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High Hurdles for Obama's Green Stimulus


To qualify in the Obama Administration's stimulus package, projects must be green, shovel-ready, short-term, and job-producing

The scent of fast money in Washington has all manner of corporate interests scrambling to show they can create jobs, especially green ones. The prize is a slice of the Obama Administration's stimulus package, expected to range from $675 billion to $775 billion in scale. But the President-elect's transition team is warning interest groups that they won't see any of the money unless their pet projects meet strict criteria.

First, the projects must be "shovel-ready"—that is, ready to go immediately. "They told us that for business to get anything, we have to prove there's a short-term job impact—within six months," explains Brent Erickson, vice-president of the Biotechnology Industry Assn. (BIO), which is pushing for biofuels production incentives. But the projects can't put Uncle Sam on the hook to spend money for more than a year or two. "They have to be temporary, not creating a permanent need for funding," says Dow Chemical (DOW) lobbyist Peter Molinaro.

A "Feeding Frenzy" of Proposals

Hiring ditch diggers would get shovels in the ground fast, of course. But Obama's team is most interested in projects that will speed America toward a greener, cleaner future, reducing both energy dependence and the emissions that cause global warming. That has touched off a "feeding frenzy," says Steven Nadel, executive director of the nonprofit American Council for an Energy-Efficient Economy. "Everyone and his mother is saying why their pet projects deserve to be invested in."

The nuclear industry, for instance, wants more help not just building new power plants but also jump-starting homegrown suppliers of components. "If you think of an industry that has created the most green jobs over the past 40 years, it is the nuclear industry," argues Marvin S. Fertel, acting president of the Nuclear Energy Institute. Dow Chemical figures its water supply business fits the bill. "What's not green about retrofitting and repairing water systems that leak thousands of gallons a day?" Molinaro asks.

One proposal generating buzz predicts more than 7 million jobs from a $171 billion investment to improve the energy efficiency of buildings and homes. Commercial property owners would get short-term tax reductions, and homeowners could lower mortgage payments if they boosted their energy efficiency or amounts of renewable energy. Homeowners would get their interest rates cut to, say, 3% if they paid for home energy audits and enough insulation and other improvements to cut usage by 75%. "It gets people back to work in a way that's extremely positive," says Edward Mazria, founder of Architecture 2030, the Santa Fe (N.M.) research group that devised the plan.

It's not just companies and industries pushing job creation plans. The Interior Dept. wants $9.5 billion to restore parks and other projects. Jobs created: 149,000. For $220 million, the Army Corps of Engineers would build up protective barrier islands and wetlands in Louisiana—and generate 30,000 jobs.

The Bottom Line: Job Creation

When it comes to signing off on green projects, Obama's team won't be a pushover. "They're not going to be fooled," says Joseph Romm, senior fellow at the Center for American Progress, a liberal think tank. They demand that all claims be backed up by hard data. That's why Erickson biotechnology industry group has hired a consulting firm to calculate the jobs created by second-generation biofuels.

And that's also why Robert Pollin, an economics professor at the University of Massachusetts at Amherst, is suddenly very popular. Pollin is the co-author of a report on the potential for a green recovery and the developer of an economic model showing how many jobs are created with any given investment. With industry groups, labor unions, environmental groups, and government agencies all vying to convince the Obama team how many jobs their projects can create, he says, "the requests are flooding in. It's a fad and some will be silly, but most are things that are beneficial."

Carey is a senior correspondent for BusinessWeek in Washington.

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