Jennifer M Granholm

Clean Power, Good Jobs, Energy Independence - April 21, 2011

Jennifer M Granholm
April 21, 2011— Little Rock, Arkansas
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Hello, I’m Jennifer Granholm, and I am working with Pew Charitable Trusts to help lead their campaign for clean energy policy in America. In fact, the Clean Power, Good Jobs, Energy Independence campaign is co-chaired by Senator John Warner, the former U.S. senator from Virginia, and me. I’m a Democrat, he’s a Republican. He is the former head of the Armed Services Committee and is co-chairing Pew’s campaign because he knows the importance of energy security from a defense perspective. I am co-chairing because as the former governor of Michigan, I know the importance of creating jobs in the clean energy sector and how energy policy can help create jobs in America.

If you asked your neighbors what the two biggest problems facing America are, how would they answer? My guess is they would say two things. The first is jobs, and the second is the price of gas. So Pew has smartly identified policies that will address both of those issues. I joined the campaign because of my experience in Michigan. In 2003, I got a call from the head of Michigan’s Economic Development Corporation—the state’s economic development agency— who said, “We have a major problem. Electrolux has a big refrigerator factory employing 2,700 people in the small town of Greenville that is about to leave Michigan. This little town had 8,000 residents. So, 2,700 people losing their jobs is like a nuclear bomb being dropped on the city.” So we went to Greenville. We asked the mayor to join us. We asked the head of the United Auto Workers, who represents the workers, to join us. We asked all of the community leaders to meet with us to figure out a way to keep Electrolux in Greenville and in Michigan.

We put everything we had on the table. We offered tax incentives. We offered to build them a new factory. We offered huge labor concessions. You name it, we offered it. We put an entire package worth hundreds of millions of dollars on the table. After we put our pile of chips on the table, the Electrolux management took 17 minutes to consider our offer. They acknowledged it was the most generous offer they had ever seen, but here’s the problem, they said. “We can pay workers $1.57 an hour in Mexico, so we’re going to leave.” We said, “What do you mean you’re going to leave? We’ve given you everything we can possibly give.” But they said.

“There’s nothing you can do to combat the fact that we can pay our workers so little in Mexico.”

When the factory was closing and the last refrigerator came off the line the employees had a gathering they called the last supper. I went to that gathering, and there were hundreds and hundreds of families in a big pavilion called Klackle Orchards Pavilion. They were sitting at tables eating box lunches, and as I went into this huge pavilion a line started to form. I didn’t intend to hold a receiving line but the workers wanted to tell me what they were going through. The first guy who came up to me had his two daughters with him and said, “Governor, these are my two daughters. They are 11 and 13, and I’m 48 years old. I went from high school to factory. My father worked here, my grandfather worked here. The only thing I know how to do is make refrigerators.” Then he put his hand on his chest and said, “So, Governor, who is ever going to hire me? Who is ever going to hire me?”

That cry of desperation came not just from him, but has come from hundreds of thousands of workers across America who lost their jobs, lost as a result of globalization. His two daughters looked at me and said, “Governor, what are you going to do?” They wanted to know what I was going to do about the fact their dad didn’t have a job anymore. That is why I’m part of this Pew campaign, because states alone do not have the tools to combat the job losses that we’ve seen as a result of the global shift in manufacturing. But if we have the right policy—if we have the right policy in the best and most-promising sectors—we can and will create jobs in America for fathers like that one and communities across our country like Greenville.

While Greenville has been victimized by enormous job losses, they’re not alone. Greenville is just an example of thousands of other communities.

Since the year 2000, 42,000 factories across America have closed. Just since 2008, over 8 million jobs have been lost. So, what’s the opportunity for a nation like ours to be able to replace those lost jobs and provide opportunity to our citizens? We know that there’s huge growth in population globally and that huge population growth is resulting in a huge consumption of energy. It’s not just the U.S. that is consuming energy; it is the rest of the globe. So what does that mean in terms of opportunity?

We’re seeing economic growth in other countries. You’re going to see a 49 percent increase in economic growth by the year 2035. As a nation, 37 percent of our energy consumption is in transportation and that, of course, leads to the concern people have about the price of gasoline. What can we do as a nation to be able to take advantage of our desire to reduce the price of gas and the fact that we are seeing huge population growth and energy use elsewhere?

