PI Original Ellyn Fortino Friday March 21st, 2014, 2:06pm

Illinois Clean Energy Industry Stymied By Contradicting Policies, New Report Shows

More than 96,800 people work in Illinois’ clean energy industry, which is on track to grow this year, according to the new “Clean Jobs Illinois” report. But that growth is being stymied by contradicting state and municipal policies. Progress Illinois takes a look at the report’s findings.

Close to 100,000 people worked in Illinois’ clean energy industry last year, according to a new report. And the industry is showing promising job growth for 2014, which is critical in a state where, at 8.7 percent, the unemployment rate is two percentage points higher than the national rate of 6.7 percent.

“Bottom line, the report shows that the clean energy sector is growing and is an important part of Illinois’ economy,” stressed Barry Matchett, co-legislative director and policy advocate at the Environmental Law and Policy Center, one of the organizations that helped with the report.  “That’s something that’s really important for citizens to understand. Clean energy isn’t an anomalous thing. It’s part of our economy. It’s part of our society, and it’s working.” 

This year, clean energy firms in the state are projected to hire as many as 8,000 additional workers, representing an industry growth of 9 percent, according to the “Clean Jobs Illinois” report. The industry currently employs 96,875 people in Illinois, the new data shows. 

The Clean Energy Trust, a non-profit in Chicago working to advance clean energy innovation in the Midwest, commissioned the report, which is based on a survey of Illinois clean energy companies. The public opinion research firm BW Research Partnership conducted the survey. In addition to the Environmental Law and Policy Center, the Environmental Entrepreneurs, or E2, and the Natural Resources Defense Council also worked on the report.

For the study, 1,599 clean energy firms provided some information about their clean energy activities, and 415 firms completed the full survey, which was conducted by phone and web throughout October and November 2013. Researchers placed more than 27,000 calls and sent some 9,000 emails for the survey, which is said to be the most rigorous of its kind for Illinois. The report defines clean energy jobs as those involved in renewable energy, energy efficiency, electric vehicles and carbon management.

While clean energy companies appear to be optimistic about 2014, policy challenges have stifled growth among renewable energy firms, the study found. In 2013, employment in the renewable energy sector contracted by 0.2 percent “due in significant part to policy headwinds,” according to the study.

Patrick Whitty, the Clean Energy Trust’s program director, noted that these “policy headwinds” are imposed at both the state and federal levels.

Most relevant here in Illinois, he said, is the state’s Renewable Portfolio Standard (RPS), a regulation passed in 2007 that requires the state to get at least 25 percent of its electricity from naturally renewable sources by 2025.

“The state is showing strong leadership on that front, however, the law right now is not working as intended,” Whitty explained. “It’s basically frozen renewable investment in the state.”

That’s because the RPS was created in 2007 before municipal aggregation occurred. Community municipal aggregation allows city and county governments to purchase electricity on behalf of residential and small business customers, and negotiate a price with an alternative electric supplier rather than the utility that serves the area. As a result of municipal aggregation, about 90 percent of customers in the state are getting their power from alternative suppliers rather than through the Illinois Power Agency, which was supposed to be the primary vehicle to procure, and therefore build, renewable energy annually as part of the RPS, explained Matchett. 

“In 2012, before municipal aggregation really took off, Illinois built something around 850 megawatts of renewable energy. We moved into being the fourth-largest renewable energy producer in the country,” Matchett said. “In 2013, as the effect of this aggregation took hold, we built zero megawatts of renewable energy in the state. That’s a major problem, but it’s solved with a simple fix to the statue.” 

Municipal aggregation, Whitty added, is good policy that has led to more Illinoisans getting their energy from renewable sources.

“It’s just that there are two different policies that are not working together, and that’s what the RPS fix is about,” he said.

In the study, firms noted that maintaining a strong state renewable energy standard would be the best way to advance clean energy in Illinois. 

“Even though not every business is in the renewable sector, it still came out as the top concern among everyone who participated in the survey,” Whitty said. “One of the things that speaks to is just how strongly the industry feels that this is an important focus for them, and for the state to continue developing its leadership in clean energy.”

