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Clean Energy 1.0Moving beyond green to create sustainablejobs and a long-term energy strategy

Deloitte Center or Energy Solutions

By Joseph A. Stanislaw


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Contents

Green energy: rom superhero to plain hero 1

Jobs: the beginning o the clean energy evolution 8

A clean, ecient sweep: priorities or policymakers 12

The energy jobs o the uture 15

Energy: a state o mind 20

About the author 21


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Clean Energy 1.0 Moving beyond green to create sustainable jobs and a long-term energy strategy 1

Green energy: rom superhero to plain hero

Source: The JAStanislaw Group LLC, 2010

Firstback when oil was levitating towards $100 a barrel and Russia was playing politics with pipelinesgreen energy

was the holy grail o energy security. Then, when concern over climate change reached ever pitch, it became the silver

bullet to solve global warming. And when the Great Recession struck, it was the panacea or unemployment and alling

wages.

Green energy, it would seem, has been everything to all people. Faced with seemingly insurmountable challenges, the

human instinct, understandably, is to grasp or easy salvation. This is also true o our elected policymakerswhat better,

ater all, than a sovereignty-boosting, air-puriying, job-producing elixir?

Inevitably, the pendulum swings. In this case, it already has. Over the past year, we experienced a course correction as the

political classes suddenly became sensitive to cost considerations in the midst o a deep recession. They thus began givinggreater weight to clean energy over green energy, acknowledging that ossil uels and nuclear power are a bridge to

the uturemaybe a longer bridge than most people expect or realize.

Figure 1. Bridge to the uture

The green (clean) uture:Sustainable, aordable

low-carbon energy;more with less

Today

Clean Gas

Clean Oil

Clean Coal

Ecient

End Use

Renewables

Nuclear

New

Technologies


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2


Devloping

cleanossil uels

Contrary to conventional wisdom:

I not addressed, climate change and energy security will limit economic growth.

New energy

technologies

Increasing

eciencies

o use

Promotes

economic

growthIncreases

energy

security

Addresses

climate change

problem

Reraming the challenge in this way is essential: rather than being in agreen energyrace, we are in a global clean

technologyrace to develop clean energy in a way that serves the economy, workers, the environment, and national

security. This clean-energy movement is in its early days stillClean Energy 1.0where the mobile phone industry was

in 1983, when Motorola released its two-pound, $4,000 DynaTac 8000x, or where the computing world stood that same

year, when Windows 1.0 was launched.

We are now due or another recalibration, as the evidence comes in about the reality o jobs in the green collar

economy. Policymakers can get beyond the hype and make a more measured assessment o how green and clean

technologies might evolve and how they t into the overall energy equation. As we move orward rom Clean Energy

1.0, we will be better able to understand how energy is evolving. A smart strategy will allow us to ocus our investments

and dramatically increase research into technologies that create sustainable, local jobs. We can thus help guide consumer

investments in energy technologies.

All this is good newsa necessary maturing o the debate around energy. Where once energy was a matter conned to

Congressional committees and industry groups, today nearly every constituency is mobilizedrom politicians across the

spectrum, to corporations o all kinds, to individuals in every corner o America and the world. Unions, too, are on the

ront lines, since they represent workers whose skillsas plumbers, welders, technicianscan be transerred to the new,

clean energy spheres.

Energy is now a national state o mind.

Figure 2. A new race clean development

A dynamic continuum o

technology developments rom

generation 1.0 to 2.0 to 3.0

Serves workers, environment,

durable job development,

sustainable business


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This mobilizationor which the green movement is responsiblehas orever changed how we develop energy policy.

Energy policy is climate policy, national security policy, economic policy, and employment policy. Above all, it has

transormed the American consumer into a pivotal actor in the debate. Put another way, the consumption o energy

has been politicized due to our heightened awareness o the impact o energy consumption on our wallets, on national

security, on the environment and, more recently, on our jobs.

This politicization o demand means that consumers have empowered themselves. In seeking more energy-ecient,

cleaner productsas well as clean energythey are undamentally changing the behavior o corporations, the allocation

o capital, and the views o lawmakers.


Figure 3. Energy o geopolitics: clean development race

The driving orce the green-clean movement

Energy policy is climate policy, national security policy,economic policy, and employment policy.

Energy

Policy

National

Security

Policy

Employment

Policy

Sustainable

Clean Energy

Development

Policy

All

interlinked

Technology Policy


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The recession has accentuated this trend. Beore the crisis, demanding clean, energy-ecient products allowed consumers

to be part o the solution to the environmental and national security challenges acing the U.S., while also saving money.

The economic crisis now has underscored the cost advantages o energy-ecient products. National security, climate

change, and the economic crisis are thus combining powerully to change the behavior o consumers, who are trying to

use less energy and going clean. This is changing the products corporations are producing, which impacts the allocation

o capital, and thus aects job growth and the economy.

