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Economy in Shambles, Midwest Goes Green

Michigan, its neighbors deploying clean-energy policies to spark job growth

August 24, 2009 | By Keith Schneider
Great Lakes Bulletin News Service

United Solar Ovonic
  United Solar Ovonic of Troy, Mich., is a leading manufacturer of thin solar panels, and will soon have 1.25 million square feet of manufacturing space in the state.
On the same day in late June that the U.S. House of Representatives narrowly approved legislation to curb greenhouse gases and invest billions in developing wind and solar energy, Mariah Power displayed one of its distinctive vertical-axis wind turbines at the Michigan Energy Fair in Onekama, Mich.

Four years ago, when the Great Lakes Renewable Energy Association began hosting its annual fair in this tiny Lake Michigan town, most residents of Manistee County thought little of climate change, clean energy, or wind turbines.

This year, however, the Michigan Energy Fair attracted 5,000 visitors over three days. And today Manistee County is home to Mariah, which builds its Windspire turbines in a plant that employs more than 40 people.

Mariah, which exports most of its small turbines to Europe, where energy prices are very high, is the first new manufacturing company in Manistee County in a generation. It also is one of the more than 30 clean-energy manufacturers—spanning wind, solar, geothermal, energy conservation, and efficiency—that have established new production facilities in Michigan in the last 21 months, generating more than 3,000 new jobs.

That job growth, in many instances the result of aggressive sales efforts by Michigan Governor Jennifer Granholm’s administration and some green-leaning businesspeople, is changing the thinking of some Michigan lawmakers. It took state legislators almost two years to pass last year’s relatively mild renewable energy and efficiency mandates; now a newly formed campaign backed by more than 20 state House Democrats and 39 citizen groups is calling for prompt action to build on that legislation.

Their campaign, called ReEnergize Michigan, is pushing bills that, observers say, have aggressive goals, a comprehensive approach, and big jobs-building potential. ReEnergize Michigan wants utilities to make 30 percent of their electricity from renewable sources by 2025 and help their customers cut overall energy use by two percent a year. The campaign also wants to tighten Michigan’s lax building efficiency codes, and establish pioneering “feed-in tariffs” that set profitable electric rates for homeowners or businesspeople who feed power from their own solar panels and wind turbines into their utility’s grid.

Many clean-energy advocates say that the ReEnergize Michigan package, paired with regulatory changes brewing inside the Michigan Public Service Commission that would strongly encourage energy efficiency, could catapult Michigan to the front of the national race to lead the country’s rapidly spreading green-energy manufacturing revolution.

But even as similar green-jobs momentum shows up all around the Midwest, and the U.S. House votes demonstrate the growing political muscle of green manufacturers, observers point out that the states in the region, including Michigan, have a lot of catching up to do.

Wanted: A Pioneering Mindset
“We have constructed our businesses, our mindset, and ourselves around an old concept of how the world works,” explained Soji Adelaja, an agricultural economist and director of the Land Policy Institute at Michigan State University. “But the old economy is dead. We have all the tools we need in this state to build the new economy in clean energy. The question is whether we will take this opportunity, and whether we get there before other states and other countries.”

No region of the United States better understands what can be gained by pioneering new markets—and what can be lost when business fails to adapt when those markets change. After all, factories in Michigan, Ohio, and other Midwestern states allowed people with or without high school educations to keep new cars in the driveway and comfortable second homes on lakes and rivers.

But that dream is now lost in closed factories, bankrupt companies, and desperate neighborhoods—urban and rural—scattered across the industrial Midwest. Median incomes are near the lowest in the country. Michigan’s jobless rate, 15.2 percent in August, has been the nation’s highest for two straight years. Ohio has lost 500,000 jobs since 2000, more than half in manufacturing.

And, crucially, Ohio and Michigan lead the nation in the number of educated young people leaving—some of them to build the new clean energy economies of other states.

Colorado and Iowa, for example, have attracted large investments, foreign and domestic, to build factories for new solar photovoltaic and wind generating equipment. Oregon is encouraging manufacturers of equipment to generate power from ocean waves. California’s clean-energy industry, by far the nation’s largest, counts more than 10,000 businesses and 125,000 jobs, according to a recent Pew Charitable Trusts report.

But in the last few years, largely guided by the region’s Republican and Democratic governors, the Midwestern states each developed new economic strategies. Between 2006 and 2008, all of the Upper Great Lakes states except Indiana started requiring utilities to generate power from renewable sources.

Ohio and Michigan produced new multi-billion dollar bond programs to encourage entrepreneurs and help existing manufacturers retool to produce equipment to meet the renewable standards and build clean vehicles, energy-efficient appliances, and other durable clean-energy goods.

