Ken Silverstein | Jan 31, 2011

Two years into his tenure, President Obama's legacy is shaping up. At stake is how his agenda has eased the recession and specifically those policies tied to the creation of a New Energy Economy.

During his State of the Union address, the president said that this country is on the cusp of change - an evolution that will not just transform its economy but one that will dramatically affect its energy portfolio. Obama is calling on this nation to generate 80 percent of its electricity from clean power sources by 2035.

What are clean fuels? Solar, wind, nuclear and "clean coal" will pave the way, the president says. He has previously called for $150 billion to be allocated over 10 years into these ventures so that millions of new jobs can form.

The speech came just when the annual deficit hit a record high of $1.5 trillion. The president's thinking is that is that his stimulus plan -- $1 trillion total - was needed to flood the economy with money at a time when individuals and businesses had cowered.

Utilities and their partners have been core to the president's plan to retool the economy: They have received $83 billion in tax incentives, loan guarantees and government assistance for energy efficient technologies and renewable energy programs. Meanwhile, they are also getting $4.5 billion to rollout smart grids that create energy efficiencies and allow more room for wind and solar energy on the wires.

Obama credits the stimulus plan for either creating or saving - immediately -- 200,000 jobs tied to construction and clean energy. He points to examples in North Carolina where a company is making advanced car batteries that will generate 1,200 jobs as well as one in California that he says is putting 1,000 people to work making solar panels.

Ohio, long considered a symbol of the old economy, is part of the new dynamic. Officials there say that the state's manufacturing base is already in place and that it can adapt to the new age. All of the essentials exist, they say, noting that 10 percent of all solar panels are now made in Ohio.

Among the companies doing business there: First Solar, with $100 million in orders for the next five years, and SunPower, with 39 patents. Those dollars are transforming the state by giving workers opportunities that they would not otherwise have.

"But to create more of these clean energy jobs, we need more production, more efficiency, more incentives," Obama says. "And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America . Because the nation that leads the clean energy economy will be the nation that leads the global economy."

Winning Strategy

President Obama's aspirations will have to be trimmed now that the Republicans control the U.S. House of Representatives. Still, some of his over-arching objectives will be implemented either by the regulatory agencies that have already been given the authority to do so or through bipartisan agreements. More than likely, any "sweeping" changes will happen at the state level.

The president's new conciliatory strategy, though, is intended to push forward some of his programs. That thinking is best encapsulated by his recent appointment of General Electric's Chief Executive Jeff Immelt to head the Council on Jobs and Competitiveness. Immelt is a symbolic olive branch to corporate interests. But the GE exec is also a strong advocate for clean energy.

As part of the American Energy Innovation Council that advocates investment in clean technologies, Immelt says that the U.S. must spend more money on research and development. The country needs $16 billion a year. But last year it spent $5 billion.

"No business will invest when there is no certainty about what a market will look like two, five or 10 years into the future," Immelt said in the council's report. "If we're serious about transforming our energy markets, we must send the right signals and create demand for the technologies that solve these problems."

Disagreement abounds over whether government support for such enterprises is worth the costs. Those who say it is point out studies that show 5 million new jobs are potentially on the line. But those who disagree say that the high costs of those subsidies mean that many new jobs will be produced at the expense of older ones, all during a period of record red ink.

The president responds by saying that the deficit would be cut by freezing discretionary spending and by eliminating the tax breaks given to big business. As for energy companies, oil will be made to pay. But this group argues that if government penalizes explorers, it would lead to a greater dependency on oil exports from unfriendly countries.

"Financial support for cleaner and greener energy resources needs to come from somewhere," says Christine Tezak, regulatory analyst with Baird. "In this case, Obama identified a source - `oil companies.'"

Therein lay the president's difficulties. He has linked economic progress to environmental changes. Those are moves that will require or incent businesses to invest in clean energy technologies. But they are also steps that the opposition sees an impediment to job growth and productivity increases. President Obama's legacy will, no doubt, be linked to winning concessions and building consensus around his agenda. 

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