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Climate Policy? Industrial Policy? Or Both?

Earlier today, I walked down to the Good Jobs, Green Jobs conference here in Washington, D.C., organized by the Sierra Club, the United Steelworkers, and a bunch of other labor and green groups focusing on—what else?—job creation in the clean-energy economy. I'd say the crowd was roughly half labor members and half environmentalists, and yes, the visual stereotypes you'd expect were occasionally on display (hulking steelworkers in overalls striding through crowds of skinny, thick-bearded eco-activists). This sort of partnership bodes well for energy and climate legislation—recall that only a decade ago, the AFL-CIO stood four-square against the Kyoto Protocol.

Anyway, one of the keynote speakers today was Michigan Senator Debbie Stabenow, and I was curious to hear her talk because she's going to be one of the crucial swing votes on any climate legislation this session. Back in 2008, during the Senate debate over the Lieberman-Warner cap-and-trade bill for carbon emissions, Stabenow voted to break the Republican filibuster, but then wrote a letter, along with nine other Democrats from manufacturing states, informing Barbara Boxer that she wouldn't have voted for the final bill, for fear that it would wipe out jobs in the Rust Belt. Unless those concerns get addressed, no sale on carbon caps.

So what was Stabenow saying today? She started off by emphasizing that jobs in the solar and wind industry could help revitalize Michigan's hollowed-out manufacturing base, and then insisted that solar panels and advanced batteries for plug-in cars should be built in the United States—the reason countries like Germany were blazing the trail in solar manufacturing was that our policy framework for promoting renewable power was so skimpy. (To take one example, Dow Corning is investing billions in Hemlock, Michigan to produce polysilicon, a key material for photovoltaics—but the material then gets shipped off to Germany and China, where the actual panels are assembled.)

Stabenow then addressed cap-and-trade, and said that while climate change was indeed a "huge crisis," a cap-and-trade regime would only promote green jobs "if we do it right." She kept uttering the phrase, "do it right." What does that mean? My sense, from listening to her speech, is that she'll only get behind carbon caps if they come alongside a national industrial policy to promote green manufacturing here in the United States. She noted that a lot of her Senate colleagues were happy to talk about incentives for renewable generation, but she was struggling to get them to focus on incentives for the actual manufacturing involved in clean energy

If you look at the entire supply chain, she pointed out, 70 percent of the jobs created by the wind industry are manufacturing jobs—the people making the ball bearings, the steel, and so forth. But if we just stuck a price on carbon and enacted policies to promote wind-power generation, there'd be no reason those jobs would have to stay in the United States, let alone Michigan. (China can manufacture wind turbines, too.) So if the Rust Belt's older, dirtier industries can't be saved, Stabenow at least wants to guarantee that the nascent "green" industries will be protected. "We know [climate change] is critical," she said, "but you need to show people there are jobs."

It's a prickly topic that'll almost certainly poke up in the months ahead. Most of the Rust Belt Democrats—Stabenow, Carl Levin, Sherrod Brown—appear to be warming to the idea that a cap on carbon can promote new technologies and new industries that can, in theory, help revitalize the Midwest. I know that some green groups like Environmental Defense Fund have glommed on to this, and instead of hyping the usual economic studies about how cap-and-trade will be relatively painless in the aggregate, as they did last year, they're now doing finer-grained analyses of the manufacturing supply chain and showing how clean-energy industries can create specific jobs in specific locales. But it sounds like Stabenow wants to see more focus on industrial policies to ensure that that stays the case. What exactly this would look like—subsidies for technology? tax breaks for manufacturers? protective tariffs?—is still unclear, however.

--Bradford Plumer