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States Mandating Clean Energy Cash In on Green Economy

As Lansing hesitates, Michigan misses out

June 13, 2008 | By Keith Schneider
Great Lakes Bulletin News Service


North America has plenty of wind, and 26 states are using “renewable portfolio standards” to build new, sustainable-energy economies.
Click here for map
One of the most noticeable features on Newton, Iowa’s Web site is a map of the Newton Union Cemetery. For a time over the last two years, the map seemed a fitting metaphor for the town of 16,000, near Des Moines.

After all, the Whirlpool Corporation had purchased and then closed the Maytag Corporation's offices and plants in Newton, ending a century-old legacy of washing machine manufacturing and putting 1,800 people out of work. Newton stood at the edge of its own economic grave, one more Midwest town unable to move from the hard-muscle industrial 20th century to the energy-efficient, high-tech 21st.

Newton’s agony, fortunately, did not last long. First came TPI Composites, of Warren, Rhode Island, which is building a 316,000-square-foot, $56 million factory there to make blades for General Electric Energy’s wind turbines, the most popular in the world. The company promises to develop 500 jobs by 2010.

Then in April, Trinity Structural Towers, a unit of Dallas-based Trinity Industries, announced it would invest $21 million to transform a portion of Maytag’s 1949 factory building to produce wind turbine towers for the Midwest’s surging wind industry. The company is recruiting 140 workers for the new plant at the city’s northern edge. Construction is underway; the first towers will be shipped early next year.

"These are exciting times in the wind industry, and we are very pleased to expand our operations in Newton," said Mark W. Stiles, Trinity Industries senior vice president, on the day the announcement was made. "Our new location in Iowa puts our company in the perfect position to serve a market with outstanding growth potential."

Just when that kind of excitement will arrive in wind-rich Michigan, which has the country’s highest unemployment rate, is unknown.

In April, after a five-month campaign led by renewable energy advocates, the Michigan House of Representatives enacted standards requiring utilities to obtain more of their electricity from renewable sources—something Iowa began doing 25 years ago. But the House bills are attracting strong criticism. For example, in a letter to Governor Granholm, the American Wind Energy Association and seven renewable energy companies looking to do business in Michigan said that the House bill "cannot be called a renewable energy standard, and the public should not expect economic benefits."

AWEA, a non-profit industry group, and the seven companies added that the House legislation is so poorly concocted that, if enacted, it would lead to "lost investment opportunities in the state of at least $2 billion" by killing the wind power projects the companies would like to build in Michigan.

Late yesterday, a Senate committee approved several changes to the House package that wind advocates said were "significant," and moved it to the Senate floor for debate.

Wind Wealth Around the Nation
In Newton, Iowa’s renewable portfolio standards, or RPS, are helping change a familiar tale of Midwest ruin into one about a small city working with a nimble state government; anticipating new trends in the clean-energy sector, capital markets, and manufacturing technology; and setting a new path to prosperity. Similar standards, and other pro-green policies, are behind other, similar stories in rural towns across America.

In upstate New York, for example, Noble Environmental Power, a four-year-old Connecticut company, is building a 600-turbine, $3 billion wind farm that will generate more than 1,000 megawatts of electricity, according to the company.

This spring, Noble began generating power from its first project—188 windmills in three New York communities, capable of generating 282 megawatts of electricity, enough power for 100,000 homes The $564 million project, which will eliminate 590,000 tons of greenhouse gas emissions annually, was financed by GE Energy Financial Services, one of the biggest investors in wind power nationally and globally.

Edward Rendell, the Democratic Governor of Pennsylvania, announced in March that the alternative and renewable energy sectors invested $1 billion and created 3,500 new, good-paying, skilled jobs. He added that his state’s unemployment rate has been below the national average in each of the last 13 months.

And T. Boone Pickens, the Texas oil billionaire, recently announced his plan to spend $10 billion on 2,500 windmills powering a 150,000-acre wind farm in the Texas Panhandle.

Windy Michigan Missing Out
But the move to leverage wind, capital, and public policy is not being duplicated to anywhere near the same extent in Michigan. According to lawmakers, wind energy developers, and economic development specialists in and outside the state, Michigan has been very slow to recognize the same market opportunities. So the state is steadily falling behind in the race for the tens of billions of clean energy investment dollars, and the hundreds of thousands of family-supporting jobs that the clean energy economy is starting to produce nationwide.

To some extent, Iowa and Michigan have similar capacities to develop a new economic strategy around clean energy assets. Both have strong agricultural sectors. Both have skilled manufacturing work forces, strong university systems, strategic locations in the middle of the country, and traditions of industrial innovation. And, like Iowa, Michigan is a windy state.

But between the two states, only Iowa has begun to gain from the opportunity. In 1983, the state enacted its alternative energy law to require utilities to generate a small portion of their power from clean energy sources. Twenty-five other states have since enacted renewable energy statutes, but Michigan is not one of them.