This politicization o demand is important, especially given our level o energy consumption: each American is responsible

or 20 tons o CO2

emissions each year, versus just 8.4 tons per European. The grassroots energy movement already has

led to critical policy innovations at the corporate, civic, local and state levels. As o February 2010, or instance, 1,017mayors rom the 50 statesrepresenting a total population o almost 90 million citizenshave developed sustainability

plans or their cities that ocus on energy eciency and husbanding resources. Thirty states have developed renewable

energy mandates, with targets o between 15-25 percent by 2020. Corporations, meanwhile, continue to ocus on the

clean products being demanded by consumers.

Figure 4. Clean energy: driven by markets

Corporate response

to market demands

Public demand

or clean energy

and energy-ecient

products

Lawmakers

Job growth

Improved

economy


Politicization o Demand

Climate (Energy Security) + Consumers + Capital = Energy and Job Creation


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In turn, ater a quarter-century o stagnation, the ederal government is eeling the heat to create a visionary national

ramework on energy. In doing so, lawmakers will ace the new reality that energy policy is now a potent prism through

which our overall economic andjobs policies are ormed. Energy policy, too, is now even more about national security

than ever beore, since we have entered a clean technology race with China and othersnot unlike the race with the

Soviet Union to put the rst man on the moonthat could determine our place in the global economy. And, in this

context, the U.S. would appear to be signicantly behind in developing such a strategic vision or energy.

It is sobering to consider that China now has a more avorable and predictable market or private investments in clean

energy technology than America does. In large part, this is because China understands where it wants to t on the energy

spectrumas the dominant manuacturing player that produces the components o renewable energy technologies. (It

is not without irony that these technologies have their roots in original research unded by the United States, back when

American R&D budgets were fush in the 1970s and 1980s.) And China is investing massively towards its goalssome $1

trillion over just 10 years.

Figure 5. The clean development race: the pole positions?


The clean development race: technologically, not unlike U.S. versus Soviet Union in the 1960s'

moon race, except or the outcome (so ar)

The clean technology race:

U.S. versus China and others

U.S., a ormer avorite,

is now in middle o pack

The goal:

Manuacturing dominance o renewable

energy components, and the resulting

economic and employment rewards

China is now the leader. Head start provided by U.S. R&D,

and technologies developed in the 1970s and 1980s, strategic

planning, and a trillion dollars invested over ten years

It is sobering to consider that China has a more avorableand predictable market or private investments in cleanenergy technology than America does.


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The Obama Administrations ocus on green technologies has made energy a national state o mindand i only or

this reason, the Administrations approach can be deemed a success. However, the emphasis on green has distorted the

broader energy debate, and clouded our ability to accurately assess what is in our best interests. Over the past two years,

in particular, ederal unds have been concentrated in green energy in the hopes o creating the jobs o the uture.

As a result, much o the emphasis was placed on supply-side jobsthe manuacture and installation o wind turbines, or

instance, or photovoltaics (mostly made in China)and not enough on building the skills base o sustainable jobs along

the entire energy supply chain. Manuacturing jobs might provide some instant gratication, but such jobs are both ewer

than predicted and likelier to fee abroad. By contrast, jobs on the demand sidethose that help reduce and manage

demandwill prove better paying and more sustainable. This might change as clean energy technologies evolve rom 1.0

to 2.0 and beyond; but, in every case, policymakers need to scrutinize the employment bottom line much more careully.

Another consequence o looking at the world through green-tinted glasses is that we have given short shrit to other

crucial energy ormsespecially natural gas, which is relatively clean and abundant. We simply cannot cross the bridge to

a low-carbon uture without mobilizing the American oil and gas industries. To accelerate this process, all energy orms,

including ossil uels and nuclear, should be allowed to compete within a low-carbon ramework. It is also essential to

remember that the oil and gas industries generate hundreds o thousands o highly skilled, high-paying jobsjobs that

America needs now to develop the low-carbon oil and gas resources o the uture. These are skills and positions that,

once lost, are unlikely to return. They also happen to be ones that could be bridged to clean technology occupations

(or instance, the high-tech, remote-control technologies that allow the oil and gas industries to monitor their production

are ones highly relevant to clean-technology elds).

Figure 6. Reverse our thinking: rom the means to the end


Energy policy is not about energy. It is about technology and the new clean technology development path. The end is

ostering (through markets) government policy and rules/regulations or developing clean technology or growth. It will

apply along the complete value chain rom R&D to nal product implementation.

Clean

technologydevelopment

path

Energy

generationand

distribution

Not here... ...but here

Focus on energy policy


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Above all, the green hype also has weakened our ocus on the energy we should not be wastingthrough eciency

initiatives, conservation, and demand reduction.

Finally, we could deepen the ocus and broaden the lens on innovation and R&D. The current generation o renewable

technologies, as in wind, are nearing maturity, while others, like solar, are advancing quickly along the current technology

curve. But as the next generation o these technologies evolve, we need to understand where the sustainable jobs will

be created and seize the resulting opportunities. To do so, we also need to plumb the next rontiers o energy more

aggressivelyrom the low-hanging ruit o reducing the carbon emiss ions o ossil uels, to the need to reinvent our

national grid, to the nascent movement to draw energy rom the oceans waves, innovative approaches to storing energy,and advances in battery technologies. We should build sustainable industries in these new energy rontiers based on

research, innovation, development, and implementation along the continuum o each energy technology curve rom 1.0

to 3.0. In so doing, we also should develop the rules o the game that encourage innovation and implementation along

the entire supply chain o any given technology.

