New research found that the Obama administration’s clean energy stimulus investments had little effect on near-term U.S. employment, raising questions about Democrats’ push for a climate-focused coronavirus recovery.
“Green stimulus investments reinforce long-run growth, but alone are not sufficient for a short-term stimulus,” read a new working paper circulated Monday by the National Bureau for Economic Research.
The researchers — economists at Syracuse University, the Italian University of Urbino Carlo Bo, and the French Economic Observatory — found that the Obama-era American Recovery and Reinvestment Act created nearly 15 jobs per $1 million spent on green stimulus. In total, the 2009 legislation spent more than $90 billion on clean energy.
But those employment gains were accrued over the long term, the researchers say, adding that they found little evidence of the green investments creating short-term employment increases.
“Green stimulus investments appear more effective for reshaping an economy than for restarting an economy,” the researchers wrote. They noted that green stimulus investments may “need to be combined with other standard short-term responses, such as extensions to unemployment benefits and financial support to business, to provide immediate impact.”
The economists also suggested a need for further research on the environmental benefits of a green stimulus, as “the long-run impacts on employment suggest that green investments lead to durable changes in the green economy.”
The working paper also found that many of the jobs created by the Obama-era clean energy investments were in the construction and waste management sectors. The finding suggests that investments in green infrastructure could benefit unskilled workers, contrary to research arguing that environmental regulation could reduce manual labor employment, the researchers said.
Even so, the boost to manual labor employment wasn’t accompanied by increases in wages for those workers, the researchers noted.
The researchers also cautioned that green recovery investments largely benefit regions that already have a greater number of clean energy workers.
The Obama administration’s recovery act pales in comparison to the efforts, thus far and likely forthcoming, to address the economic downturn brought on by the coronavirus.
Climate change is also a more top-of-mind challenge for governments around the world than it was in 2009.
Major international institutions, including the International Energy Agency and the Organization for Economic Cooperation and Development, have called on countries to make climate and clean energy investments a central focus of any coronavirus recovery efforts. The European Commission recently unveiled a 750 billion euro ($825 billion) recovery plan that places a heavy focus on the region’s broader climate change goals.
The Trump administration, however, has expressed little interest in a green stimulus. President Trump has mocked Democrats’ pushes for climate-related investments, including a nearly $500 billion infrastructure package they recently unveiled, likening it to the progressive “Green New Deal.”
“The ‘Green New Deal’ would have a devastating effect on the world, and it’s not going to happen anyway because it’s impossible for them to do it,” Trump said during a June 5 news conference at the White House. “If you look at what they want to do under the ‘Green New Deal,’ it’s like baby talk.”
House Democrats, though, have ramped up calls to include relief for the clean energy sector in virus recovery legislation. Sen. Martin Heinrich of New Mexico and Rep. Paul Tonko of New York led a recent letter with more than 50 Democrats requesting greater funding for clean energy and tweaks to renewable energy tax credits in future virus packages.
“Investing in clean energy, clean transportation and clean infrastructure should be a major focus of our recovery,” Senate Minority Leader Chuck Schumer said in response to their letter. “By making clean energy investments, we can reinvigorate American manufacturing in clean technologies, generate millions of jobs per year and ensure the workers who have lost out during this economic downturn have a chance to be part of building our economy back.”