Mark Zandi, chief economist at Moody’s [Analytics], has said that there is nothing more threatening to our economic prospects as a nation than higher oil prices and, in turn, higher gas prices. We are seeing political unrest in 2011 as we have never seen it before in countries that don’t have our nation’s best interests at heart. We’ve experienced oil at over $100 per barrel and gas at more than $4 a gallon at the pump. While the numbers have varied, the price of oil and gas is taking a lot of consumer dollars out of the economy. As much as a billion American dollars is being sent outside of this country every single day to pay for our oil and gas consumption.

So, what does this mean for us in terms of the opportunity to create jobs in America? Here is what we know. Clean energy can provide all kinds of jobs for all kinds of people; $2.3 trillion in private-sector investments will be made in clean energy by the year 2020. Experts project that the clean energy sector will create 37 million jobs. The question for us is, where are those jobs going? Where are the places that those jobs will be created? Let me share some information with you.

We’re seeing a 630 percent growth in the clean energy sector since the year 2004. Private- sector investments are being made in clean energy jobs in the G-20 countries. Imagine that kind of growth. We haven’t seen that kind of growth since the advent of the Internet. In fact, John Doerr, a recognized venture capitalist with Kleiner Perkins, has called the clean energy sector the mother of all markets. The competition from other countries is fierce.

Envision an Olympic stand featuring the winners of the gold, silver and bronze medals in the Olympics of private-sector investment in clean energy. Who would you guess is getting the gold and who would you guess is getting the silver? And who is Number 3 in attracting private-sector clean energy investments? Well, China is Number 1, Germany is Number 2, and the United States is Number 3. This wasn’t always the case. In fact, just a couple of years ago, the U.S. was standing on the gold platform. Two years ago China jumped over us, and last year Germany jumped over us. If we fail to adopt national policies that will invite private-sector investment and jobs in America, if we continue to do nothing, we will vanish from the winners’ platform altogether.

Let’s look at where the clean energy private investment is going. Pew has teamed up with Bloomberg New Energy Finance to determine where private-sector investment is in the G-20 countries. In 2010, China attracted $54.4 billion in private-sector investments, Germany attracted $41.2 billion and the United States attracted $34 billion. People often guess that China is ahead of the United States because of wages, but why is Germany ahead of the United States? Clearly, their wage structure is similar to the United States’ wage structure. What’s the difference? The difference is policy.

China, Germany and many other countries have adopted policies that make it profitable for clean energy businesses to locate there, and the United States has no national clean energy policy.

South Korea has made a commitment to invest $12 billion in making the batteries for the electric vehicle by the year 2020. They call it Battery 2020 Project, and you better believe they are going to create a huge number of jobs in South Korea. In Germany, there are now more workers in clean energy than there are in the automotive sector because of policies that make a good business case for those private-sector players to locate in Germany and hire people.

In 2005, China had $2.5 billion in private-sector investment in clean energy. So in a mere six years, China got the amount of private-sector investment that the rest of the world got in 2004. China is completely focused. Chinese President Hu Jintao was asked by President George Bush: What keeps you up at night? President Bush was expecting President Jintao to say something like terrorism, which our president was worried about. But what the Chinese president said was this: “What keeps me up at night is creating 25 million jobs a year for my people.” He went on to identify the clean energy sector as a place where he could create enormous number of jobs for Chinese citizens, and he’s been very successful at it.

One of the things that China has done, for example, is to commit to getting 20 percent of the nation’s energy from clean energy sources by the year 2020. This has given clean energy businesses an entire nation, the biggest in terms of population on the planet, a market for their products, and that has made a huge difference. They have also said that they want to be a leader in producing the lithium ion batteries for the electric vehicle. China has committed to investing $17 billion by the year 2020 in making the batteries for the electric vehicle. Wouldn’t it be a shame to substitute our reliance on foreign oil in the way our cars are driven, for a reliance on foreign batteries? We need to be the place as a nation where these electric vehicles are produced—all of the components, including the batteries.

As the former governor of Michigan, I’ve worked hard to make this possible, which I’ll explain later in my presentation.