Green energy is no longer the magic bullet. We should be grateul or this. It can now take its pivotal but mortal place

in an array o energy orms and technologies that will power the world in the 21st century. The transition rom green to

clean will power the next phase o development o the world economy, as we race to create technologies that help us

better produce energy and reduce its use.

As we climb the learning curve o Clean Energy 1.0 and beyond, we will become better able to assess the complex

calculus o energy. We will weigh the benets o each energy ormbalancing cost, environmental impact, job creation

potential, and national security considerationsin order to develop smarter policies and encourage market rameworks todrive the right portolio o energy orms. I we play our cards right, in addressing these concerns we will bepromoting

growth rather than hindering it. This will position us not at the starting block o the clean development race, but squarely

in the thick o it.

We simply cannot cross the bridge to a low-carbonuture without mobilizing the American oil and gasindustries which generate hundreds o thousands ohighly skilled, high-paying jobsjobs that Americaneeds now to develop the low-carbon oil and gas

resources o the uture. Tese are the skills and positionsthat, once lost, are unlikely to return.


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Jobs: the beginning o the clean energyevolution

Ater decades o stagnation in American energy policy, the Obama Administration entered oce with a sweeping vision

and determined, well-nanced plans. The Presidents approach has not just reinvigorated the energy debate, but has

made energy a national state o mind. Citizen-consumers and corporations have thus been mobilized. The Administration

now should step back and assess the results o its experimentationdoing so rom the vantage point that this was, essen-

tially, Year One o a two-generation-long process o transormation.

When it does so, it will realize that understanding the arc o clean technologys evolutionrom CleanTech 1.0 to

CleanTech 7.0 (or so), where we should be by mid-centuryis more complicated than it might have seemed. Americas

policymakers and corporate leaders will have to consider where the energy jobs will be in the uture, analyzing the entire

supply chain, and determining which jobs are sustainable, well-paying, and likeliest to stay in America.

So ar, one critical realization is that we might be paying too much in subsidies or jobs that might soon disappeara

lesson painully learned by Spain and Germany. Both countries subsidized photovoltaic markets to help create jobs andpromote demand or Spanish and German PV modules. And they succeededor a while. But it was not long beore the

Chinese, who have commoditized the PV markets, dominated supply. Beijing is now beneting rom Spanish and German

subsidies. Understanding that this could happen in America is perhaps the most important takeaway rom the past year.

Americas policymakers and corporate leaders will haveto consider where the energy jobs will be in the uture,analyzing the entire supply chain, and determiningwhich jobs are sustainable, well-paying, and likeliest tostay in America.

Figure 7. The technology continuum: the dynamic or economic success


The technology continuum:

The new energy policy will provide or uture

evolution o individual technologies. Computer

operating systems evolved rom Windows 1.0

to Windows 7.0. We are now at Clean Energy

1.0. There will be a Clean Energy 2.0 and Clean

Energy 3.0.

This technology continuum applies to:

Energy sources

Coal, oil, gas

Renewables and alternatives

Energy products

Everything rom insulation to batteries to smart

meters to new products yet to be developed

Clean

Energy

3.0

Clean

Energy

2.0

Clean

Energy

1.0

Today Mid-century


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President Obama came to Washington promoting green as the answer to a clutch o challenges: climate change, national

security, and economic growth. Within a month o taking oce his Administration had created the outlines o a Green

New Deal. Obama ordered higher standards or uel eciency, appointed ardent advocates o emissions cuts to senior

jobs, and committed almost $80 billion or energy and environment projects in his economic stimulus package. This was,

as White House energy and climate czar Carol Browner dubbed it, the biggest energy bill the countrys ever seen. It

appeared the Administrations goal was to ast-orward us, in a fash, rom the era o ossil uels to a zero-carbon world.

In arguing or his Green New Deal, Obama emphasized the environmental prerogative over the other two legs o the

green society triptychthe creation o enduring, local jobs and the enhancement o national security. But relatively

quickly, with the Great Recession bearing down, greens environmental virtues lost some o their relevancesaving jobsbecame more important than saving the environment (this explains, in part, the loss o momentum that led to the collapse

o climate negotiations in Copenhagen). The relevance o green energy to national security, meanwhile, also dimmed as

oil and gas prices collapsed. With unemployment groaning towards 10 percent, it was jobs that mattered.

And so green energy metamorphosed into a pathway to well-paying jobsa mantra that has exploded at every level o

government. Lawmakers everywhere trumpet their potential. The predictions were eye-popping. Obama promised to

create some ve million green jobs over a decade by spending $150 billion. The Apollo Alliance said $500 billion would

be needed or those same ve million green jobs. (Said an Apollo Alliance spokesman about the discrepancy in how much

each job would cost: Honestly, it's just to inspire people.) The Center or American Progress was even more ambitious,

suggesting that ederal outlays o $100 billion over two years would create two million green jobs. (All this still pales in

comparison to Chinas $1 trillion investment over 10 years.)

