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US climate and energy policy could boost jobs and revenue growth in Midwest manufacturing, says new report

Date
28 January 2010
US climate and energy policy could boost jobs and revenue growth in Midwest manufacturing, says new report

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A new report by The Climate Group and The University of Michigan finds significant potential for job creation and revenue growth in the Midwest over the next five years from the manufacture of three low-carbon technologies. 

The report, "American Innovation: Manufacturing Low Carbon Technologies in the Midwest," which uses economic research from Deloitte, estimates that climate and energy policies could create up to 100,000 new jobs in the Midwest, and generate additional market revenues of up to $12 billion, boosting state and local tax revenues by over $800 million by 2015.  These gains were estimated from policy-assisted growth in the wind turbine component, hybrid powertrain, and advanced battery manufacturing sectors in the Midwest.

The report considers the impact of three climate and energy policies: a $17 per ton price on carbon in 2015, resulting from a cap on emissions; a national renewable electricity standard (RES) of 20% by 2020; and a green economic stimulus package.  It compares job and revenue growth in Michigan, Illinois, Indiana, Ohio and Wisconsin with these policies in place, and without. 

Because the research looks at only three of the fifteen low-carbon technologies that the Midwest has a comparative advantage in, the report represents only part of far greater economic benefits associated with climate and energy policies across the Midwest.

Amy Davidsen, US Executive Director of The Climate Group said: "If the US adopted comprehensive climate and energy policy, the Midwest's manufacturing base could benefit significantly. The Midwest already has the value chain needed to produce many low carbon technologies that are vital to America's future.  This report shows that the right policies will spur much-needed job and revenue growth."

Governor Jim Doyle of Wisconsin said: "Good government policy like renewable portfolio standards, which we passed in 2005, are creating family-supporting jobs in our state. This report shows in detail the enormous opportunity that Wisconsin -- and the rest of the Midwest -- stands to gain by taking the next step. We can stick our heads in the sand and let others seize that opportunity, or we can push forward and create jobs, grow our manufacturing base and leave a better world for our children and grandchildren."

Governor Pat Quinn of Illinois said: "The climate and our economy need help urgently. This timely report documents the huge boost we can give our economy if we adopt strategies to accelerate investment in the low-carbon technologies that will rejuvenate the industrial Midwest, put our people back to work and ensure the Midwest remains globally competitive."

According to the new report, climate and energy policies would lead to the creation of over 37,600 new jobs over the next five years from wind turbine manufacturing in the Midwest - in a scenario where US wind capacity increases to 65.7 GW in 2015.  Additional market revenue under this scenario would amount to $4.3 billion, while additional tax revenue would come to $286 million.  In a scenario where US wind capacity increases to 90GW in 2015, the policies would generate 61,800 jobs, with additional market revenues of $7.1 billion and additional tax revenues of $470 million.

In the hybrid powertrain market, climate and energy policies would create nearly 31,000 new jobs, $3.8 billion in additional market revenue and approximately $252 million in additional tax revenues in the Midwest by 2015. 

In the advanced battery market, if the US supplies 10% of the domestic market, climate and energy policies would generate more than 2,300 new jobs, $295 million in additional market revenues, and $18 million in additional tax revenues in the Midwest by 2015.  If the US supplies 50% of the domestic market, the policies would create more than 11,900 new jobs, $1.4 billion in additional market revenues, and $90 million in additional tax revenues in the Midwest by 2015.

William L. Thomas, Counsel, Environmental and Climate Change Practices at the law firm Skadden, Arps, Slate, Meagher & Flom LLP said: "With debate over the implications of prospective climate change regulation hotter than ever in the U.S., American Innovation: Manufacturing Low Carbon Technologies in the Midwest offers timely insight into some of the ways well-crafted policy responses can spur greentech innovation and generate economic opportunity."

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