China is now producing 50 percent of the world’s wind turbines and solar panels. That was not true even a couple of years ago, but because they created a market and they provide incentives, they have been able to attract huge amounts of investment and employment for their citizens. To illustrate the significance of this, let me tell you a story about Evergreen Solar. Evergreen Solar makes solar panels, and the Commonwealth of Massachusetts went all out in trying to keep them in the Bay State. The state provided incentives, but Evergreen Solar instead decided to go to China because China provided a market for their products. Ian Bowles, the former Massachusetts secretary for energy and environmental affairs, said it best: Our federal government has brought a knife to a gunfight. Its support is completely out of proportion to the support displayed by China and even to that of Europe.

We have brought a knife to a gunfight. That is a quote worth remembering. Because if we’ve brought a knife to a gunfight, we’re going to lose in the battle for jobs, particularly if we stand idly by and continue to be passive in the face of active governments who want to create jobs for their people. It’s important to note that Massachusetts did everything right. They have a state renewable energy standard. They had incentives to make a good business case. But what Massachusetts didn’t have was the ability to provide a national market for the products that were being made by Evergreen Solar. China could provide a national market.

I want to go back to the story of Greenville for just one moment because it’s a “good news/bad news” story. After Electrolux closed, I said, “We have got to replace those jobs.” I saw this clean energy sector as a huge promising opportunity, so we went to a local manufacturer of solar panels in Michigan, Uni-Solar, and persuaded them to locate in Greenville. In fact, they went on to employ a total of about 800 employees in two fantastic, state-of-the-art factories. They were hiring people from Electrolux to work in those factories, which was great for the workers and the community. Uni-Solar wanted to expand further. They applied to the federal government for loan guarantees, and they continued to ask the federal government to create a national market for their products, and yet we’ve done nothing. So in May of 2011, Uni-Solar closed one of their factories and moved to Ontario because Ontario has adopted clean energy policies that are helping to create a market for Uni-Solar’s products. A good news/bad news story because Electrolux left, Uni-Solar came, but half of Uni-Solar left, and many workers in Greenville are still without jobs. We’ve got to have consistent national policy.

Policy matters. In fact, the states that are adopting policies are doing a great job of trying to combat the competition from Korea and elsewhere and are having some success. Let me give you one example of what we did in Michigan. In 2008, Michigan adopted a modest renewable energy standard, saying that we were going to get 10 percent of our energy as a state from renewable sources by the year 2015. We adopted incentives to attract clean energy job providers and as you can see, there are now 258 clean energy businesses in Michigan, some $9.4 billion is being invested in our state by clean energy businesses, and almost 90,000 jobs are projected to be created as a result. Included in those numbers is the electric vehicle battery. Michigan is the home of Car 1.0 and we wanted to be the home of Car 2.0, which is the electric vehicle. We went after the whole supply chain for the electric vehicle. We asked state lawmakers for incentives, and we sought out companies involved in building the battery cells, the anode and the cathode, the separator material, and the electrolyte. As a result, there is a whole cluster—an entire supply chain is now in Michigan.

In about 18 months, we were able to attract 17 companies, all of whom are building the components of that electric vehicle with the promise of creating 63,000 jobs, which was a tremendous boost for Michigan. But unless we have national energy policy that makes a commitment to a clean energy future, including in transportation, we are going to lose that opportunity, too. This is why there is a sense of urgency to this moment. We need to fight back. You, me, your neighbors—we need to demand a national jobs policy. Through four pragmatic national clean energy policies identified in the Pew Clean Energy Campaign, we can create solutions that will result in 3 million new jobs.

These four solutions will help to stoke the job creation we so desperately need in America. Here they are.

First, create more electric and fuel-efficient cars. I’m pleased to say that in 2011, there was an agreement with the Obama administration and the CEOs of the auto industry to get our cars to be able to go 54½ miles per gallon by the year 2025. That’s a hugely important step in reducing our reliance on foreign oil. We’ve got to continue pushing for more electric vehicles, and that means building out the infrastructure for the electric vehicle, making it easy for people to charge their electric vehicle, and helping to bring down the initial cost of the electric vehicle. Electric vehicles initially have been expensive because that battery I talked about earlier is expensive, it’s new technology, but it’s going to be like your computer. Compare our experience decades ago, when computers took up entire rooms and were outrageously expensive, to today, when you can pull one out of your pocket that has huge capacity and is almost disposable it’s so inexpensive.

