PORTLAND — New England’s economic downturn is proving to be deeper and more persistent than expected, but it can rebound through a green economy, one of the state’s leading economists said today.

Development of a green economy is in its infancy now, similar to where information technology was more than 40 years ago, according to Charles Colgan, professor of public policy and management at the University of Southern Maine. State and local governments can encourage clean-energy businesses that can drive the emerging recovery, he said, through public policies that influence the price of oil.

“Only by making oil more expensive will we unleash the market forces,” he said.

Colgan made his comments at the start of a three-day conference of the Council of State Governments/Eastern Regional Conference.

The nonpartisan group promotes multi-state and regional partnerships to deal with issues including energy, health care and transportation. It represents states from Maine to Maryland, Puerto Rico and the U.S. Virgin Islands and six eastern Canadian provinces.

The latest economic recovery may be stalling, Colgan said. New England economic forecasters earlier this year thought the job market would begin growing this year and get back to pre-recession levels by 2013. That outlook may be extended, he said, when forecasters meet again this fall.

With consumer spending down, state and local governments are coping with an unprecedented plunge in tax revenues, off 15-20 percent. Government can be more efficient, Colgan said, but it can’t provide past levels of service, if there’s less money to replace the police officers and school teachers who lost jobs.

Following the deep recession in the early 1990s, the so-called dotcom technology boom left the country with a strong foundation for growth. After the latest recession, Colgan said, we’re left with foreclosures and excess housing.

That’s where the clean-energy economy can create a new foundation for growth. But it’s still unclear to what degree Northeast states and their Canadian counterparts can agree on regional strategies, to develop renewable energy sources and the transmission corridors to connect them to where the power’s needed.

Some of the issues were explored with Colgan and a panel that included Gov. John Baldacci of Maine, Gov. Jim Douglas of Vermont and Deputy Premier Frank Corbett of Nova Scotia.

“You have to control your energy resources, or someone will control your economy,” Corbett said.

Nova Scotia, for example, recently signed a memo of understanding to work with Maine on tidal and offshore wind energy research. Nova Scotia also is trying to get hydroelectric power from a megaproject in Newfoundland and Labrador, but is facing opposition from Quebec, which is promoting its own hydro resource.

That resource, from Hydro Quebec, provides one-third of the electricity in Vermont, and Douglas just signed a contract to extend the deal for 26 years.

Maine sees a smaller role for Hydro Quebec, one that doesn’t eclipse its desire to develop offshore wind energy for sale in southern New England and New York City. But Maine also wants to work with its Canadian neighbors, to offset the threat someday of wind energy from the Midwest serving New York. Baldacci wants Hydro Quebec to provide base load power, to complement the intermittent nature of wind.

“I feel we can incorporate both, but we need to do it in a balanced way,” he said. 

This afternoon, the head of the regional power grid operator is scheduled to discuss the opportunity and challenges of wind power.
Gordon van Welie, president and CEO of ISO New England Inc., will talk about power grid improvements and outline the region’s potential for development of renewable power sources.