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Horses, Buggies, and SB438: Senate bill would kill state’s clean energy leadership potential

September 4, 2015 | |

(NY Daily News: Courtesy of Merri Ferrell)

Some Michigan GOP Senators are pushing SB438, which would slow Michigan's drive to become a 21st-century, clean-energy manufacturing leader.

A century ago, Detroit and Michigan were growing like cherries in June. As the nascent auto industry took hold in Detroit and Michigan, it attracted ambitious, hard working people from around the world who wanted to work on Henry Ford’s new-fangled production line.

As the auto industry exploded, new factories, housing, and businesses sprouted throughout southern Michigan. All roads seemed to lead to Detroit, the Silicon Valley of those times. The city’s population hit 300,000 people; a decade later, it passed 1 million and continued upwards, peaking at almost 2 million around 1950.

Those were heady times, transforming Michigan into the Auto State and Detroit into the Motor City. America wanted cars, we knew way better than anyone else how to build them, and the state enjoyed more than a half-century of unprecedented prosperity.

Today, the whole world wants solar panels and wind turbines, and Michigan manufacturers, among the world’s best and most innovative, could provide huge numbers of them. We could be a giant on the clean energy stage, but only if we can build and hold on to our own home market as a base for exporting.

But that means Lansing’s Republican Senators must cast aside stale ideologies and SB438, and understand that the new, global, clean energy industry, easily as wealth building as the auto industry, is taking off like a rocket, but could leave us at the launching pad.

It was not always this way. Thanks to a smart, bi-partisan 2008 state law, Michigan grabbed an initial piece of the emerging clean energy industry. The law—which required utilities to get to 10 percent renewables by this year, help cut energy use by 1 percent annually, and pay people fairly for the solar power their panels generate—led Michigan entrepreneurs to begin manufacturing all sorts of wind and solar parts and, in the state’s fine tradition, develop ingenious new processes to make them better and cheaper—lighter wind turbine blades, for example.

It was the clean-energy home market produced by our 2008 law that galvanized Michigan industry. It led to nearly $3 billion in clean energy investments in the state, many thousands of manufacturing and installation jobs, and big savings for utility customers, thanks to efficiency programs and the falling cost of renewable energy, especially wind power. Given that our 2008 law was not particularly strong compared with many other states’, the sharp rise of our clean energy economy demonstrated just how strong and effective our manufacturing heritage is.

However, if our clean energy policies were strengthened instead of, as many state Republicans want, severely weakened or eliminated, we would do even better.

How much better?

In 2014, the Cleantech Index reported that venture capitalists invested $5.5 billion in U.S. deals. California, Texas, Massachusetts and Illinois gobbled up about $4 billion of that pie, leaving Michigan and other states with the crumbs.

Michigan was not even in the Top 10 overall, nor the Top 10 for utility-scale wind or solar, hybrid cars, EVs, smart meter market penetration, or ultra-efficient buildings. Overall, when it comes to clean energy, the state that put the world on wheels and changed how manufacturing is done now ranks 13th overall, 18th in policy, and 29th in technology innovation.

The one bright spot: Per capita, Michigan was number two for clean-energy patents, thanks to Michigan industries’ hybrid, electric car, and fuel cell research. But it lost the top spot to Delaware and DuPont, where many patents were won via the state’s strong participation in the solar market.

Why does Michigan lag behind these other states in so many categories? Unlike the Wolverine State, California, Massachusetts, and Texas have policies that deeply commit them to new, emerging energy markets rather than to paternalistic protectionism for the status quo.  These states’ policies provide students, residents, and out-of-state employees and companies the certainty and incentives they need to stay in or move to those states so they can prosper from the new markets their policies are driving.

But Michigan is moving in the opposite direction. In the Michigan Senate, the Republican-sponsored SB 438, for all its talk of “customer fairness”, “cookie cutter solutions,” “picking winners and losers,” and “market freedom,” is actually a warning to anyone thinking of building a clean energy business here: “There might be significantly more clean energy technology developed in Michigan, but there might not be, too. You are on your own, and we’re not here to help.”

America’s clean energy and clean transportation sectors now include a remarkably broad array of research activities, manufacturing facilities, and jobs connected with computers, smart phones, smart meters, demand-side response, apps, and even augmented reality. It is happening on an enormous scale and touches every aspect of our life. But instead of being a clean energy powerhouse, Michigan will become a follower if SB 438 becomes law.

Utility and fossil fuel company lobbyists are working the state capitol with great success, convincing conservative lawmakers that continuing and expanding the 2008 standards—i.e., actually requiring utilities to stick to a clear, predictable plan in developing clean energy—is a bad idea, even though it plainly works so well.

Perhaps that is what it was like a hundred years ago. Were horse and buggy representatives as ferocious as today’s utilities in efforts to hold back those horseless carriages? In 1900, after all, there were 21 million horses in the U.S. and only 4,000 autos. Due to longtime production and investment, the cost of the cheapest buggies had dropped to $20, making it difficult for upstarts to compete.

But, lobbying or not, times do change, innovators build revolutionary things and, eventually, new technology wins out. And so it was that, as the auto industry grew, and the nation’s paved roads expanded, the buggy industry collapsed. In 1914, there were 4,600 carriage companies. By 1925 that number had dropped to 150. In 1919, in a sign of the times, Studebaker’s motorized carriages finally discontinued their horse and wagon gear.

The same will certainly happen for the coal, natural gas, and centralized power generation industries. The question is: Will Michigan be a leader in making that change? Or will we still be clinging, as much as Michigan law allows, to our old way of making and delivering energy, while dozens of other states—and many dozens of other countries—soar in the clean energy economy?

There is a brave new world out there—one without carbon, poisonous fossil fuels, the air and water pollution they cause, and the risky extraction and transportation practices they require.

Right now, Michigan is stuck in the horse and buggy days. To the extent that SB 438 is intended to start an honest, open conversation about how to thrive in the new energy economy, it is overdue and to be applauded. However, to the extent that the Bill is an effort by fossil fuel supporters – whether they be Koch Brothers-funded groups like the American Legislative Exchange Council (ALEC), the utilities themselves, or badly informed elected officials— to preserve the status quo, they need to give up and untie the hands of Michigan’s entrepreneurs. That would effectively invite the rest of the world to move to Michigan again, not to build autos, but to help lead the worldwide drive toward a bright new energy future.

Dan Worth is the clean energy policy specialist for the Groundwork Center for Resilient Communities. Reach him at [email protected]

About the Author

Dan Worth is Groundwork's clean energy policy specialist. Reach him at [email protected].

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