Figure 8. Policy design: the goal is the question


Targeting subsidies "wisely"?: A case study

Spain and Germany subsidized their photovoltaic markets to help

create jobs and demand or Spanish and German PV Modules

But China commoditized PV markets, then dominated

supply in the German and Spanish markets

Jobs?

Prots?

German and

Spanish growth

Chinese jobs?

Chinese Prots?

Chinese

growth


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Congress, too, joined the chorus: Today, August 10th, here in Las Vegas, we're ring the rst shots o a new revolution to

regain that prosperity and restore that leadershipa clean energy revolution that will create millions o jobs across America,

declared Senator Harry Reid at the Clean Energy Summit in Las Vegas in August 2009. Bernie Sanders, who chairs the Senates

green jobs sub-committee, drated the 10 Million Solar Roos and 10 Million Gallons o Solar Water Heating Act o 2010.

Obama repeatedly has cast this as a competition among nationsthe space race has been replaced by a race or green

jobs. The nation that leads the clean energy economy will be the nation that leads the global economy, Obama said in

his January 2010 State o the Union address. And America must be that nation.

Beore the crash, greenwashingthe practice o invoking green to underscore ones virtueswas primarily a corporate

phenomenon. Hardly a day went by without several corporations unveiling new, greener versions o themselves.Companies scrambled to create low-energy productscomputers, cars, light bulbs, insulation.

Today, greenwashing has inected the political world. Policymakers everywhere trip over themselves to issue press releases

about the number o green jobs their town, state, region, or country has created. A Google search will yield hal-a-million hits

or green jobs councils. Green job websites, blogs, airs, and recruiters are legion. Good Jobs Advocacy Day took place

on May 6, 2010 in Washington, to coincide with the Good Jobs, Green Jobs National Conerence. States, meanwhile, are

prolierating programs like the one in Connecticut that waives college loans i students go into green elds.

This set the stage or the $787 billion American Recovery and Reinvestment Act, which included $80 billion or clean energy

initiatives. Its supporters said the overall Act would create 3.5 million jobs, many o them green. "Building a robust clean

energy sector is how we will create the jobs o the uturejobs that pay well and can't be outsourced," Obama said.

But it turns outat least judging rom the early returnsthat green energy jobs are ewer than anticipated, lower paying,less permanentand yes, in act, they can be outsourced. This is not a reason to despair about green energy jobs in

the longer termwe are, ater all, only at Clean Energy 1.0but it should give policymakers pause as they consider the

overall energy strategy and the race to move along the clean economic development curve.

It is worth considering the evidence. More than a year ater the Recovery Act, the governments own tally o jobs created

by stimulus spending on energy is a grand total o 60,000 (out o 300,000 jobs created overall by the stimulus bill). In

some sectors, despite heavy spending, there was even a net loss in jobs.

Take Americas wind energy industry: the U.S. installed more wind power last year9,900 megawatts, or enough to power

2.4 million homesthan in any other year. But, according to a report rom American Universitys Investigative Reporting

Workshop, 1,219 o the 1,807 wind turbines unded by the stimulus were manuactured abroad. While the wind sector is

particularly egregious in this respect, these basic dynamics are evident throughout the industry. Today, roughly 70 percent o

America's clean energy systems and components are produced abroad, and the U.S. produces less than 10 percent o the

global solar component market. But the race is hardly over. As solar moves to the next generation o technology, the U.S.

needs to reestablish its predominance in ways that not only secure patents, but that create domestic jobs.


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Overall, according to the White Houses gures, it has cost $135,294 to create each green job. This would be accept-

able, were the positions sustainable. The act that they oten are not has drawn re even rom Administration supporters.

There is a lot o wishul thinking about green jobs, said Philip Mattera, lead author o the study by Good Jobs First, an

aliate o the Corporate Research Project. A lot o proponents just take it on aith that these are going to be good jobs

(and) thereore we should invest in them. A lot o people are so caught up in creating the jobs that they are not paying a

lot o attention to the quality o the jobs. Or they may be saying, Let's worry about that later. Wage rates at many wind

and solar manuacturing acilities are below the national average or comparable manuacturing sector jobs, according to

the Good Jobs report.

The numbers as tallied at the state and nation levels, thus ar, are not especially encouraging either. In Caliornia, the vanguard

o environmentalism in America, just one percent o all jobs are green; in the past 15 years, the state has added only about45,000 such positions. Overseas, too, researchers are nding cause or concern. A King Juan Carlos University study in Spain

determined that or every green job created, 2.2 others were lost and only one in 10 green jobs became permanent. The

study ound that green jobs in Spain cost $800,000 each to create, thanks to subsidies, higher electricity costs, and tax hikes.

