Energy production is booming in some western states, like North Dakota, where its unemployment rate has fallen below 2%, and fracking has made the potential for gas extraction a promising proposition. Yet, many major projects, like the Keystone pipeline and development in parts of the Marcellus Shale Field remain in limbo as lawyers, activists and regulators reduce the prospects for domestic energy and they prospects for increased jobs and economic growth. Ironically, with 13 million workers unemployed or underemployed, the U.S. continues to buy a substantial amount of its energy abroad. Instead of creating and producing at home, we are sending dollars overseas, sometimes to our enemies.
A couple of years ago, I wrote a study on the potential loss in economic value of 351 proposed energy projects that have been delayed or cancelled due to significant regulatory and legal impediments. These projects included energy for final sale to the public, predominantly electricity. Among these projects were 140 renewable energy projects – notably 89 wind, 4 wave, 10 solar, 7 hydropower, 29 ethanol/biomass and 1 geothermal project.
While I am not suggesting that all of these projects should have been approved, had they been approved, the economic benefits of constructing these projects would have yielded 1.9 million jobs during each year of construction and a total of $1.1 trillion increase in GDP. In addition, if these plants were to operate, they could have produced economic benefits for many years to come, including $145 billion in increased GDP per year, plus an average 791,000 jobs per year during operations, according to the study results.
Among the impeded energy-producing projects identified in this study, nearly half (45%) were identified as renewable energy projects, which suggests that cleaner energy projects are hitting the same roadblocks as gas, oil, nuclear and coal projects. These projects accounted for one-half million jobs per year – during just in the construction phase.
The study also showed that there were plenty of private investors and developers are prepared to fund, build and operate energy projects that could materially increase GDP and create many jobs, yet some activists look at these projects as if energy is a curse on society, not the opportunity that they are.
Faced with a slow economic recovery, mounting federal deficit and higher than average unemployment rate, maybe the U.S. economy needs a second economic stimulus plan.
What this study showed is that there “shovel-ready” economic projects already available to policymakers – projects that are bigger than the direct spending authorized under the Economic Recovery and Reinvestment Act (ERRA), and projects that will decrease (not increase) the federal budget deficit.
All of this can happen now, provided that the current approval energy process is streamlined and if projects would be evaluated using a more quantitative cost/benefit framework. If America hopes to remain economically competitive, create jobs, reduce its energy reliance and transition to cleaner energy, public policies need to facilitate approval of these and other energy projects, and soon.
For the first time in generations, we have an opportunity to achieve energy independence. Until policymakers encourage investments in domestic energy, loss of these private investments will continue to represent progress denied for millions of citizens and workers, and our dollars will continue to go overseas.