literature on state and local climate and clean energy policies in the U.S. has been focused on energy diversification and decarbonization, instead of employment effects (Carley, 2011, Yin and Powers, 2010, Yi and Feiock, 2010). This stream of research has been totally disconnected from the green jobs literature, leaving a significant gap in the literature. The lack of empirical evidence on the effectiveness of the state and local clean energy policies in creating green jobs has not only thwarted meaningful communication in the political debates, but also affected the progress in academic understandings of this important policy area.
This paper fills this lacuna by empirically examining the impact of clean energy policies at the state and local levels in stimulating and maintaining green jobs in the U.S. metropolitan areas. This study contributes to extant literature of state and local energy policies as well as green jobs studies.
In the next section, extant literature on green economic development is examined. We then discuss the array of state and local policies adopted to stimulate green economic development and present the key hypotheses. Ordinary least squares (OLS) and two stage probit least squares (2SPLS) regressions are then conducted to empirically examine the influence of clean energy policies on green jobs in 361 U.S. metropolitan areas. This paper concludes with implications and suggestions for future research.
Section snippets
Green economic development and green jobs
The traditional framework of economic development portrays a tradeoff between economic opportunities and environmental sustainability (Portney, 2003). Within this framework, economic development is achieved at the expense of environment, and environmental preservation is realized by sacrificing the economic opportunities. Green economic development is an emerging economic development framework that integrates the traditionally contentious relationship between economic development and
Cross sectional evaluation of green jobs
One dimension of green economic development is that clean energy policies have short-term, mid-term and long-term employment effects (Fankhauser et al., 2008). Scholars have different predictions regarding the employment effects of clean energy development. Optimists argue that in the short term, clean energy policies could create jobs, due to the fact that low-carbon technologies are more labor-intensive than conventional options. In the medium term, early movers in clean energy may further
State policy incentives for clean energy development
State governments in the U.S. have adopted various policy tools to stimulate the clean energy industry and thus green economic growth. These policy tools are typically market-based tools that rely on incentive designs to provide support for renewable energy and energy efficiency. These tools include renewable portfolio standards (RPS), energy efficiency resource standards (EERS), public benefit funds (PBF), various tax incentives, appliance/equipment standards, emission caps, net metering,
Local policy tools for the green economy
At the local level, counties and cities are also actively involved in climate mitigation policies that are motivated not only by environmental concerns, but also by economic motivations. One of the most important local climate mitigation policies is their participation in ICLEI's Cities for Climate Protection (CCP) Campaign. Established in 1990, ICLEI is an international association of local governments and other levels of governments who share the commitment to sustainable development. By
Other factors that contribute to accumulation of green jobs
While this paper examines the effects of clean energy and climate policies on green jobs, a set of alternative explanations needs to be taken into account. Two groups of factors are identified: economic factors and labor supply factors.
Data
To empirically test the hypotheses, we collected a data set for relevant variables in all 361 metropolitan areas in the U.S. The dependent variable was coded from a report by U.S. Conference of Mayors and Global Insight in 2008, titled U.S. Metro Economies: Current and Potential Green Jobs in the U.S. Economy. This report provides data on the number of green jobs created in all the metropolitan areas in the U.S. The industry classifications used in this report are summarized in Appendix A. This
Models and results
We first ran an OLS regression model with logged green jobs as the dependent variable. The dependent variable was log-transformed to meet the assumptions of the regression and make it easier for interpretations. The regression model is specified as follows:where Y is the dependent variable, logged number of green jobs in the metropolitan area. Z are control variables, as discussed in the last section. ε represents the error term. X are state and local policy variables.
The initial
Two stage probit least squares model
Given that we rely on cross-sectional data for the above regression analysis, concerns could be raised about the potential endogenous relationships between dependent variable and explanatory variables. It is likely that population change is driven by increasing employment opportunities in green energy, and that cities join in ICLEI due to their vested interests in green energy as a result of green job growth. The clean energy sector only accounts for a small percentage in the U.S., and this may
Conclusions
Green economic development and green jobs creation is a popular topic among government officials and scholars. However, much of the existing scholarship has focused on ex-ante forecasting of green jobs creations, while little attention is directed onto whether clean energy policies have fulfilled such promises in creating and maintaining green jobs. Ex-post evaluation of existing clean energy policies is needed to determine the effectiveness of these policies. This paper investigates whether
Acknowledgement
The author would like to thank the anonymous reviewers and Editor for their helpful comments and suggestions on the earlier draft.
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