UK should learn from Obama’s green jobs gamble

By Wednesday, the deadlock between Republicans and Democrats in the US debt crisis will have been resolved one way or another. The nation’s most crucial challenge, to reduce chronically high levels of unemployment, will swing back into view again. The US has an estimated 12.4 million jobs gap that urgently needs to be reduced. One solution which has regularly been held up by President Obama in response to the crisis is the promise of US’s emerging ‘green economy’.

Obama bet heavily on this early on in his Presidency, investing around one eighth of Stimulus Act funding ($90bn) in building a clean economy. As well as the longer-term gains from green energy incentives, his aim was to create hundreds of thousands of ‘shovel-ready’ green jobs in public works-style programmes in energy efficiency and home insulation to put Americans back to work.

The bet is paying off, but not in the way Obama thought. Despite at least $20.5bn spent on energy efficiency and buildings retrofit programmes, few jobs have been created in that sector. Mass layoffs in the construction industry have outweighed any gains made through the stimulus investment and the domestic retrofit market wasn’t sufficiently developed to create jobs on the scale expected. A report recently published by the Brookings Institute shows that just 60,000 jobs were created in this sector between 2003 and 2010.

Green jobs growth in the US is in fact being driven by emerging energy technologies like wave and wind power and solar thermal, which have grown at around four or five times the rate of the wider economy, despite difficult market and finance conditions.

The UK can learn lessons from this. First, it’s vital to get the market conditions right for energy efficiency schemes to both save energy and create jobs. Without achieving a far greater level of uptake of residential energy efficiency measures, the government’s Green Deal home insulation scheme will struggle to deliver on its 250,000 jobs ambition. Second, though the private sector will play a lead role in the development of renewable energy, government support for this industry is crucial to help overcome barriers to growth and support job creation.

But an overlooked legacy of Obama’s green jobs campaign has also been to link green with economic aspiration in the minds of the American public. As a new IPPR report shows, this has broadened out the appeal of the green economy and played an important role in helping maintain support for clean energy policies. With energy bills rising in the UK, and green policies getting some of the blame, now might be a good time to start following that lead.

Clare McNeil is Research Fellow at IPPR

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