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At CAPAF, we have come to believe, through deep research on the matter, that smart strategic investments in climate solutions can help to rebuild the underpinnings of our economy. Built on the foundation of efficient and low-carbon energy sources, this transition can be a source of increased business opportunity and competitiveness, stronger communities, improved national security, and increased prosperity. We call this approach “the Energy Opportunity,” and we believe that it must be at the center of both America’s energy policy and our economic policy as we confront the interrelated challenges of a sagging economy, rising energy prices, and a growing climate crisis.
Working in partnership with the University of Massachusetts’ Political Economy Research Institute, we released a report this month entitled, “Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy.” The report outlined a strategy for short-term economic recovery that simultaneously achieves longer-term public purposes by investing not only in a traditional consumption-based stimulus, but by helping to lay the groundwork for the transition to a clean, low-carbon economy.
The recent economic downturn makes the need for a recovery package urgent and incontrovertible. August unemployment was at 6.1 percent, a five-year high, and employers cut nearly 84,000 jobs, primarily in manufacturing and employment services. New housing construction continued to slow in July, with privately owned housing starts at a seasonally adjusted annual rate 11.0 percent below the revised June estimates and 29.6 percent below the July 2007 rate. For the 18th consecutive month home prices continued to drop, with the S&P/Case-Shiller 20-city home price index falling a record 15.9 percent for the year through May. Finally, the recent upheavals in financial markets make the case for some sort of recovery package all the more compelling.
A program of investment in deploying new clean energy technology and improving building efficiency is good short-term economic policy. It would drive immediate spending into some of the hardest hit sectors of the economy in construction and manufacturing, and ensure that an infusion of near-term spending flows directly toward job creation and domestic investment. Specifically, we outline in our report a program of investment that would inject $100 billion into the domestic economy through near-term spending on energy efficiency and renewable energy. We focus on strategies that would ensure the funds are brought to bear rapidly, within an 18- to 24-four month timeframe. We find that a strategy for economic recovery that invests in new energy alternatives and smart public infrastructure provides superior improvements in economic performance and job creation when compared to either rebates or comparable spending on traditional energy sources. Put simply, a green recovery package creates more jobs and more good jobs than any other strategy. It deserves strong consideration at this time.
Drawing on this work, I want to principally address three topics with you today. In this testimony, I discuss:
1. Why public investment in energy efficiency and renewable energy should be central to any near-term economic stimulus package.
2. Specific measures that Congress could include in a stimulus package.
3. The proper relationship of short- to medium-term measures in the report, and a long-term, comprehensive strategy for investment in clean technology and green jobs.
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