Economic Development in a Transforming Energy Economy - New IEDC Report Available to the Public

Today's guest blog is authored by Elizabeth Thorstensen, Senior Associate at the International Economic Development Council (IEDC), and a primary author of the IEDC publication Getting Prepared: Economic Development in a Transforming Energy Economy.

While the specifics of the transition to a low-carbon economy are still being debated, it appears likely that some type of cap and trade or carbon pricing will emerge. Any effort to price carbon will hold significant implications for U.S. industries, regions and the nation. The International Economic Development Counicl (IEDC) recently published a report, Getting Prepared: Economic Development in a Transforming Energy Economy, designed to aid economic developers and others in related fields in positioning their economies to benefit from the transition. While IEDC does not specifically promote a cap and trade policy, we recognize that this is an important emerging issue that those in the economic development and allied professions need to be aware of and to understand.

To understand how states are preparing for this changing policy paradigm, IEDC convened a group of state economic development leaders in the fall of 2009. The meeting was intended to explore the opportunities and challenges presented by a regional or economy-wide move toward carbon pricing. The states represented diverse geographies and economic circumstances.

Following this meeting, IEDC selected nine states to profile in the Getting Prepared report to better understand how states are already transitioning to the low-carbon economy and working to reduce their greenhouse gas (GHG) emissions. Across the majority of states examined for this report, we found a significant amount of GHG mitigation activity, much of which is linked to economic development or is in the process of developing such linkages. Policies such as renewable energy standards, state and local energy efficiency strategies, new building codes, as well as clean tech development and deployment have tremendous implications for economic development.

If national and local economies are to maintain and increase their competitiveness, reduction of GHGs must be understood as beneficial to the future health of the economy, not just the environment. Almost all states are now taking steps toward changing their energy profiles and incorporating sustainability into their economies. The challenge of transitioning to a clean energy economy will be to employ and connect all of these pieces in a synergistic way. Given that cap and trade, or carbon pricing may relatively soon become a reality of the American economy, changes and preparation are needed if it’s going to be a smooth transition. How economic developers build systems that will aid the transition and tap into its potential is of critical importance.

Despite the diversity of their assets all of the states featured in Getting Prepared indicated some movement toward greater preparedness in light of a shifting energy economy. That preparedness emerged in four areas detailed in the report:

• Policy drivers;
• Investments in innovation;
• Transition assistance, and;
• New partnership development.

While some policies stand alone, others are part of a set of complementary policies that are capable of transitioning economies over the long term. The integration of the business community, government, workforce intermediaries, utilities, and entrepreneurs will all be vital for the transition to grow organically rather than reactively or behind the curve.

Unlike the biotech sector, in which only a few regions were favored by sustained federal R&D funding, all communities can stand to benefit from the transition to a lower-carbon economy. Therefore, the real story is that preparedness is an economic driver in and of itself. The more you invest, the more prepared you are, but you’re also starting to drive your economy into more dynamic areas of growth. The key will lie in balancing acceptable climate change policies with economic assets in a way that advances GHG mitigation while driving growth.

To find out more and to read the full report, please go to: http://www.iedconline.org/?p=Getting_Prepared