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The Clean Economy is a Manufacturing Economy

Posted By Jeff Moad, July 26, 2011 at 12:09 PM, in Category: Sustainability

A large proportion of clean economy activity and jobs in the US are directly tied to manufacturing. And that activity and those jobs generate lots of economic benefits in the form of high worker salaries and exports. But the continued growth of clean economy-related manufacturing is threatened by several factors including inadequate access to low-cost end-user financing, spotty public sector clean procurement practices, and complacent public utilities.

These are some of the findings contained in a recently breakthrough study published by the Brookings Institution in collaboration with Batelle's Technology Partnership Practice.

The report recommends a series of government and private industry steps that, it says, could stimulate the growth of the clean economy--and the manufacturing of clean products--including state-sponsored revolving loan funds, stablizing investment tax and production tax credits, investing in energy innovation hubs, local support for clean manufacturing clusters, and creation of a carbon pricing system.

The study used existing relevant SIC codes plus information from a variety of sources such as industry associations and patent lists to identify all companies in the US that could be considered part of the clean economy. The report defined the clean economy as "economic activity--measured in terms of the establishments and the jobs associated with them--that produces goods and services with an environmental benefit or adds value to such products using skills or technologies that are uniquely applied to those products."

The study found that the clean economy in 2010 accounted for 2.7 million jobs in 41,185 companies in the US. While that number represents just 2% of jobs in the US, the number of clean economy jobs is already larger than the number of jobs in the fossil fuels and the bio-sciences industries.

The clean economy added about 500,000 jobs between 2003 and 2010, growing at an annual rate of 3.4%, the study found.

Twenty-six percent of those clean economy jobs, the study said, are manufacturing jobs compared to just 9% for the economy as a whole. Clean manufacturing in the US added 35,832 jobs between 2003 and 2010. During the same period, manufacturing as a whole laid off 3.3 million workers.

And those clean economy manufacturing jobs tend to generate positive economic impact. While the average US employee earns a wage of $33,190, those in the clean economy earn on average $44,000. And Brookings estimated that $20,129 worth of exports is generated for every clean economy job compared to $10,390 for the average job in the US.

But the report warns, growth of clean economy activity and jobs is threatened by a number of factors. Besides those factors mentioned above, the report notes that, in 2010, China generated $47 billion in financing for clean energy assets, while US private financing totaled just $21 billion.

The report recommends several public policy changes that it says could improve the clean economy's outlook. Among them is more local support for the development of clean economy clusters, collections of clean economy companies pursuing similar businesses that can support each other. Companies operating in such clusters tend to outperform other clean economy companies, the report found. Such clusters already exist in places such as Los Angeles, Silicon Valley, and San Francisco.

The report concludes: "Vigorous private sector-led growth needs to be co-promoted through complementary engagements by all levels of the nation’s federal system to ensurethe existence of well-structured markets, a favorable investment climate, and a rich stock of cutting-edge technology—as well as strong regional cast to all efforts."

Do you think that so-called clean manufacturing has the potential to significantly grow manufacturing jobs and economic activity in the US? Are private industry and governments doing enough to support clean manufacturing enterprises? What more should be done?

Category: Sustainability
Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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