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Carbon Tax

Less Carbon Pollution = More Manufacturing (Report)

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This article was originally published on the indispensable blog Climate Progress.
By Jeff Spross

green economy manufacturing carbon emissions

Image Credit: Industrial workers via Shutterstock

If you listened just to GOP talking points, you’d think efforts to cut carbon emissions and efforts to revitalize the United States’ manufacturing sector are locked in perpetual, mutually exclusive combat. But a new report by the Center for American Progress (CAP) suggests this antagonism is not inevitable — we can, in fact, combat global warming and boost manufacturing at the same time, providing jobs to working class Americans.

First off, the paper notes several hopeful signs: US labor productivity is going up, rising wages in other countries such as China are making foreign labor more expensive and thus less attractive to firms, and trends in business and supply chains are beginning to favor manufacturing sites that are in close physical proximity to research and development sites — and the US still has plenty of the latter. Manufacturing also has a high multiplier effect; an economic term meaning every dollar spent on manufacturing encourages $1.35 in activity elsewhere in the economy. Similarly, every job created in manufacturing indirectly helps to create anywhere from 5 to 10 other jobs depending on the sector.

But CAP also notes that not all manufacturing is created equal. Trying to bring the garment industry back to American soil, for instance, is probably a lost cause. And the report allows that even some aspects of solar panel manufacturing may be lost as well. The manufacturing that meshes well with the needs of the American economy, CAP concludes, is clean energy manufacturing that is innovative or has a strong US market, or both. To that end the report proposes three main moves Congress should take to strike that balance:

  • Authorize $2 billion for the National Network for Manufacturing Innovation, and focus more of its hubs on clean energy. Three hubs in the network — proposed in Obama’s 2013 State of the Union speech — are already in development, and the president has proposed creating 15 more. But funding for them remains in limbo, and current plans devote only one of the hubs to the pursuit of clean energy manufacturing.
  • Reauthorize the advanced manufacturing tax credit. The 2009 stimulus bill originally introduced the 30 percent investment tax credit, which goes to companies with qualifying clean energy products and business plans. The first round provided a total of $2.3 billion to 183 domestic recipients, and the second round – which just closed in April — provided an additional $150 million. The report suggests another 5 to 10 year extension, with a laid out end path, and $5 billion in additional funds.
  • Pass a progressive carbon tax. Because the market prices of carbon-based energy don’t currently account for the damage global warming and climate change will do, America is effectively subsidizing fossil fuels to the tune of $502 billion a year — far more than any other country. That doesn’t just mean we overuse fossil fuels, that means the entire infrastructure of our economy is unfairly tilted away from clean energy and related manufacturing. CAP previously put forward a more detailed proposal on just how a progressive carbon tax would work.

As the report notes, the 2009 stimulus successfully created a huge new domestic market for renewable technology. While our overall 2011 trade balance with China — a country to which we’ve lost 2.8 million manufacturing jobs in the last decade — was in deficit by $301.6 billion, we enjoyed a $1.63 billion trade surplus with China in renewable energy goods and services specifically. Globally, clean energy investments cleared $269 billion in 2012, meaning there’s a massive worldwide market waiting to be met with American exports.

Finally, the clean energy economy is unusually friendly to manufacturing jobs. CAP’s report notes that 26 percent of all clean energy jobs fall into the manufacturing sector, and tend to come with wages 13 percent higher than the US median. Another study of clean energy jobs by the Economic Policy Institute found that they are, on average, more accessible to workers without a college education, and that states with higher levels of green economic activity weathered the 2008 crash better than those that did not. Tying those points together, research in 2009 found that technologies such as clean energy and energy efficiency are more labor intensive than traditional fossil fuel technologies, meaning they generate more jobs per every unit of energy produced.

Contrary to popular perception, we can in fact cut down America’s carbon emissions and boost the manufacturing sector — providing a robust job market for the working class in the process — at the same time.

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