Granholm Offers Michigan as Template for Clean Energy Economy

(Courtesy, State of Michigan)

Probably no U.S. state has suffered more from the collapse of American manufacturing in the first decade of the 21st century than Michigan. But that state’s governor now offers Michigan’s experience as a model for rebuilding the country’s economy with clean energy as its core.

Governor Jennifer Granholm — in a talk that was equal parts science/economics tutorial and college pep rally — told a meeting today at the Center for American Progress, a Washington, D.C. think tank, that Michigan has taken steps both on its own and with Washington’s help to start replacing its devastated traditional manufacturing industries. Instead of recreating the old industrial base, however, Granholm said Michigan is trying to build an economy based more on new technologies while still trying to put the current workforce back on the job.

Granholm said Michigan is “the poster child for the shift in manufacturing jobs”. Granholm added that the changes taking place are structural, and that she reminds Michiganders that “The world has changed, so we must change too.”

Granholm said her administration is eager to bring more clean energy businesses to the state, which she defined as new generations of batteries, solar and wind power, and energy efficiency. Michigan itself passed an energy industries bill in October 2008, which she said “sent market signals that we were serious” and helped open new companies and convert traditional manufacturers to solar and wind power components or generation.

Michigan also got plenty of federal help, particularly from the 2009 Recovery Act. Granholm focused on new automotive batteries, since a year ago today Vice President Biden came to Michigan to announce a series of 12 federal grants for manufacturing of new electric vehicle batteries. Those grants, said Granholm, led to investments of $1.35 billion in 16 companies, which are expected to create some 62,000 jobs over the next decade.

The new automotive batteries, as Granholm explained, use the same basic lithium-ion technology found in mobile phones, but are arrayed into multiple cells and packs, all of which need to be manufactured and installed into a vehicle’s electrical drive train. She noted that the various components in the entire battery supply chain are now made in Michigan. (See last week’s story in Science Business about a company making ultracapacitors to reduce the size and enhance the lifetime of automotive batteries.)

To take Michigan’s experience and project it to the national stage, Granholm said the U.S. government has to play a major role. “Every other country is doing this,” she noted with exasperation, “They are eating us for lunch, and if we don’t put our finger on the scale, for our own people and our own manufacturers, shame on us. We will lose this opportunity.”

Granholm recommended five basic steps to make this opportunity happen:

1. Pass an energy bill to set federal priorities and send a message to the global business community. She recommended framing the legislation as a jobs bill instead of arguing about whether or not climate change is real.

2. Provide federal incentives to create demand for early, and more expensive, technology. Granholm cited the $7,500 tax credit for purchasers of battery-powered vehicles, as an example of an incentive that can reward early adopters.

3. Direct federal investment in energy research and development — to speed advances that reduce the size and weight of batteries, for example — and infrastructure, such as the electrical grid

4. Access to capital, including loans and grants, for retooling factories. A lot of mid-size manufacturers cannot get the credit to buy and install the expensive new equipment they need. The banks got bailed-out, Granholm notes, but they were not required to make loans to long-time commercial customers to keep them in business and people employed.

5. Mandates that goods financed by federal investments be made in the United States, so jobs are created in the United States.

Granholm added a longer-term goal, to make a greater effort to build Americans’ skill levels in science, technology, engineering, and mathematics. In response to a later question, she admitted that American companies may need in the short term to add engineers from abroad while more American students get trained for this work.

Overall, since the state energy law was passed in Michigan, the combination of biofuels, advanced batteries, wind, and solar technologies have led to $9 billion of investment, 47 new companies and 89,000 new jobs in Michigan. “If we do the right policy, said Granholm, “we can and will create jobs.”