JUICE: Gigajobs?

By Published On: August 15, 2014

California-headquartered Tesla Motors penned a deal at the end of July with Panasonic, under which the Japanese firm will supply lithium ion battery cells for the electric car company’s planned battery “gigafactory.” If it’s built in California, as politicians hope, that could mean many new jobs here, plus growing political support for the state’s clean energy policies. The development highlighted the urgency of a bipartisan effort in Sacramento to put together a package of incentives to get Tesla to locate the $5 billion plant with an estimated 6,500 jobs in California. Nevada, Arizona, New Mexico, and Texas are competing too for Tesla’s manufacturing business. California is the clear-cut green policy leader among these states. Indeed, its policies requiring sale of electric cars and procurement of grid-integrated renewable energy storage have mandated markets for Tesla’s products. California’s even given the company technology development grants. Yet, Tesla’s upcoming decision about where to locate its battery factory is casting doubt about whether green policies alone equate to high-paying green product manufacturing jobs here in California. So is the prospect of utility-scale solar projects being derailed in the state due to duties the federal government has slapped on cheap Chinese solar panels, which many politicians envisioned would be manufactured in California when they passed clean energy laws (see sidebar). “Continued political support for California’s path depends on the support of the business and labor community among others,” observed Ed Cazelet, chief executive officer of TeMix, which is in the energy storage business. “Locating storage factories in California will create businesses and jobs in California that will help continue and increase the current political support for California’s path.” To land the first big battery manufacturing plant, California finds itself desperately competing with other states on the basis of public concessions and giveaways similar to those offered to woo a National Football League team by ramrodding through a new stadium subsidized by taxpayers. These giveaways—currently under discussion in the governor’s office—are to be inserted into SB 1309, an urgency measure by Senate President pro Tem Darrell Steinberg (D-Sacramento) and Sen. Ted Gaines (R-Roseville). It has to be passed this month if California is to stand a chance of landing the factory. Right now the bill’s but an empty shell until a deal is worked out in the governor’s office. There, Gaines says, “Everything is on the table—tax credits, investment credits, hiring credits.” The Republican lawmaker maintains the state needs “to show Tesla that we’ll cut through the red tape that frustrates California companies and prove that we are open for business.” Also under discussion are expedited permits, including possible exemption from the California Environmental Quality Act, an exception that environmentalists see as a slippery downward slope to less environmental protection. Meanwhile, there’s little doubt California’s energy policy goals go hand-in-hand with Tesla’s fortunes. If Tesla’s gigafactory achieves what the company’s chief technical officer J.B. Straubel calls a “dramatic reduction in the cost of energy storage across a broad range of applications,” it would make electric cars and grid integrated storage of electricity commonplace. Already, touts Tesla chief executive officer Elon Musk, the company is in partnership with SolarCity to install storage batteries in conjunction with solar rooftops on businesses and eventually homes. After the gigafactory opens up, sales of batteries are expected to lift off like a rocket ship. Analysts believe Tesla can bring down the cost of high-quality lithium ion batteries at least 65 percent by the end of the decade, from about $850/kWh today to between $200 to $300/kWh. That would mark a major advance for California in achieving its goals of reducing both greenhouse gases and air pollution by promoting emissions-free energy technologies. But there’s another side of the coin. It’s that California politicians have consistently promised that green policies will create a manufacturing renaissance that brings good, high-paying jobs to the state. Now that promise looks like a half-truth as California finds itself racing to bend its own environmental policies and open it’s pocketbook to woo Tesla’s gigafactory. Don’t blame Tesla, which itself is in a cutthroat competition with companies around the globe to make affordable greener technology. To succeed, Tesla must go where it can minimize its costs and maximize its advantages, regardless of state environmental policies. Unfortunately, that’s what California politicians either neglected to say or were too naïve to realize in promising a green manufacturing jobs revolution. Now, they have a big chance to come to grips with reality. Failure could seriously shake political support for the state’s campaign to control greenhouse gases and advance a clean energy revolution.

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