A recent report rom German think tank Rheinisch-Westalisches Institut ur Wirtschatsorschung"Economic Impacts rom

the Promotion o Renewable Energies: The German Experience"concludes that the countrys green jobs program seems

to have created 278,000 jobs, albeit at the very steep cost o $240,000 per position. Even those jobs that were created are

vulnerable, since they are export orientedand other nations have rapidly undercut German green hardware prices. As a

result, green energy installers in Germany import components produced abroadmeaning that Germany is subsidizing jobs

in China.

Asia is playing a much better unded and more sophisticated clean energy game than most o the West. South Korea

has dedicated 81 percent o its stimulus unds to green initiatives, while China is at 34 percent. By contrast, the U.S.

earmarked just 12 percent o such spending to the green sector, and Britain lagged at just 7 percent.

The bottom line is that Chinawhich is spending $9 billion each month on clean energy projectsis a more attractive

destination or investors. And it shows: In 2008, the U.S. took the lead as the worlds largest producer o wind turbines,

passing Germany. It took all o one year or China to seize the mantle.

In his State o the Union address, Obama acknowledged the urgency o the clean technology race: Chinas not waiting

to revamp its economy. Germany's not waiting. India's not waiting, he said. These nations aren't playing or second

place. ... Well, I do not accept second place or the United States o America.

But to reach beyond second place, the U.S. will have to revamp its strategyand soon.


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The Great Recession has served an unexpected but important role in setting the stage or a smart, long-term American

energy strategyor numerous reasons:

Energyisnowtopofmind:Thefederalstimulusbillhashelpedkick-startamassiveinvestmentincleanenergy

technologies and has shited Americas psychology on energy.

Newstrategicdirection:Thisimmersionexperiencehasallowedustobetterunderstandthroughexperimentationand

debatewhat our long-term energy strategy might be.

Cleanbeatsgreenefciencytrumpsall:Morespecically,wehavecometounderstandthatwhatmattersmostisnot

green energy but clean energywhether it comes rom the wind, clean coal, natural gas, or nuclear. And best o all is

using less energy overall.

Energyisjobspolicy:Policymakershavelearnedthatenergypolicycannotbeseparatedfromjobspolicyandthat

sustainable jobs matter most. From the start, the Obama Administration could have established that energy policy was,

rst and oremost, jobs policy.

Energyimprovesthebottomline:Therecessionhasunderscoredthepocketbookbenetsofefciencyandcleanenergy

or individuals and corporations. Added to their positive impact on climate change and national security, eciency and

clean energy are now rmly embedded in the consciousness o Americans.

Goclean:AndasaresultAmericanscontinuetoinsistthatcorporationsgoclean,thusshapingproductdevelopment

and capital allocation, and that policymakers ollow their lead as well. One shortcoming that corporate and political

leaders must still reckon with is the impoverished R&D budgets or clean technology product development.

A clean, efcient sweep: priorities orpolicymakers

NO SALE

Figure 9. The clean energy continuum: a long-term American energy strategy


Energy use is now top o mind

Federal stimulus bill's investmentin clean energy has centered

America's attention on energy

New strategic direction

New ocus on long-termenergy goals

Clean beats green:

eciency trumps all

Wind, scrubbed coal, natural gas,or nuclear are all good.

Less energy use is better.

Research and

development

Energy policy is jobs policy

And sustainable jobs matter mostEnergy improves

the bottom line

Eciency and clean energybenets individuals andcorporations alike

Go clean or go broke

Americans insist that

corporations oer cleanenergy products and services

Policy supporting

the clean energy

continuum

Challenges aced in common by policymakers, the private sector, and the public

We stand beore an opportunity o a lietime: There will be more money spent in the energy sector in a broad sense in

the next 50 years than has been invested in the past 100 years, i not in history. Channeling these investments wellinto

job-producing technologies and services that create clean energy, reduce demand, and drive us along the Clean Energy

continuumis the challenge that policymakers, the private sector, and the public ace united and together.


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Now, with over a year o renetic investments under our belt, we have a chance to pause and consider the principles that

will guide us as we move rom Clean Energy 1.0 to the next generation o technology and the next iteration o our energy

strategy. Four core principles could guide us as we move along the clean development continuum:

A ederal ramework is critical: As Washington stood idle or the past ew decades, cities and states took the lead

on energy policy. This made a dierence in many positive ways, including by ostering experimentation that has made us

smarter about what works and what does not. But the absence o a Federal ramework is now an enormous handicap. It

seems unlikely that clean energy companies will hire in large numbers until the Federal government mandates renewable

power consumption nationwide and upgrades the electric grid. Whether the target is 20 percent o American energy

coming rom renewable sources by 2020, or something more modest, a mandate is essential. Policymakers should not try

to pick winners, but they should set targets.

This transormation also should be led by policymakers who need to make it knownthrough transparent rulesthat

there is no silver bullet in our common eort to build a carbon-ree uture. All energy ormsprovided they can meetstandards or being clean and cost-eectiveshould be able to compete or market share and unding.

