Future Of U.S. Wind Energy Jobs Depends On Federal Support

February 24, 2010

wind farmOn the one-year anniversary of the American Recovery and Investment Act pundits on all sides of the political spectrum are opining on how much it has stimulated the economy and created jobs. With clean energy a clear focus of the Obama Administration, and climate change legislation pending in Congress, special attention has been paid to the bill's impacts on green jobs. And, in the area of wind power, there's a lot of hot wind fanning controversy about the growth, location and types of jobs that have been created.

In USA Today, Denise Bode, CEO of the American Wind Energy Association, says that federal stimulus dollars for wind projects and wind turbine-component manufacturers--approximately $2.2 billion--helped save the industry from the recession's stifling impacts. By adding 39% more wind power to the American market, the stimulus bill produced additional wind power to supply the equivalent of 2.4 million homes with clean energy. According to Bode, employment remained the same: while 1500 to 2000 manufacturing jobs were lost, they were offset by an equal number of wind-farm construction and maintenance positions.

Controversy about where the jobs are

Critics were quick to pounce on this relatively positive reading for the future of wind energy and its job-creating potential. ABC World News reports on a study by the Investigative Reporting Workshop at American University's School of Communication, which found that about 80% of the stimulus funding for wind energy has gone to foreign manufacturers of turbines, resulting in approximately 6000 new jobs in other countries. Senator Charles Schumer of New York was irate, calling the flow of money to foreign companies an outrage because the stimulus was intended to create jobs inside the United States.

The AWEA responds, saying that 100% of Recovery Act money went to wind projects in the US. On the one hand, this is true in that the projects were built in the U.S., creating jobs in construction, transportation, civil and electrical engineering, and operations and maintenance. On the other hand, approximately half of the value of the turbines and related components that were installed were made overseas, providing jobs in other countries. This is because there are not enough U.S. wind power manufacturing companies in the U.S. to meet the demand.

Lack of turbine manufacturers in U.S. reduces employment potential

According to the Watchdog Institute, companies such as Cannon Power of San Diego, who received $19 million from the federal government to expand a wind farm near Portland, OR, bought its turbines from Siemens, a German company, the main contractor for the project. Gary Hardke, president of Cannon, acknowledged that the majority of turbine manufacturers are foreign and that many of the parts used were made outside of the U.S. He didn't know the origin of each of the different components. In fact, some may have been produced by foreign companies with factories in the U.S., thereby employing American workers.

Tracking exactly who benefits most from jobs created by developing wind farms is incredibly complex. However, if there were more turbine manufacturers in the U.S., many more jobs would be retained on American soil. To illustrate the potential for job growth, consider the estimate of the Renewable Energy Policy Project, a think-tank advocating renewable energy technology research. It predicts that for every 1 megawatt of wind energy developed, 4.3 jobs are created. Three of these are in manufacturing of the components, while the other 1.3 are for installation, operation and maintenance of the wind farms.

Investments in wind power require supportive national policies

According to USA Today, turbine makers are reluctant to build plants in the U.S. because the country has yet to create a national standard to increase the use of renewable energy. For manufacturers to invest in new production facilities, they need to know that there will be ongoing demand for wind power. With such assurance, the job gains could be significant. A study by Navigant Consulting conducted for the renewable-energy group RES Alliance for Jobs, finds that the country would gain 274,000 new jobs if Congress adopts a national standard requiring the production of 25% of its electricity from renewable sources by 2025.

Other reasons for slower than expected job growth in the wind power industry are uncertainties in federal energy policy, according to the Los Angeles Times. Questions include whether existing tax credits and other financial incentives will continue, whether the federal climate bill will make fossil fuels more expensive, and the extent to which the government upgrades transmission lines and makes operational changes in the electrical grid.

Defending federal investments in wind power

Because of criticism from Charles Schumer and others, supporters of the government's investments into wind energy were put on the defensive. According to the Investigative Energy Workshop, Department of Energy Secretary Steven Chu said that the point of the wind power stimulus was to ensure that America leads the world in creating jobs for manufacturing wind power components. Before that can happen, however, demand for the product needs to be established. The federal grants "provide the precondition to jump start the manufacturing," he said.

Rob Gramlich, vice-president for public policy at the American Wind Energy Association, commented that the monies were intended to serve as a lifeline to keep the industry afloat during tough times. "We strongly support the policy and are giving the administration and Congress a lot of credit for putting it in place and redesigning how it worked--but it wasn't a long-term jobs policy and it wasn't really intended to be a long-term jobs policy," he said.

Jobs outlook for the industry remains uncertain

Indeed, the wind power industry has reason to worry. In recent months, several foreign wind turbine manufacturing companies with U.S. production have closed or slowed operations. The Danish company, Vestas, and Spanish company, Gamesa, have both laid off workers due to the poor economy. And, some state governments are taking measures to discourage investment in wind energy.

The Dallas Chronicle reports that the governor and legislature of Oregon are about to phase out the Business Energy Tax Credit in order to save money for the state. The state of Wyoming may go one step further in trying to address its budget woes. According to the Washington Post, Governor Dave Freudenthal wants to impose an excise tax on wind energy production. If his proposal is passed, wind energy generation in the state would be subject to a 5% tax, with 60% of the revenues going to the state and 40% to the counties where wind farms are sited. Neither policy is encouraging for wind energy jobs seekers in those states.

On the other hand, on a positive note, WisBusiness.com reports that Ingeteam, a Spanish wind company, will build a $15 million facility in Milwaukee to produce wind turbines and solar energy components, creating 275 jobs for Americans. It goes to show that the wind is blowing in all directions these days. Consequently, the outlook for jobs in the wind power industry is, shall we say, up in the air.

Written by Abigail Rome

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