When it comes to renewable energy, economic development officials in Michigan could be laughing all the way to the bank.
Michigan's renewable energy policy has attracted billions of dollars in investments over the last two years while neighboring Indiana sat idly by. The developments are expected to create thousands of jobs in manufacturing -- a blow to industrial areas like Northwest Indiana.
The strategy isn't a secret, although Michigan officials aren't keen on promoting something that would take away their competitive advantage: The boom started in 2008 when Michigan passed a law requiring utilities to get 10 percent of their energy from renewable sources and energy efficiency by 2015.
"Since the adoption of the renewable energy standard in Michigan, we have attracted more than $9 billion in new investment in new alternative energy manufacturing business," said Michael Shore, spokesman for Michigan Economic Development Corp.
"That $9 billion is projected to create more than 9,000 jobs over the next 10 years. We've gotten significant new investments in solar energy manufacturing, wind energy, biofuels as well as advanced battery. Those are the green, sustainable energy sectors we've targeted."
Indiana is one of 14 states nationwide without any kind of renewable energy standard, according to the Pew Center on Global Climate Change. The Indiana Legislature has considered one the past four sessions. Both houses passed separate bills last year, but couldn't agree on a compromise because one senator wanted to include nuclear among renewables. Other lawmakers cited concerns that electricity rates will increase if utilities have to get a certain percentage of energy from renewables, which are more expensive than coal.
"Renewable standards have been criticized for their driving rates up, but environmental groups have said we'll put a cost cap on renewable energy standards," said Jesse Kharbanda, executive director of the Hoosier Environmental Council. "That standard was never set on something like (Duke's) Edwardsport (power plant.) Now we're dealing with a 17 percent rate increase. Renewable companies can meet that.
"It's a valid concern for people in a bad economy to be worried about rate increases but we're willing to put a cap on it. Rates would not increase more than, say, 5 percent compared to business as usual."
Shore makes no bones about the fact that in terms of the renewable standard, Indiana's loss may be Michigan's gain.
"The renewable energy standard by itself is only a first step. It's like a high school diploma or GED. You're not ready to be a professional in any field, but you can't realistically get there, or easily get there, without it," he said.
In 2009, Michigan supplemented the standard with tax credits for renewable energy development. To get the credits, companies had to go through a review. That helped companies when the federal government later offered stimulus funding, securing Michigan $1.3 billion -- a sizable portion of the $5.8 billion total investment in advanced battery technology.
Standard helps Illinois
In Illinois, renewable energy standards adopted in 2007 are also making an impact.
The percentage of electricity that utilities are required to purchase from renewable energy sources increases annually from 5 percent in 2010 to reach 25 percent by 2025. Of that total, 75 percent of the renewable energy must come from wind power.
Wind energy generated nearly 1,000 estimated jobs and over $18 million in revenue for the state and landowners. Interim benchmarks for renewables propelled Illinois' wind market to seventh in the nation, according to Sierra Club Illinois Chapter.
Old-line Chicago manufacturers such as Finkl & Sons on the south side and Brad Foote Gear Works in Cicero are getting a lift from wind power by making components for the alternative-power industry.
According to the report "The Wind Energy Supply Chain in Illinois," compiled by the Environmental Law and Policy Center, 104 companies in Illinois with more than 15,000 employees play a role in the solar-power industry, whether it's making parts, mixing cement or providing legal, banking, engineering and accounting services for the industry.
ArcelorMittal is among the only manufacturers in Northwest Indiana involved in the renewable energy sector. The mill makes steel for wind mill towers.
"Illinois had all kinds of requirements, like the 25 percent (renewable electricity standard.) That gave them a real big boost. But we don't have anything like that here," said Bryant Mitol, a Valparaiso resident who works for Earth Solar Technologies of Indianapolis. "I think that's really what has helped boost (development.) Because they're serious about it.
"Here, the powers that be are still pushing for coal. In Ohio and Illinois, they're making great strides, but here we are in Indiana. I think the coal lobby is just really, really strong here."
Based on a survey and analysis, the Solar Foundation said Indiana ranks 10th in the nation for solar jobs with an estimated 3,400 solar jobs and 25 estimated solar firms. Indiana is one of only two states in the top 10 without a renewable energy standard.
Indiana has also attracted major wind projects, such as BP's wind farm in Benton County. But that's misleading, said Kharbanda from the HEC.
"The governor and other politicians will talk about the investment coming into our state without the renewable energy standard," he said. "The problem with that argument is, the investments have been driven by the RES. They've either been driven by RES in other states, which Indiana wind is tapped to comply with, or they view it as an incremental tool. They'll sort of lead legislators to inaccurately conclude there's no need for a renewable energy standard.
"In the scheme of things, wind farms like BP are very impressive, but they only lead to 1 to 2 percent of our electricity use."
A renewable energy standard is among the top priorities on environmentalists' agenda for the upcoming legislative session.