Obama's stimulus bill green lights green spending

US President Barack Obama will today sign the $787bn (£551bn) economic stimulus package in Denver, Colorado with proponents of green business celebrating that a tenth of the money will be directly targeted at environmental initiatives.

Echoing the sentiments of many environmentalists, Joseph Romm, a senior fellow at the Center for American Progress and acting assistant secretary of energy for energy efficiency and renewable energy during the Clinton Administration, hailed the bill as a landmark in America's transition to a lower carbon economy.

"Years from now, long after the economy has recovered, this moment may well be remembered as the time that progressives, led by Obama, began the transition to a sustainable economy built around green jobs," he said.

The final compromise on the American Recovery and Reinvestment Act passed the House on Friday by 246-183 without a single Republican vote, having passed the Senate by 60-38 with the help of three Republican senators.

The stimulus bill initially passed by the House had a projected cost of $820bn and the Senate's was even higher at $838bn, but the lower final figure was agreed in an attempt to bring the Republican senators on board and assure the bill's speedy passage.

Environment America, a federation of state-based, environmental advocacy organisations, analysed the final bill and said there were $32.80bn in funding for clean energy projects, $26.86bn for energy efficiency initiatives and $18.95bn for green transportation, giving a total of $78.61bn directly earmarked for green projects.

Obama has said that he hopes the act will create or save 3.5 million jobs over the next two years, and a sizable chunk of these jobs are now expected to be so-called "green-collar jobs".

While some popular projects took a hit as a result of the compromise deal, environmentalists were as pleased almost as much at what did not make the final cut as what did.

For instance, in the Senate version of the package there was a provision for $50bn in federal loan guarantees that could have been utilised by the nuclear and coal industries. Its original inclusion caused 243 advocacy groups to send a joint letter to senators expressing their "dismay and anger over the inclusion by the Senate Appropriations Committee of a provision in the economic stimulus bill to provide up to $50bn in additional taxpayer loan guarantees that could be used for construction of new nuclear reactors and 'clean coal' plants" .

The provision was subsequently ditched from the final bill, in a move that Kevin Kamps of campaign group Beyond Nuclear hailed as "a big victory for common sense and the American taxpayer".

"This toxic nuclear pork had no place in a bill designed to put Americans back to work and salvage our economy," he said. "Our legislators are to be applauded for getting their priorities right and saying no to yet another blatant attempt to prop up an industry that has never stood on its own financial feet."

However, less contentious green investments also took a hit with the plan to upgrade the country's electricity transmission system to better take advantage of renewable energy and improve efficiency seeing proposed funding of $11bn cut to just $4.5bn. Federal Energy Regulatory Commission acting chairman Jon Wellinghoff said the funding was "seed money... but it really isn't enough money to make huge advances in the overall backbone grid that we're talking about to integrate substantial amounts of wind."

The full investment to meet the type of renewable growth that Obama's targeted would cost more than $200bn, he said, but added that based on the proposals already submitted to the agency he now expected the rest of the funding to come from the private sector.

The need for private capital to piggyback the US government’s initiatives was highlighted by University of Massachusetts economist Robert Pollin writing in this week's Nation magazine. Banks could be required to devote a percentage of loan portfolios to green investments, he wrote, while expanded tax credits could be provided to homes and businesses for installation of solar and other renewable energy. Funds from a cap-and-trade emissions programme or a carbon tax could also be recycled back to the public in rebates to spend on energy saving measures, he predicted.

Pollin also joined with green groups in praising a stimulus package that will simultaneously cut carbon emissions and create jobs.

"The central facts here are irrefutable: spending the same amount of money on building a clean energy economy will create three times more jobs within the US than would spending on our existing fossil fuel infrastructure," he observed. " The transformation to a clean energy economy can therefore serve as a major long-term engine of job creation."

His comments were echoed by the Solar Energy Industries Association, which forecasts that the stimulus package will create 67,000 solar jobs in 2009, and 119,000 in total through 2010. The stimulus plan will "catapult the US to be the world's largest solar market by the end of 2010", predicted Suvi Sharma, chief executive of Solaria, a solar-cell maker.

Striking a similarly upbeat note was Kevin Surace, president and chief executive of Serious Materials, a Silicon Valley company that makes green building materials. With the final document providing $5bn for a Weatherization Assistance Program, enough to supposedly prevent 9.7 million tons of global warming pollution and create 375,000 jobs, he predicted that the company would "be hiring hundreds of people over the next 12 to 18 months".

Plans to invest $8bn in new high-speed rail projects also secured praise from an unlikely quarter, when Florida Republican House representative John Mica, who voted against the package, issued a statement praising the focus on high-speed rail.

"I applaud President Obama's recognition that high-speed rail should be part of America's future," he said.

A spokesman for Mica said that he voted against the bill as he saw the high-speed rail provisions as just a "silver lining". It has become a popular tactic for politicians to tout in press releases local benefits of legislation they voted against in the hope that voters did not follow the debate too closely.

As well as green initiatives, the new act will provide money for road building, new bridges, new schools and the expansion of broadband networks to rural communities, all of which it could be argued could help curb overall emissions. There are also funds to computerise healthcare records, extend federal unemployment benefits and boost healthcare funding for low-income and disabled Americans. It also provides an estimated $280bn in tax cuts.

The White House is establishing a website to track the spending, and green groups can now be expected to be keeping a close eye on how and where the new funding will be spent.

"This historic step won't be the end of what we do to turn our economy around, but the beginning,'' President Obama said over the weekend. "The problems that led us into this crisis are deep and widespread. Our response must be equal to the task."

He could of just as easily been talking about climate change, as well as the economic crisis – and given the make up of his stimulus package, perhaps he was.