Can the Stimulus Bill both Stimulate and Transform?

Can the stimulus bill both generate jobs immediately and lay the technological foundation for long-term economic growth? That''s the 100 billlion dollar question that Tech Review editor David Rotman addresses in the current issue. The notion that a big government program can produce both short and long-term benefits represents a big shift in attitude, notes Rotman, citing Robert Pollin and a September 2008 University of Massachusetts report that ''now reads like a blueprint for much of the stimulus bill''s energy funding.''

The numbers are impressive: the Department of Energy is getting an additional $39 billion, on top of its pre-stimulus $25 billion budget; DOE''s Office of Energy Efficiency and Renewable Energy is seeing its budget go from $1.7 billion to $16.8 billion. About $11 billion are allocated for smart grid programs and technology.

Rotman makes a persuasive case that when it comes to renewables, there are real dangers in trying to combine stimulus with infrastructure building. If excessively expensive technologies are subsidized, and if the subsidies fail to make the technologies more market-ready in the long run, then there could be a backlash leaving them in a worse position than where they started.

Better, argue many economists and energy specialists, to drive up the price of carbon emissions, and then let the market decide which low-carbon and renewable technologies are best set to replace fossil fuels.

When it comes to smart grid technology, however, the opportunities may be greater and the risks smaller than Rotman and his sources seem to think. Harvard environmental economist Robert Stavins told Rotman that rebuilding the electricity grid will take years and have little immediate effect. But is that obvious? If, for example, every electricity meter in the country were replaced with a smart meter in the next few years''which would be very expensive, but not insanely expensive''the immediate effect on employment could be considerable and the medium-term impact on economic growth could be considerable.

Once homeowners have meters that tell them how much electricity they''re using hour by hour, and how much they''re paying for the electricity as prices fluctuate with supply and demand, they will start thinking about their home appliances and personal habits much more critically and constructively. They''ll replace their old refrigerators and freezers, their clothes washers and driers, their window-mounted air conditioners and electric space heaters, with ones that come with DOE''s Energy Star recommendation. A little further down the line, having discovered that there are times of the day when electricity is almost free''some places, the utility will even PAY you to use electricity under certain conditions''they''ll buy themselves one of them plug-in electric cars and charge them at just those cheap-electricity times.

I don''t want to sound too much like Robert Atkinson of the Information Technology and Innovation Foundation, who enthusiastically told Tech Review''s Rotman that the stimulus bill is ''almost like free money.'' (ITIF also produced a tech jobs report consistent with the stimulus bill philosophy, but only after the election.) It''s possible, however, to imagine a smart grid future in which first lots of people get jobs and make money building and installing basic equipment, and then a lot more find employment in making and selling the equipment that best interacts with the reconstructed transmission and distribution systems. The benign effects could be almost immediate, but also medium- and long-term.


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