Wisconsin and Illinois focused on leveraging their agriculture industries to produce clean bio-fuels. Many Midwestern states are supporting community colleges’ green-collar job training and encouraging universities to collaborate on clean-energy projects.

These strategies leverage the Midwest’s competitive strengths—the world’s greatest collection of major research universities; the world’s largest freshwater resource; a strong base of high-tech manufacturing facilities; a culture of industrial innovation and entrepreneurship; and millions of people trained to make things.

A Green Gold Rush
So the Midwest is now embracing the renewable energy economy, and a nice cross-section of those alternative technologies was on display at the Michigan Energy Fair. Wind turbines, several manufactured in the state, whirled in a steady Lake Michigan wind. Beneath baby blue skies, Michigan-made solar photovoltaic panels made voltage meter needles dance. People test-drove new electric vehicles, including Ford’s 2010 Fusion Hybrid.

And, inside long wooden buildings that usually showcase farm implements and prize heifers, new entrepreneurial clean-energy companies displayed Michigan-made tools, appliances, and materials to supply the clean-energy market.

The industrial activity is reflected in state labor statistics. A study issued in May by the Michigan Department of Energy, Labor, and Economic Growth found that 109,000 residents—3 percent of the state workforce—work in green industries and earn more than the average state salary of $42,000. The survey confirmed that clean-energy manufacturing jobs were the fastest-growing part of that sector.

Other Midwestern states are experiencing similar gains. Toledo, Ohio anchors a new solar photovoltaic manufacturing sector and employs 6,000 people, according to the Regional Growth Partnership, an economic development agency. Akron is a center of fuel cell development. In Cleveland, Case Western Reserve University and Cleveland State University are sponsoring new wind and battery technology startups.

In March, Willard & Kelsey Solar Group LLC, Toledo’s newest solar energy manufacturer, invited Ohio Governor Ted Strickland to tour its new Perrysburg plant. The company plans to produce 2 million solar panels annually, assisted by a $5 million state economic development loan and a $500,000 grant.

In Michigan, one maker of lithium ion batteries, A123 Systems, won a $249 million Department of Energy grant last month to help build a $2 billion plant near Detroit that could employ 14,000 people. Hemlock Semiconductor, which manufactures polycrystalline silicon for solar panel companies, is constructing a $1 billion factory near Midland that will employ 600 people. In late June, General Electric announced plans for a $100 million wind energy research and technical center in Michigan that will employ 1,100 people.

Washington’s Help
When the Obama Administration’s American Recovery and Reinvestment Act appropriated approximately $100 billion for clean energy development and employment training, in hopes of creating several million new jobs, Midwestern states were determined to get their share.

Almost every Democratic representative in the upper Great Lakes region voted for the House carbon cap-and-trade bill that passed in June. Two of the eight Republican lawmakers who supported the bill were from states bordering the Great Lakes.

Not everyone thinks embracing a green economy will save the Midwest’s many economically depressed states.

“Relying on more such government handouts and mandates will inevitably raise energy prices—and high power prices are job killers,” Max Schulz, a researcher at Manhattan Institute—a free-market think tank—wrote earlier this year. “Industries that make physical products, whether cars or chemicals or paper cups, are energy-intensive and will gravitate to low-energy-cost locales.

“Keep in mind, too,” Mr. Schulz added, “that the traditional industries currently supplying Americans with reliable, affordable energy already employ millions of workers. A radical plan to transform our energy economy in favor of renewable energy technologies would put many of those people out of work.”

But the researcher is in the minority; many business people and politicians say that the transition to a green energy economy is helping lots of people.

Skip Pruss, director of the Michigan Department of Energy, Labor, and Economic Growth, said that clean energy is the only industrial sector producing new jobs in a state that since 2000 has lost 800,000 jobs, half of them in high-paying manufacturing.

His boss, Governor Granholm, set a goal in February to produce 45 percent of the state’s power from renewable sources by 2020 to accelerate the transition.

“I want those who would be resisting this change to realize that this is a job creator,” Governor Granholm said this spring. “If you change policy the right way, you create a demand for jobs in this renewable energy and energy efficiency area. Those construction workers can be put to work building wind turbines, or building the factories for wind turbines, or installing those turbines, or attaching the turbines to a smart electric grid.”

Said Mr. Pruss: “We’re at the start of a new era of industrialization.”

Germany, he point out, now generates almost 15 percent of its energy from wind, sun, geothermal, and biomass fuel sources. The German government says that next year the country will have more people working in the clean-energy sector than in auto manufacturing.

“And this is in the country,” notes Mr. Pruss, “that is home to Porsche, Volkswagen, Audi, and Mercedes.”

A version of this article was originally published by Yale Environment 360 on July 16, 2009. Keith Schneider, who founded the Michigan Land Use Institute, currently directs communications for the U.S. Climate Action Network. Reach him at keith@mlui.org.

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