Wind Equipment Companies Settle in Iowa
It took almost a decade for Iowa’s pioneering RPS law to begin affecting the state’s energy mix and economy.

In 1992, Minnesota Power built Iowa’s first commercial wind turbine—a tiny, .25 megawatt machine in Spirit Lake, according to AWEA. In the 16 years since, Iowa has built the nation’s third-largest wind generating sector, capable of producing 1,300 megawatts, behind only Texas and California. Iowa also has one of the largest wind turbine and parts manufacturing industries. More than 1,800 new industrial jobs are already tied to the wind industry in Iowa, according to the state Department of Economic Development, and hundreds more jobs are on the way.

Acciona Windpower, a unit of the Spanish renewable energy company, built a $27 million, 200,000 square foot wind turbine plant in West Branch, Iowa last year that employs 110 people. The network of suppliers in the United States for the plant, which produces 250 turbines annually, will employ another 1,300 people, said Acciona executives.

Siemens Power Generation opened a wind turbine blade manufacturing plant in Fort Madison, Iowa in 2007 and earlier this year said it would spend $33 million more to enlarge the plant, which will soon employ 533 people earning an average of $17.14 an hour, according to company executives.

Other big names in the wind energy production industry that have settled in Iowa are Clipper Wind Power in Cedar Rapids, and Hendrick Industries in Koekuk. As of November 2007, 9.5 percent of Iowa’s electricity was produced from renewable sources.

Governor Chet Culver, in an address to the Legislature earlier this year, encouraged lawmakers to adopt a new renewable portfolio standard in Iowa, setting a goal to generate 25 percent of Iowa's electricity from renewable sources by the year 2025.

"As governor, my goal is to take full advantage of Iowa’s natural resources, along with our incredible manufacturing base and work force, to make Iowa the renewable energy capital of the nation," said Governor Culver, a Democrat, in a statement in April.

Whether Iowa can achieve that goal is far from clear, but the geography and opportunity of the clean energy sector is vast, according to market analysts. The United States is now the largest market in the world for wind turbines.

Big Money Moving Into the Sector
Big money is moving into the renewable energy sector. Along with GE Financial Services, which announced in 2007 that it would invest $4 billion in renewable energy by 2010, in the United States and overseas, other players include Citigroup, Goldman Sachs, and JPMorgan Chase.

Clean Edge, a data research firm, New Energy Finance, and Nth Power jointly issued a study earlier this year that found the clean energy sector is one of the premier growth industries in the United States and globally. Among the other findings in that report and several others:

    1. Venture capitalists invested $625 million in the first quarter of 2008 in "clean tech"— alternative energy, pollution control equipment, recycling, and conservation—according to PricewaterhouseCoopers and the National Venture Capital Association. That is fourth in total venture capital investment during the period, behind life sciences ($2.3 billion), biotech ($1.27 billion), and software ($1.26 billion).
    2. Revenue worldwide for production of solar photovoltaics, wind, biofuel, and fuel cells in 2007 was $77.3 billion, up from $55 billion in 2006, or a 40 percent increase.
    3. Revenues for biofuel sales worldwide are projected to reach $81.1 billion by 2017, $83.4 billion for wind by 2017, and $74 billion for solar photovoltaics by 2017. That adds up to $238 billion by 2017, or triple the value of the market in 2007.

The United States is the largest wind energy market in the world now, according to the American Wind Energy Association.

Newton is perched along the welcoming banks of this surging river of clean energy wealth. With the arrival of TPI and Trinity Industries, the town is accumulating a critical mass of suppliers that is likely to encourage more wind companies to settle there.

"As the wind industry continues to grow, we face an ever-increasing demand for reliable and efficient wind turbines," said Victor Abate, vice president-renewables for GE Energy, TPI’s main customer.

And though wages for production jobs at the TPI plant –$12.25 to $13.40 per hour, plus benefits—are lower than the former $19 an hour jobs at Whirlpool, residents and city officials said they were pleased to recruit TPI and Trinity to their town.

Trinity, in fact, is a Wall Street darling: Its stock price has climbed 40 percent this year, in part because of the expanding market for its wind turbine towers. Trinity has a $1.6 billion backlog of orders for the towers it will make in Newton, up from a $200 million backlog last year, according to its first quarter 2008 financial earnings report.

And that map of the cemetery on the Newton Web site? It’s again seen as helpful for burying people, and no longer a symbol for interring an entire town.

Keith Schneider, a nationally known writer and producer, is the director of communications at the Apollo Alliance, a national coalition of labor, green, and business groups, based in San Francisco, that advocates new policies to advance the clean energy economy. Keith founded the Michigan Land Use Institute in 1995 and served as executive director and in other senior positions until September 2007. Reach him at keith@mlui.org, and read his blog, Mode Shift.

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