Sustainable jobs are as important to energy policy as are climate change, national security, and cost: The

green movement was driven or much o the past decade by a grassroots commitment to reduce global warming. Then,

the need to rethink American energy strategy gained even more momentum rom national security concernshighlighted

by the Iraq war and Americas reliance on Saudi Arabiaand resource nationalism. Now, the recession, with its double

hit on American pocketbooks and jobs, has introduced a new actor in designing energy policies. The creation o sustain-

able jobs that keep communities whole should become a actor, together with cost and carbon reduction, in calibrating

Americas new energy portolio.

Figure 10. The our principles: guiding the movement along the clean development continuum


Sustainable jobs are as important to

energy policy as climate change

The recession is a new actorin energy policy

A ederal energy ramework is critical

Federal government should mandaterenewable power consumption, and

upgrade the electrical grid

New clean energy

products and services:

Research Develop Design Manuacture Distribute

Research and development

should rise again

Recent decline in R&D investmentshould be reversed

Reducing demand is more important

than producing clean energy

Energy eciency is an untapped market orentrepreneurs, investors, and policymakers


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Reducing and managing demand is more important than producing clean energy: Energy eciency is perhaps

the biggest untapped market or entrepreneurs, investors, and policymakers. It meets all the demands o those seeking

to reduce emissions and increase national security, while having the potential to contribute mightily to the creation o

sustainable, well-paying jobs.

Research and development should rise again: Beore the stimulus bill, the Federal government budget or energy

research was the same today, adjusted or infation, as it was in 1968: about $3 billion. The share o research and devel-

opment money, both rom the public and private sectors, going into energy has been in decline or over two decades. We

should reverse this by creating market conditions to promote investments in research, development, and market penetra-

tion in energy eciency, in new methods o consumption, and in all orms o energy, be they traditionaloil, gas, coal,

nuclearor alternative.

Asian nations, in particular, are investing vast resources in renewable energy research and technology development, while

setting ambitious targets or clean energy use. For example, South Korea has committed to investing two percent o GDP

each year in clean energy, or a total o $80 billion over ve years. China is aiming to generate 20 gigawatts o solar power

by 2020, a tenold increase rom today, and is oering its industry the worlds most generous subsidy to help meet that

goal. Beijing also is investing heavily in wind, battery, and other technologies. By contrast, only one-ourth o the world's top

renewable energy companies are American-owned. And only one U.S. company, General Electric, is among the worlds top

10 wind turbine makers. R&D can help America position itsel on the leading edge o the Clean Energy evolution.

Figure 11. Every company is an energy company


147www.moescab.com

Reduce energy use

Ecient equipment/processes Innovative architecture

Sel-generation

Small-scale: Wind Solar Geothermal Cogeneration

Improved transportation feet

Hybrids

Electrics CNG Route planning

Reduced CO2

Increasedprots

(and enhanced

energy security)


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Until now, the notion o green jobs was thrown around willy-nilly to justiy a wide array o initiatives, policies, and

investments. We need to reset our sights and narrow our denition o green jobs. It might be easy to generate ast

construction jobs installing Chinese-made wind turbines, but the costs o these is immensely high and their duration very

short. By contrast, investing in training (and re-training) a new generation o skilled workers to manage our energy use

should pay o handsomely.

The management o energy oers a motherlode o long-term, well-paying job opportunities. These jobs echo those in the

world o IT, where companies create sotware and hardware applications and then establish a sustainable market or their

services by constantly updating and maintaining their products. The Clean Energy world has the same potential.

Heres just a short list o jobs in the world o energy ecency:

Energyefciencyspecialists,engineers,strategistsandmanagers,allofwhomwillbecomeincreasinglyimportantto

businesses as the price o carbon increases

Energymanagersresponsibleforpowerusageacrossanentireorganization,requiringexperienceinareassuchas

technology, behavioral change, compliance and procurement

Environmentalmanagersareneededtoensurethatorganizationscomplywithlegislationandotherprocedures

Supplychainexpertsareneededbylargeretailerstomonitorandminimizethecarbonfootprintofallthegoodstheysell

Waterconservationspecialists,includingengineerstodevelopwater-savingtechnologyandmanagerstoensurethat

businesses minimize their use o water

The energy jobs o the uture

Individual awareness

Votingclean energy

Policies that encourageor reward clean energy

Supply o clean energy

Demand or clean energyproducts and services

Corporate response

Government Mandate

(at every level)

In the last year or two, energy consciousness has

captured national attention as never beore

Figure 12. Energy: a state o mind



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16

In the U.K., the Carbon Reduction Commitment legislation, which takes eect in 2011, will require 5,000-6,000

businesses to monitor their carbon output, thus creating an array o positions or carbon managers. (Eciency jobs arehiding elsewhere, too: Think o the bike shop workers in cities that adopt bicycle lanes, or the bus and subway employees

in those that have congestion charges or cars.)

Add to this the immense job creation potential o every promising new startup in the eld. Take Verdiem, which provides

sotware to reduce energy consumption o PC networks, or Google PowerMeter, which allows consumers to monitor

energy usage in their homes. Meanwhile, entire massive industriesshipping, or instanceare only just now beginning

to explore the potential o reducing energy consumption and emissions (shippers are now being spurred to do so by

legislation that compels them to reduce emissions near the shores o North America and elsewhere).

