PITTSBURGH/NEW YORK (Reuters) - The collapse of the U.S. steel industry forced Drew Mihalek in 1977 to leave Pittsburgh, a onetime capital of industry that U.S. President Barack Obama will show to world leaders this week as a “bold example” of a new green economy.
Mihalek, 58, recalls bubbling caldrons of metal during summer jobs at U.S. Steel as a college student. Now he works in a dust-free workplace as environmental health and safety manager at Solar Power Industries, a maker of solar cells.
Mihalek calls the change in his hometown “kind of like my own personal revitalization.” That shift will be in the spotlight this week as leaders from the Group of 20 nations meet in various “green” buildings — a visible image of the new economy touted by the Obama administration.
Debate before the Pittsburgh summit of leading developed and developing countries has focused on bankers’ pay, regulation of the financial sector and how governments should withdraw from the enormous stimulus packages enacted to blunt the global economic crisis and spur growth.
Climate change and tackling high unemployment are other issues on the G20 agenda, tying into Obama’s vision for a green economy and why Pittsburgh is hosting the summit. But hopes for millions of new green jobs in the U.S. economy may prove more ambitious than many advocates and investors dream of.
Central to a green economy are education, innovation and research, which Pittsburgh offers through schools like Carnegie Mellon University and the University of Pittsburgh. Also key are an educated work force and plentiful raw materials.
Andy Hannah, chief executive of Plextronics, a company that makes organic solar cells and organic light-emitting diodes and uses photoactive inks to print solar cells, said Pittsburgh offers the right mix of corporate and university talent.
Hannah also said Pittsburgh was a prime location for setting up Plextronics because raw materials such as aluminum, glass and plastics are produced locally.
Patrick McCarthy of ATRP Solutions, a polymer maker using technology developed at Carnegie Mellon, also said the key elements for a green company come together in Pittsburgh.
“In this city, we have a history of materials companies commercializing products. This expertise is not everywhere in the country,” McCarthy said.
Despite all its strides — Pittsburgh has one of the largest green collar work forces for a U.S. city its size — some doubt green jobs will be a major engine for the economy.
Lester Lave, an economics professor and director of the Green Design Institute at Carnegie Mellon, said neither oil or coal will be replaced any time soon. He also said politicians were overly optimistic in their assumptions about new jobs.
“You are not going to be overwhelmed with (green) jobs in energy,” Lave said. “I think the vast majority of jobs are going to be in the retrofit area and those can be good jobs.”
There has long been debate along left-right political lines about the viability of green energy and the large government funding needed to get renewable energy off the ground.
The $787 billion economic stimulus package that Obama signed into law in February included more than $60 billion in clean energy investments.
A green economy would boost energy independence and reduce a chronic U.S. trade deficit, advocates say. But that dream is still far away: solar and wind power accounted for just 0.6 percent of U.S. energy consumption in 2008, according to the U.S. Energy Information Administration.
Another selling point for a green economy is that a green collar work force earns 10 percent to 20 percent more than other jobs, the Council of Economic Advisors has said. And those jobs are more likely to be union jobs, the council said.
The Bureau of Labor Statistics estimated in May 2008 there were 9.9 million people employed in U.S. production, and 3.3 million in computer and mathematical sciences, where salaries averaged $74,500 a year, more than double that of manufacturing.
For all the talk about jump-starting the U.S. economy and spurring jobs, some say that impact has yet to be felt.
“I hear a lot of thunder, but I see no rain,” said John Bucher, a senior executive at Solar Power Industries, where Mihalek works.
The poster child for a green economy is solar power, which is expected to drive jobs growth, especially in installation.
But costs still outweigh benefits and industry experts say grid parity is a tipping point that is several years away. Grid parity refers to when solar costs come in line with the cost of electricity from the power grid.
“If the incentives aren’t there, then it’s hard to justify the price of the system itself,” Bucher said.
Investors have made big bets on solar energy. There are about 45 publicly traded companies in the sector whose market capitalization is about $50 billion.
A number of catalysts could spark a sudden conversion to solar panels, as was seen with the rapid adoption of cell phones in the late 1990s, said Shawn Kravetz, president of Esplanade Capital LLC in Boston, who has a fund dedicated to solar energy.
A tipping point could come earlier than many think, perhaps by 2011, especially if carbon taxes or a cap-and-trade program aimed at limiting carbon emissions comes about, Kravetz said. A fall in panel prices, cheap financing and the first solar panel to go up in a neighborhood are enough to spark sales, he said.
“People are more aware that solar isn’t a newfangled technology, it’s by-and-large a 30-year-old technology that works,” he said. “We just need to get the cost to where it’s cost effective, and where, thanks to some government support, we’re finally there.”
Editing by Frances Kerry