Association for Public Policy Analysis & Management

In response to Hurricane Sandy and other weather-related disruptions, firms are increasingly concerned about electric reliability. Combined heat and power (CHP) is an innovative technology, promising the efficient production and use of energy on consumer sites. While a U.S. executive order in 2012 set a national goal of 40 GW of new industrial CHP by 2020, the deployment of CHP is challenged by financial, regulatory, and workforce barriers. To fill the gap between private and public interests, federal, state, and local policy-makers have implemented incentive-based and/or regulatory policies, which simultaneously aim to promote energy-based economic development (EBED). EBED, a term recently coined by Carley et al. (2011), reflects the emerging strategies that capture the integration of policy-driven transformations of energy systems for low-emission and efficient energy generation and regional and national concerns for economic competitiveness and resilience. A great deal of relevant studies have addressed the ambiguous goal of growing “green jobs.” While recent policy reports have continued to use the perception of green jobs to address positive contributions of clean-energy policy legislation to job creation (For example, Laitner & McKinney, 2008; Pollin et al., 2009), previous studies to date provide only a limited understanding of EBED.

This research aims to examine the relationship between state governments’ activities on energy efficiency policy implementation and firms’ adoption of CHP technologies, and the subsequent impact on employment opportunities. We develop an empirical method for tracking historical changes on CHP generation and examine the relationship between those changes and energy efficiency and renewable energy policies that support CHP deployment. We first identify types of state CHP policy instruments, following the framework of types of pollution policy instruments defined by Goulder and Parry (2008), and score states by the intensity of those policy implementations. Second, we investigate regional differentiations of the characteristics of CHP generation by state. Third, we examine the relationship between two. We assume that industries are more likely to adopt innovative technologies where the state government provides strong clean energy policy instruments. In addition, we extend the existing literature, focusing on green jobs, by developing a theoretical framework to converge two fields—economic development planning and energy planning. Within this framework, we demonstrate how EBED has been embedded in reality, how firms act along with clean energy policies, and why green jobs could be a source of economic development.

References

Carley, S., Lawrence, S., Brown, A., Nourafshan, A., & Benami, E. (2011). Energy-Based Economic Development. Renewable and Sustainable Energy Reviews, 15(1), 282–295

Goulder, L. H., & Parry, I. H. (2008). Instrument Choice in Environmental Policy. Review of Environmental Economics and Policy, 2(2), 152–174

Laitner, J. A. “Skip,” & McKinney, V. (2008). Positive Returns: State Energy Efficiency Analyses Can Inform U.S. Energy Policy Assessments. Washington, D.C.

Pollin, R., Heintz, J., & Garrett-Peltier, H. (2009). The Economic Benefits of Investing in Clean Energy: How the economic stimulus program and new legislation can boost U.S. economic growth and employment. Department of Economics and Political Economy Research Institute (PERI), University of Massachusetts, Amherst