Of the state’s more than 96,000 clean energy workers in 2013, 35 percent of the employees held jobs in engineering, research, manufacturing and assembly, the report showed. Another 30 percent were employed in the installation and maintenance fields.

More than half of Illinois’ clean energy companies are working to conserve — not generate — energy, the study found.

The state’s energy efficiency sector, which involves things like smart grid technology development and weatherization services, made up the largest share, 62 percent, of Illinois’ clean energy industry last year. In 2013, more than 60,400 people were employed in that sector.

And the energy efficiency efforts appear to be paying off. Electricity demand in the Midwest is estimated to drop by about 1 percent between now and 2016, the report stated. Meanwhile, the energy efficiency sector is projected to grow by 9.9 percent this year.

“Illinois’ robust energy efficiency sector is due in part to the state’s energy efficiency standards,” the report reads. “Illinois efficiency standards say that utilities must reduce electricity demand by 2 percent each year but spend less than 2.015 percent of rates paid by customers on efficiency projects.” 

Last year, the renewable energy sector represented the second largest share, 28 percent, of the clean energy industry, followed by alternative transportation and greenhouse gas management, which includes controlling carbon emissions. 

But researchers found that Illinois did lose renewable energy jobs last year, which is also when the federal Wind Production Tax Credit expired. Survey respondents said they want to see incentives and rebates for clean energy investment strengthened as well as restrictions on traditional fuel sources. 

At the local level, Illinois does not provide much direct support to the renewable energy or energy efficiency sectors, Matchett explained.

“We have some small state programs that work in very specific areas of those sectors, but we don’t have some $100 million fund that’s out there providing direct assistance to renewable or efficiency companies,” he said.

Nonetheless, Illinois is considered to have one of the best energy efficiency programs in the country, and the state also has the second-best renewable energy standards, Matchett pointed out.

“So there’s a sense that they’re doing some of it right, but where we are at the moment, at least on the renewable side, we do need a few tweaks to get things lined up in a better way [for] the future,” he added. “When it comes to the efficiency side, I think there are significant opportunities, and there’s a little bit of a debate going on in Springfield, about how to make sure our energy efficiency programs are capturing all of the available energy efficiency that’s out there in the market.”

Illinois should look to other states that have adopted forward-thinking clean energy policies, Whitty said.

“There are issues out there on the horizon where we know states are taking leadership,” he noted. “That’s not to detract from what Illinois has already done to advance renewable energy and clean energy more broadly … There’s certainly bright spots for Illinois and areas [where] we can move ahead as well.”

When questioned about the advantages of operating in Illinois, many firms cited the state’s clean energy network, proximity to customers and resources in Chicago, like networking opportunities and its workforce.

The disadvantages of operating in the state, according to the companies, include “high taxes and costs, government regulation and the political climate, including dysfunction and uncertainty.”

Although the survey showed that 40 percent of clean energy companies plan to hire more workers in the coming year, more than half of the employers, 51 percent, said they found it difficult or very difficult to fill new clean energy positions over the last 12 months. Specifically, they had a hard time finding qualified software and mechanical engineers, welders and installers.

For educators and jobs trainers, Whitty said he hopes the survey illustrates that “this is an important part of the economy and there are jobs here, and that those jobs are in demand — and they’re good jobs.”

“We hope more mid-career workers out there who have the experience and skills that clean jobs offer or require look at this industry as one they might be interested in moving into,” he added. “If you’re an engineer or a software designer who’s working in a different sector, you can make a difference working in the clean energy industry.”

The partial survey of 1,599 firms has a margin of error of plus or minus 2.38 percent at a 95 percent confidence level. The margin of error for the full survey of 415 firms is 4.69 percent at a 95 percent confidence level. This is within the typical range for similar industry studies, the report noted.

Comments

Despite the Clean Energy’s leadership in the market for natural gas fuels, it has consistently reported financial losses since its inception.

 

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