The battery for the electric vehicle is going to come down in price, increase in efficiency and be very affordable. It will be on par with the internal combustion engine sometime between 2015 and 2020. Once that happens, the industry will take off, but until that happens we need to build out the infrastructure and jump-start the industry by providing consumers with tax credits to help offset the initial cost. If we don’t do that, if we don’t jump-start that industry here in the U.S., we will continue to be reliant on other countries for our energy independence, whether it’s batteries or oil, and that is not a good future for America. And, by the way, we will lose the opportunity to create jobs as well.

A second policy Pew has identified that will help create demand for clean energy products in the U.S. is a national renewable energy standard or a clean energy standard. If we got 20 percent of our energy as a nation from renewable sources by the year 2025 and if, as the president has asked, 80 percent of our energy came from clean sources by the year 2035, we would be sending a signal to job providers. We would be telling them that the U.S. is serious about creating a market for their products and, therefore, they should manufacture their products here, sell them here, and here export them to other countries.

Right now, there’s no market, and we are losing this opportunity every day. When these job providers make the decision to move a factory to China, it’s very difficult to bring that factory back to the U.S. because all of the investment has been made. And, once the factory goes to China the research and development is likely to follow. So we are going to lose the intellectual ability to compete for these jobs, along with the research, the design, the development once the manufacturing goes. The clock is ticking. And by the way, it doesn’t cost one dime out of the federal Treasury to create a renewable energy standard—not one dime.

The third policy Pew has identified that will help to create jobs is to make the industrial and commercial sector more energy efficient. Do you know that there is so much waste heat coming from factories across the country that if you just captured it you could power the entire nation of Japan for a year. We would like for there to be an easy opportunity for factories to install the equipment that allows them to capture the waste heat from industrial processes, capture that heat, put it into the system, and use it to power the plant. That’s called combined heat and power. That technology is not new, but it is a bit expensive. We want it to be accessible to factories of all sizes in the U.S.

As a nation we can make sure that we capture that heat waste and use it to make the commercial and industrial sector more efficient. There are bills that have been introduced that

expand a tax credit for factories, for businesses to be able to install this equipment and also lift the size of that tax credit so that it really makes it significant for them to make the decision to do that. We are encouraging Congress to pass those bills.

And the fourth policy Pew is advocating for is more investment in R&D related to clean energy. Currently, the federal government spends only $3.8 billion invested in clean energy R&D. Compare that to the amount of federal investment in health care, the past investment in defense, and the investment in going to the moon. Clean energy is our new moon shot. If we don’t invest as a nation, the private sector is not going to step up on its own. We need to create public/private partnerships and co-invest with the private sector to make sure we commercialize R&D related to the solutions to make us energy independent, that bring down the cost of gas at the pump, and create jobs.

You might ask, what’s the problem. Why can’t we get Congress to act on clean energy policies? We asked ourselves that same question, so we polled Americans on whether they favor or oppose energy proposals that will increase energy efficiency and increase the use of renewable and alternative sources. Our respected bipartisan team of pollsters asked Democrats, Republicans and independents who are average citizens, and here’s what they told us:

Eighty-four percent favor a policy that increases energy efficiency and renewable energy. Among Republicans, 75 percent favor those policies, and among Democrats, 93 percent favor those policies. Eighty-two percent of independents favor policies to increase energy efficiency and renewable and alternative sources of energy as do 63 percent of Americans who identify with the tea party. Clearly this is not a dangerous thing for members of Congress to support. Americans support it. They want jobs, and they want energy independence.

Our nation needs to act. We need to make our voices heard. You need to make your voice heard. Every president since John F. Kennedy has called for a national renewable energy policy, and we still haven’t gotten one yet. The people of America hire their elected representatives in Washington. They are our employees, they work for us. They should hear your voice, and they should fear your actions. You need to let them know that this is important for our country, that having a national energy policy must be a part of how we get this economy back on track, of how we compete against other nations, of how we bring down the price of gas and our reliance on foreign oil.

The challenge is not too big. We have done this in the past. John F. Kennedy, in giving a graduation speech, once said this: “We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.”

We are not defeated, we can help move our nation toward a clean energy economy, but only if your voice is heard.

Thank you.