There are two sectors in which the job potential o energy eciency is most evident: construction and urban management.

Figure 13. Redening the business model rom cost-based to value-pulled capitalism


Redefning capitalism:

Three interconnected virtuous circles

driving local solutions to reduce carbon

Goal:

Create a low- or zero-carbon world

Education

Ideas

Solutions

Recycle

Revise

Reduce

Reimagine

Redesign

Reengineer

Carbon

Cost

Until now, the notion o green jobs was thrown aroundwilly-nilly to justiy a wide array o initiatives, policies, andinvestments. We need to reset our sights and narrow ourdefnition o green jobs.


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Cities generate the vast bulk o CO2

emissions. As a result, city policymakers are under growing pressurerom citizens

and rom investorsto incorporate into their policymaking environmental sustainability in general and greenhouse gas

emissions in particular.

Cities are relevant because o their immense worldwide growth and their complex systemswhich can greatly reduce

energy use. In 2008, or the rst time in human history, the majority o the worlds people lived in cities. I there were evera time to ocus on developing solutions or sustainable cities, that time is now. And mayors are taking action: More than

hal o U.S. cities are either currently creating a sustainability plan or have nished one within the past year, and about

one-quarter o cities nished their plans even earlier than that. The most concrete sign o this commitment rom cities is

in the mass compact signed by the majority o mayorsthe U.S. Conerence o Mayors Climate Protection Agreement.

As o February 14, 2010, 1,017 mayors rom the 50 states, the District o Columbia and Puerto Rico, represented a total

population o over 86 million citizens. The mayors o 400 European cities, meanwhile, pledged last year to make drastic

cuts in CO2

emissions by 2020.

Figure 14. Value-based capitalism: driving business and thus sustainability


Cars

Houses

Electricity

Auto fuel

Clothing

Food

Entertainment

Ideas

Appliances

Technology

Paper goods

Office buildings

Buy Green

A company/business should be sustainable. This means services and

products should meet demand needs o customers through cost reductions

to ensure a better choice.

And "choice" in tomorrow's world means that all costs associated with the

"Commons" are incorporated.

Then the company is sustainable, society is on a sustainable path, and so is

the planet.

Make these products chic and use Say's Law to create a new eco-ethic/

eco-chic, where the supply o environmental, climate-change-riendly goods

creates market and creates demand.


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18

Take trac congestion, which costs the U.S. economy $78 billion in 2005. The economic costs o congestion in New York

alone are close to $4 billion a year. Estimates suggest that congestion costsin developed and developing citiesare

between one percent and three percent o GDP. As car ownership grows, even greater strain will be placed on the

transport inrastructure. Cities are just beginning to invest in managing this load. In Stockholm, or instance, a dynamically

priced congestion charge or cars has reduced inner-city trac by 25 percent and emissions by 14 percent, while boosting

inner-city retail by six percent and generating new revenue streams.

The great potential or America in the Clean Energy race is that it emanates rom the IT industry, where America has

a history o leadership. Pervasive inormation and communication technology means that there is much greater scope

or leveraging technology or the benet o cities: Instrumentation, or digitization, o a citys system means that the

workings o that system are turned into data points and the system is made measurable. The connection between

smarter water and energy systems is an example o the linkages that exist between urban systems. A substantial amount

o electricity generated goes toward pumping and treating water. In Malta, or example, a new smart utility system

inorms citizens and businesses about their use o both energy and water, enabling them to make better decisions about

resource consumption. In Seattle, a trial that gave businesses and households access to live energy pricesand thus the

opportunity to adjust their use accordinglyreduced stress on the grid by up to 15 percent and energy bills by 10 percent

on average.

The essentialsEducation: ContinuousLeadership: LearningBasics: The ingredients based on actoring in all costs with aholistic approachTime Scale: One generation and more

New game, new playing eld

And new rulesValue-based capitalism

Capture all costs associated with the "Commons"

All local, regional, and national elements

Then write the Clean Energy Rule Book

Figure 15. Value-based capitalism and the clean energy continuum: two generations


A Sampling rom the New Clean Energy Rule Book

Howtobuildahouse;howtopositionhousefor

sun and wind

Localrulesforsmall-scalewindmillsinasuburban

setting

Architecturegreenbuilding

Layoutofcityroads(can'tchangedriveformobility,

but can shape and infuence it)

Localdevelopment,localproduction

Alternativeenergy:localsuppliers,localmaintenance

Processchangefromseedswithhigherannual

yields to producing goods with zero-carbon

ootprint

Packaging:Reducemass,makebiodegradable

and carbon neutral

Smarterconsumptionandsmarterproduction

Clean

Energy

1.0

Clean

Energy

2.0

Clean

Energy

3.0

Today Mid-century


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The construction sector is even more rie or savings. In the U.S., buildings account or 70 percent o all energy use.

Meanwhile, a startling 40 percent o the world's output o raw materialsthree billion tonsis used in buildings. Green

buildings can reduce energy consumption by 30 to 50 percent, on average, according to IBM. And yet achieving just a 15

percent reduction in energy consumption in buildings worldwide could lead to $295 billion in energy savings.

