To Harness Cleantech Opportunities, Economic Development Organizations Need to Think Big

How economic development organizations and their partners can be the engines driving clean industrial growth.

Last week, Oklahoma notched the latest win in Inflation Reduction Act-driven investment. Thanks to the hard work of the Tulsa Regional Chamber, the Oklahoma Department of Commerce, and others, the state’s $180 million incentive package persuaded Enel North America to build a solar panel manufacturing facility in the town of Inola, 14 miles east of Tulsa. In exchange, Enel will have to spend at least $1.8 billion in capital expenditures and create 1,400 permanent jobs — the largest economic development project in the state’s history. The project could have a second phase and is likely to spur a cluster of new cleantech facilities.

The Oklahoma example shows how, with trillions of dollars of federal and private investment on the line, the stakes are high for states and regions looking to attract investment in cleantech industries. The thousands of economic development organizations (EDOs) across the country, which typically focus on attracting and retaining business and creating jobs, are well positioned to help realize the benefits of clean industrial growth. But they will need to think strategically, build broad groups of partners, and ensure that the local workforce and communities reap the benefits.

A Historic Opportunity

The Inflation Reduction Act (IRA), Infrastructure Investment and Jobs Act (IIJA), and CHIPS and Science Act could put over $1 trillion of federal funds to work in cleantech industries, facilitating over $3.5 trillion in private investment. Since the IRA passed in August 2022, there has been over $120 billion in new project announcements in cleantech industries — even before sectors like green hydrogen, carbon capture, green steel, and advanced nuclear have taken off. EDOs can play a critical role by helping prospective investors take advantage of generous tax credits, working within states to develop a conducive policy environment, and coordinating with universities and companies to develop coalitions for major funding opportunities.

EDOs Need to Strategize

Federal funding won’t fall into EDOs’ laps, but those with clear goals and flagship initiatives to achieve them will be better positioned for success. Goals should also align with existing strengths and capabilities, improving the likelihood of developing competitive clusters and growth opportunities. RMI is working with EDOs to leverage these unique human and economic capacities to better target strategically important cleantech industries in their economic development strategic planning.

The Michigan Economic Development Corporation (MEDC), for example, was the first EDO in the nation to prioritize electric vehicles in its economic development strategy. MEDC helped get the first EV manufacturing facility off the ground in 2008 and today has helped secure Michigan’s position as one of the global epicenters of the EV transition. Michigan has provided the most economic development incentives for EV and battery manufacturing since 2008 and has seen the most investment dollars and job announcements of any state since passage of the IRA, building on the “advanced manufacturing heritage in the Great Lakes State,” as MEDC CEO Quentin Messer has put it.

Economic Development and Workforce Development Are Stronger Together

EDOs typically focus on job creation and retention, collaborating with other entities on the question of filling those jobs, including workforce development organizations. By bringing together both elements, economic development can be more successful. With unemployment nearing historic lows, cleantech manufacturers are reporting that skilled labor shortages are one of the most significant constraints holding back further investment. According to the U.S. Chamber of Commerce, employing all unemployed durable goods manufacturing workers would fill only 44 percent of the industry's vacant jobs. Qualified local labor can also mean big savings; the IRA gives even larger tax breaks to employers that hire registered apprentices for clean energy projects.

The Columbus Partnership, for example, is demonstrating the power of coalition building. By convening workforce development partners, it’s accelerating investment attraction and delivering sustained community benefits. The Partnership works closely with stakeholders like the Workforce Development Board of Central Ohio, Goodwill, and local community colleges to support industry-informed training, career counseling, funding for training, and pre-apprenticeships. It also touts its network of over 30 “workforce partners” (workforce development organizations and similar community groups) to give businesses “access to resources for training and development and connections with a diverse and formerly hidden workforce.”

Inclusivity Is Key

Impacted communities need to benefit from growth in more ways than job creation. Inclusive growth is an imperative, not just a buzzword; major infrastructure investment has historically institutionalized inequities. Industry doesn’t always hire locally or improve impacted communities. Projects may not produce long-term or “high-road” jobs, and they may further pollute already-burdened neighborhoods. But tools exist that could make cleantech a turning point.

One important approach can be designing inclusive community benefits agreements (CBAs) for new projects. CBAs are contracts negotiated between community groups and a business (usually a developer or manufacturer), which identify the benefits the business agrees to provide in return for community support of a project. Community benefits could include job creation, local hiring and training, education partnerships, affordable housing, or recreation facilities.

The federal government recognizes the role of CBAs in cleantech industries. For example, all Department of Energy funding notices for IIJA and IRA require Community Benefits Plans, which could include a CBA or similar agreement.

Stronger Communities Foster Growth

Attracting and retaining residents to fill jobs is just as important as creating jobs, and communities must be places people want to live and work for years to come. EDOs may not play the lead role here, but livability is a necessary condition for EDOs to achieve their goals — especially in a tight labor market, where worker shortages are a major constraint on new investment.

Livability goes beyond jobs and cost of living to include education and training, mentors and support systems, physical assets including housing and parks, culture, and inclusivity. Policymakers pile on incentives and cut red tape to attract employers, and recently cities and states have started to do the same to attract both in-person and remote workers. EDOs can play a role in these campaigns; Startup Tucson launched Remote Tucson, bundling relocation funds from sponsors, Airbnb credits, free internet, and more into an incentive package for remote workers. And in West Virginia, the Ascend program offers accepted applicants cash, professional development support, social programming, and more.

Clean industrial growth is about more than industrial policy or ramping up manufacturing. Lasting, locally beneficial economic development that supports cleantech requires cooperation across governments, EDOs, business, educational institutions, social services, and other stakeholders. This kind of cooperation is a tall order, but where it happens it provides the opportunity to create jobs, boost local economies, and strengthen communities, including by supporting historically disadvantaged groups. States, cities, towns, and rural communities can realize these gains through robust collaboration. The outcome? Not just more clean energy jobs, but making locations attractive to existing and potential residents, ensuring the benefits of clean industrial growth accrue locally, and positioning local workforces to support new industries.