At the heart of Obama’s new green economy is the cap and trade system which essentially is a tax on polluters for green house gas emissions.  The thought is that the revenue generated from cap and trade will generate between $30 and $50 billion a year, and would go to funding:

1)    a Clean Technologies Venture Fund ($150 billion over 10 years) which would fund green technology innovation
2)    education and job training in clean technology development and production.

So right off the bat, Senator Obama would channel money that would otherwise stay in polluter’s pockets into a green R&D fund as well as training the workforce to be able to transition into the green jobs which the R&D will create.  On the flip side of that coin, the coal industry (responsible for half our nation’s electricity but also a major emitter of green house gases) is going to get hammered.  People like to talk about clean coal but the truth is the coal industry won’t be able to afford the cap and trade system or the technology necessary to stay profitable while complying.  People in that industry will be laid off, and there will be a void in America’s energy production.  So how on earth can this be good for the economy?

Because new industry will rush to fill that void.  Like many fossil fuel extractive industries, the coal industry is a dinosaur.  Regardless of who is President, future legislation will penalize those industries which emit massive amounts of carbon and instead favor more carbon neutral alternatives.  The coal industry will inevitably become less profitable and therefore less of a job provider.  Obama would rejuvenate our electricity production sector by giving utilities tax incentives to get their power from renewable sources, and that’s going to create lots of jobs in the wind and solar industries.  There would also be incentives for more nuclear energy production and that’s going to create a variety of jobs in that field.  Moreover, Senator Obama would expand natural gas production and incentivize more domestic drilling which will create more domestic jobs.

The Clean Technologies Venture Fund will help develop new cellulosic fuels and create new jobs as we move away from crude oil based fuel.  Senator Obama would create a vast amount of jobs with his “digital smart grid” initiative.  This would involve changing over America’s energy infrastructure so that it’s more energy efficient, so that more electricity from renewable sources can be utilized, and so that customers can actually “feed the grid” during off peak hours.

While most agree that all this will be good for the economy in the long-term, the real question remains, will this have a “jump starting” effect on the U.S. economy in the short-term.  I suspect that the more vigorous the incentives the faster the new green economy will grow, and along with it, America’s piece of mind.