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Wednesday, February 2, 2011

Stimulus money will not drive local employment (published in May of 2009 in the SB News Press)

On February 17, 2009, President Obama signed the $787 billion stimulus bill (The American Recovery and Reinvestment Act) into law; one of the largest rescue packages since Roosevelt’s New Deal.  Backers of the stimulus predict that it will save or create 3.5 million jobs.  The President spoke to a group of 250 business people and community leaders when he signed the bill into law, emphasizing his support for clean and sustainable energy alternatives.  But, will any of this money really help us locally?  More specifically, will the stimulus create jobs, especially clean or sustainable energy jobs, locally?

In this article, I sift-through the itemized spending initiatives in the stimulus to identify where money will be spent relating to alternative energy, in an effort to pinpoint the potential benefit (if any) for our local community. 
So far, only about $37 billion of the total $102.9 billion made available through the stimulus has been paid-out.  Of the $102.9 billion allocated, about $13.5 billion is available for California.  Of that $13.5 billion, almost half (about $6 billion) will go into the state “Fiscal Stabilization Fund”, meaning it will be swallowed by our crushing budget deficit.  (All data was sourced from 

I only see two categories of allocated funds from the stimulus for California, which could contain money directly earmarked for clean energy, and that could create new jobs in clean energy, either in California, or our local community.  So far, $1.73 million (yes million, not billion) has been allocated for the “State Clean Diesel Program,” and $226 million for the “State Energy Program.”  Those two programs amount to about $228 million out of $13.5 billion allocated to California, or about 1.7 percent.  Not very impressive is it?

Candidly, clean Diesel isn’t really clean energy, and I’m not clear as to what the “State Energy Program” really is either.  One thing I can say, based on these minuscule numbers, is that, at least in the case of California, we are not going to see any real job growth from the stimulus, in California or in Santa Barbara, relating directly to clean energy, unless something changes drastically with the allocation of stimulus funds.

I went-through the entire stimulus package and pulled-out anything that remotely seemed to apply to clean or alternative energy initiatives and that could create jobs. 

As you can see, the total, including both spending and tax-credits, is about $30 billion, or a little less than four percent of the total stimulus.  Keep in mind also that the stimulus will be spread over several years, and that even after the money has been allocated, it takes a long time for that money to weave its way through state and local government bureaucracies. 

While $30 billion sounds like a lot of money, if you divide that number by fifty states, it amounts to about $600 million (2 percent), on average per state.  California will likely get more than the average, since our population is larger, and received about 13 percent of the total $102.9 billion allocated so far.  If we use that 13 percent as our estimate of the total we will get out of the $30 billion, it amounts to $3.9 billion, or about one half of one percent of the total stimulus package that might be directed towards clean or sustainable energy initiatives.

Hopefully the numbers have not made your eyes cross.  The point of all of this is that, even being generous with the inclusion of programs that are not technically clean or renewable energy related, the total amount of money in the stimulus that could potentially go towards creating new jobs in clean and sustainable energy is insignificant to put it mildly. 

Mark Schniepp, PhD, Director of the California Economic Forecast and former Director of the Economic Forecast Project at the University of California, Santa Barbara, between 1982 and 2000, when discussing the stimulus package states, “This is spending, not stimulus, and with the exception of a few pet projects, like bridges that have needed to be rebuilt for twenty years that are finally getting some attention, the stimulus is going to have little meaningful impact on the economy this year.” 

He goes on to explain that the process for companies to apply for any funding from the stimulus is, “… an onerous, tedious, cumbersome process, that takes forever to complete, and no one seems to fully understand what to do and how to complete it.” 

Schniepp says that even for organizations like his, trying to get any information about the monies being allocated, spent, or the process of applying for it, is “… a smokescreen and nearly impossible to effectively navigate.” 

I tried to contact the California Energy Commission—the agency that is in charge of disbursing the stimulus money allocated to California for clean energy—but the only connection I could make was with an automated voicemail system, and my messages were not returned.  I saw nothing on their website, or any related sites, that specifies how our tax dollars are being used to support clean and renewable energy initiatives. 

One can only hope that companies pursuing stimulus money earmarked for clean and renewable energy will be successful in their quest to garner at least a tiny slice of the stimulus pie.  However, I for one cannot help feeling disappointed (and a little angry), about the lack of serious funding that we have been promised through the stimulus, and that we clearly need to make any of the alternative energy options economically viable. 

What is happening today is exactly what happened back in the 1970’s when the Arab Oil Embargo caused oil prices to spike, resulting in long gas lines and giant price increases in the United States, just as we had last summer.  Back then, lots of alternative energy companies were started, (just like today), with the expectation that the government would support them, and that Americans would buy their products, even if those products cost a bit more than oil-based fuels.  They were wrong then, and I am sorry to say that it looks like those pursuing alternatives today may suffer the same fate. 

At the end of the day, we the people must decide if we want alternative energy sources.  If we do, we must to be willing to support the development of these technologies, even if they cost more—a lot more—than petroleum-based fuels.  Ultimately, if alternative energy companies are to survive, and prosper, it will be because they create economically viable products that capture a significant share of the energy market.  Only time will tell, but we as consumers need to support these technologies, and these companies, if we want to (eventually) stop using oil.

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