January 28, 2011 / 12:59 AM / 8 years ago

Analysis: Obama green job vision faces challenge from abroad

SAN FRANCISCO (Reuters) - CEO Bill Watkins wants to build a $100 million next-generation LED light factory near his Silicon Valley-area headquarters, but China wants the 2,000 jobs he hopes to create.

U.S. President Barack Obama tours Orion Energy Systems, a power technology company, as part of his Administration's White House to Main Street Tour, in Manitowoc, Wisconsin, January 26, 2011. REUTERS/Larry Downing

The head of Livermore-based Bridgelux loves California, USA, but other nations are offering cash and guaranteed markets, tempting the executive who prefers a “Made in America” sticker on his bulbs.

“I could solve Bridgelux’s problems — I put a factory in Asia,” said Watkins.

That is the reality facing President Barack Obama, who called on the United States this week to build a clean energy economy, using cleaner sources than traditional coal plants to generate up to 80 percent of U.S. electricity by 2035.

It is part of a global race to dominate what is seen as a potentially huge industry in solar, wind and other alternative energies that offers wealth and energy independence. For the United States, it is part of Obama’s high-stakes plan to create jobs in the “jobless” economic recovery.

But it will not be easy — or cheap — to convince Watkins and other clean technology and alternative energy start-ups to set up shop at home as rival nations offer companies the carrot of subsidies and the stick of cut-throat competition.

Clean energy jobs range from research to manufacturing, construction and installation of plants. California’s Silicon Valley remains a global center of research with its universities and specialized financing, and local construction will always be necessary to build a power plant. But the United States is not assured of manufacturing jobs.

Factory jobs are appealing because they can be done by a relatively large group of people, said Daniel Weiss, senior fellow and director of climate strategy at the Center for American Progress think tank.

“We do not want to be an economy that only has two ends — innovation and installation — without having production in the middle,” he said.


Recent lessons for solar companies are grim. California’s Solyndra, pulled its public stock offering last year after its auditor questioned its survival prospects. Evergreen Solar said this month it would close a Massachusetts factory employing 800 people, despite getting generous incentives from the state, in the face of cheap Chinese solar cells.

California’s Innovalight is licensing its technology, which improves solar efficiency, rather than compete in manufacturing with the Chinese.

“Up front these companies need help, like all of the other countries are offering them,” said former Michigan Governor Jennifer Granholm, who convinced her Legislature to provide up to $400 million in grants to advanced battery companies as the state’s economy cratered during the auto industry downturn.

“There was a crisis that precipitated direct action on our part,” she said, and Michigan responded by courting industry it felt would thrive, like auto-related battery makers. “We got a lot of push back for picking winners and losers,” she said.

About 18 battery companies, including divisions of established automakers, are creating some 64,000 jobs as a result, she figures, with grant winners facing requirements to provide jobs.

A recent study of California green jobs showed the sector growing about three times faster than the entire economy for more than a decade. Even so, the industry is relatively small, accounting for 174,000 jobs as of two years ago.

“California is a leader in patents,” which stokes innovation, said economist Doug Henton of Collaborative Economics, author of the study for nonprofit Next 10. “The other thing that is driving this obviously is a concern for the environment.”

Watkins scoffs at some environmental goals, and is focusing on economics. His dream is for California to guarantee him a market by setting up a fund for cities to buy LED streetlights — with 60 percent U.S. content.

It would be a no-cost program, he argued, since cities would pay back the loans with energy savings, and the entire industry, not just his company, would be drawn in.

“It could be the U.S., if I get a ‘Buy America’” program, he said.

Editing by Mary Milliken and Peter Cooney

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