The opportunities or energy innovation and management are everywhere evident, beginning with the training o

architects who design the build ings, to construction processes, to insulation, the HVAC system, the lights, the water, the

elevators, the power and cooling or technology, the heating and cooling or people.

Requiring that new buildings be green is a good rst step or cities. But retrotting existing buildings is where the greatest

mid-term potential liesover 90 percent o buildings in America are over ve years old. There are up to 250 billion squareeet o buildings in the United States, mostly in cities, that need to be retrotted, according to the Green Cities Report

(produced by the Living Cities philanthropic collaborative).

Green retrotting, o course, can create new green jobs. Investments in retrots can produce immediate economic

impact: $1 million spent on retrots creates between eight and 11 jobs, according to the Green Cities Report, and

generates about $300,000 in taxes.

Figure 16. Clean energy triptych


Durable local jobs

Climate National security


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20

Energy: a state o mind

This is just the early dawn o the Clean Energy era. Only in the past year or two has energy become a national state o

mind. But the historic importance o this can hardly be underestimated.

Today, every American citizen and corporation has been empowered. Each one is becoming aware that they have their

own energy P&L and carbon ootprint. Businesses and governments should respond to this new reality by creating the

products and services that will help Americans manage their energy consumption. Corporations, meanwhile, should

realize that in addition to their core business, each and every one o them is an energy company, tooand that managing

their energy usage can be critical to their bottom line. Policymakers can ampliy these trends by creating the rules o the

game and unding the research that will position the United States at the cutting edge o the Clean Energy evolution.


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About the author

Dr. Joseph A. Stanislaw

Independent Senior Advisor

Energy & SustainabilityDeloitte LLP

+1 703 251 1726

[email protected]

Dr. Joseph A. Stanislaw is ounder o the advisory rm The JAStanislaw Group, LLC,

specializing in strategic thinking, sustainability, and environmentally sound investment

in energy and technology. He is an independent senior advisor to Deloittes energy and

sustainability practices. As an energy industry leader, advisor, strategist and commentator,

Dr. Stanislaw advises on uture trends in the global energy market. Dr. Stanislaw serves on

several boards in the energy and clean technology space. He is a member o the Council on

Foreign Relations.

Dr. Stanislaw was one o three ounders o Cambridge Energy Research Associates in 1983

and served as managing director or all non-U.S. activity until 1997, when he was named

president and chie executive ocer. He is an adjunct proessor in the Nicholas School othe Environment and Earth Sciences at Duke University, where he is a Member o the Board

o Advisors or the Nicholas Institute or Environmental Policy Solutions. Dr. Stanislaw was a

Research Fellow o Clare Hall and lecturer in Economics at Cambridge University, where he

was also a member o the Energy Research Group in the Universitys Cavendish Laboratory.

He was a senior economist at the Organization o Economic Cooperation and Developments

International Energy Agency in Paris.

Dr. Stanislaw is co-author o The Commanding Heights: The Battle for the World Economy.

Now in the second edition, the book has been translated into 13 languages and made into

a six-hour documentary on PBS. He is also the author or co-author o numerous reports and

published papers on the geopolitics and economics o uture energy supply and demand,

including Energy in Flux: The 21st Centurys Greatest Challenge, and Clean Over Green: Striking

a New Energy Balance as We Build a Bridge to a Low-Carbon Future, and he is eatured in thepublic television documentary, Oil ShockWave.

Dr. Stanislaw received a B.A., cum laude, rom Harvard College, a Ph.D. in Economics rom the

University o Edinburgh, and was awarded an M.A. rom the University o Cambridge. He is

one o only several people to have been awarded an Honorary Doctorate and Proessorship

rom Gubkin Russian State University o Oil and Gas in Moscow.

Dr. Stanislaw may be contacted at [email protected].


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This publication contains general inormation only and Deloitte is not, by means o this publication, rendering accounting, business, nancial,

investment, legal, tax, or other proessional advice or services. This publication is not a substitute or such proessional advice or services, nor should

it be used as a basis or any decision or action that may aect your business. Beore making any decision or taking any action that may aect your

business, you should consult a qualied proessional advisor.

Deloitte, its aliates, and related entities shall not be responsible or any loss sustained by any person who relies on this publication.

Copyright 2010 Deloitte Development LLC. All rights reserved.

Member o Deloitte Touche Tohmatsu

About the Deloitte Center or Energy Solutions

The Deloitte Center or Energy Solutions provides a orum or innovation, thought

leadership, groundbreaking research, and industry collaboration to solve the most complex

energy challenges.

Through the Center, Deloittes Energy & Resources Group leads the debate on critical topics

on the minds o executivesrom legislative and regulatory policy, to operational eciency,

to sustainable and protable growth. We provide complete solutions through a global

network o specialists and thought leaders.

With locations in Houston and Washington, D.C., the Deloitte Center or Energy Solutions

oers interaction through seminars, roundtables and other orms o engagement, where

established and growing companies can come together to learn, discuss and debate.

www.deloitte.com/energysolutions

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