The hallmark of a consultant’s report is that when you read it, your first reaction is “I knew that.” The hallmark of a consultant’s report that was worth the money is that your second reaction is, “It’s about time someone said it out loud that clearly.”
So it was with the release a little over a week ago of the Washington State Clean Energy Leadership Plan Report (.pdf), authored by Navigant Consulting, Inc. Washington’s 2009 Legislature created the Clean Energy Leadership Council, charged with developing a plan of actions to accelerate business growth and associated increased jobs in Washington as the world transitions to a clean energy economy. The Legislature also funded hiring a consultant to develop a plan to meet that objective. The Leadership Plan Report is the product of that legislation.
One of the key findings of the Report was that “leadership” is not where Washington currently is in the clean energy field – and probably not where it could get to on a broad scale under any circumstances. Washington’s natural success at clean energy is part of the problem; its abundant hydropower already gives it both some of the cleanest and the lowest cost electricity in the United States. That means that most renewable energy sources and many of the energy efficiency solutions have initial costs that are higher than Washington’s low-cost existing supplies. That makes it difficult for either Washington’s regulated utilities or its publicly-owned utilities to adopt market-leading clean energy solutions, because the added costs must be reflected in increased consumer rates. Many other states have invested far more heavily and far earlier than Washington in research and technology solutions. Indeed, the tax incentives and business assistance offered by other states have caused a number of start-up companies in the clean energy field that began in Washington to relocate to other states. Washington cannot assume that its success in the high-tech revolution 25 years ago, its rich supply of technology talent and its high quality of life will necessarily assure it of success in the new world of clean energy technologies. To the contrary, a number of other states offer a better business environment for clean technology businesses, and have been actively recruiting. For a start-up business, financial assistance and markets are hard to ignore, and there are a lot of places where business success offers an entrepreneur a high quality of life.
The other reality is that if a region wants the world’s conversion to green energy to be a source of its long-term economic success, that region doesn’t just want to install efficiency technology in its buildings and a power grid for electric cars. The region wants to develop the technology that it will use to lower its carbon footprint AND the technology it can export to the rest of the world to do the same. It is the ability to export its skills and technologies that enhances the long-term wealth of a region. That is why Boeing and Microsoft are so important to Washington. But in the green energy field, other parts of the world, most notably China, are investing heavily in developing the technologies that they can test at home but then export to us. There is nothing wrong with creating “green” jobs by training workers to install weather stripping and thermopane windows in homes, but those are not high-multiplier jobs, that boost the economy as a whole very much. The high-multiplier jobs are the research and development jobs that find and manufacture the new glass that insulates better than any existing windows, and ships that glass around the world. To date Washington’s investment in clean energy has been more directed at encouraging the individual investments in energy savings, and not enough directed at developing the businesses that will export success from here to the rest of the world.
To address that troubling starting point, the Clean Energy Report has at least two critical ideas. The first is that Washington needs to identify those segments of the universe of “clean energy” where it has natural advantages and concentrate its efforts there. It will, for instance, never lead in clean coal technology – it doesn’t have coal mines and it doesn’t have any significant coal-fired power plants. It will not lead in developing the hydrogen automobile or the battery that extends the range of electric cars – that will happen in Detroit or other parts of the world where automobiles are the focus of the economy.
The Clean Energy Report found three areas where it concluded that Washington should focus:

  • Energy efficiency. Implementation of leading-edge, large scale combined energy efficiency, green building and smart grid solutions that seek to achieve “net-zero energy use” buildings. That focus can leverage Washington’s strong green building and software sectors with upgrades to the electrical grid.
  • Renewable energy integration. Integration of renewable energy resources into the electric grid and utility portfolios, with a combination of renewable energy, energy storage and smart grid solutions that will more cost-effectively utilize the rising percentage of wind power and future solar power, by means of technologies that could be applied to other regional utility systems.
  • Bioenergy. Demonstration of market-leading deployment of biomass power generation and development of transportation biofuels using Washington’s extensive forest- and agriculture-based resources and in-state capabilities.
  • In each of these areas there is something unique to Washington, not already widely shared by states and nations that have been focusing longer and harder than we have. The Report talks about the specifics of how to drive each of these areas to achieve market demonstration of leading-edge implementation of their advances.

The second critical idea is that making this work will require investment from the state of Washington. The Report sets $20 million per year as the minimum threshold of funding that will make Washington a serious competitor for leadership, even in these areas of focus where it starts with some natural advantage. Other states, with poorer economies and worse state budget crises, are spending that much or more. The reality is that the first market demonstration of any technology is almost never economic on its own. We have the Internet because the Defense Department invested in it. With states across the nation vying for clean energy jobs and the economic growth associated with becoming a clean energy exporter, Washington will need to invest as well if it wants to be the home of a green energy future.
That poses a stark challenge for the budget writers in the Legislature. This will be a brutal budget year for the state. There is no assurance that next year or the next will be better. Most of what the Legislature will be doing is cutting programs that they believe are important, and which have focal constituencies. None of the decisions will be easy. But one must hope that the Legislature also recognizes that we probably do not have the luxury of waiting until a better time. By the time the state budget is in better shape it may well be too late to catch up with the states and nations that have used this time of budget crisis to nonetheless invest for future prosperity.