Last month world leaders gathered at the United Nations for a summit on global clean energy investment, while outside trade unionists, mayors, philanthropists, and student activists all rallied in a major climate march, to echo calls for divestment from fossil fuels and a new generation of investment in clean energy and good jobs. These growing calls to action raise important questions. How can we stabilize an already-changing climate in a way that promotes economic prosperity? And what levels of investment will be required to reach this urgent goal?
An important set of answers is contained in the recent study "Green Growth: A U.S. Program for Controlling Climate Change and Expanding Job Opportunities" jointly published by the University of Massachusetts Political Economy Research Institute and the Center for American Progress. This book, which I co-author with Dr. Robert Pollin, Dr. Heidi Garrett-Peltier, and Dr. James Heintz, builds on four years of research, and the findings are cause for both great hope and grave concern.
Working backward from long accepted climate stabilization goals – put forth both by the IPCC and within US policy – we explore the levels of new investment and technology deployment that will be required in order for the United States to meet an emission-reduction target that cuts greenhouse gasses by 40 percent economy-wide, from 2005 levels by 2035. In short, we find that this ambitious goal is not only technologically and economically achievable, but it will create significant jobs, economic growth, and opportunity.
Achieving a fuel mix for the United States that is compatible with a stable climate will, by our calculations, lead to a net increase of 2.7 million jobs – or a reduction in national unemployment of 1.5% – even after aggressive assumptions on job contraction within fossil fuel dependent industries. The reason for this is simple: Investment. Building a clean energy economy will require substantial new commitments from both public and private capital sources, to projects that are locally distributed, more heavily concentrated in advanced manufacturing and construction trades, and that substitute the intelligence of skilled workers to replace pollution from wasted resources.
The economic opportunity outlined in “Green Growth: A U.S. Program for Controlling Climate Change and Expanding Job Opportunities" is not a feel good prescription for an “all of the above” energy plan. Rather we put a price tag on the very real choices that face U.S. investors, policy makers and citizens within the next two decades. Transitioning to a clean energy future will entail sustained annual investments of $200 billion each year for twenty years, or 1.2 percent of U.S. GDP, mostly from private sources. That number represents $110 billion that must be invested in clean renewable energy and $90 billion each year for improving the energy efficiency of buildings, infrastructure, and transportation. Of this total, public expenditures averaging $55 billion each year will be required to “crowd in” new private sector investments. While these numbers seem large, they are in line with recent experiences during the American Recovery and Reinvestment Act. Further, they are actually 40 percent lower than oil and gas industry investments made just last year. In short these goals while ambitious, are entirely achievable.
A path forward on Green Growth in the United States remains available, however it is by no means inevitable. In fact our research also exposed that simply following along what today would pass for an ambitious program of clean energy policy, will none-the-less lead to substantial overshoot of climate goals. The study examined what we call an “Aggressive Reference case”, where we assume the full implementation of the best clean energy policies currently being pursued within the American political debate. We found that full implementation of policies ranging from stringent CAFE standards, to new Clean Air Act regulations on carbon, to indefinite extension of existing renewable energy tax incentives, still caused U.S. CO2 emissions to rise to 4,441 mmt within 20 years, or fully 40 percent above the 3,200 mmt target, that would meet U.S. commitments to avoiding the worst impacts of climate change.
Having spent the past two decades advancing green growth and a clean economy within an often stalled American policy debate, it is sobering to recognize that within the next 20 years, the United States must go much further and realize absolute reductions in the use of fossil fuels. Achieving a 40% reduction in U.S. global warming emissions means cutting consumption of coal by 60 percent, oil by 40 percent, and natural gas by 30 percent. In short, there is no “natural gas bridge” to a low-carbon future.
Following the path of least resistance, and allowing emissions to rise in the face of a mounting climate crisis, offers the lowest first cost to investors, but the long term impact is substantial. Recent White House projections, for example find that allowing a 3°C degree increase in global average temperatures would lead to $150 billion in economic damages every year in perpetuity. Green growth on the other hand offers sustained productive investment of $200 billion each year in a skilled workforce, more resilient communities, and new advanced technologies to drive economic innovation.
The growing calls for divestment from fossil fuels and reinvestment in clean energy that echoed in New York City this September, like previous divestment movements, provides stark choice with profound implications for both social justice, and the future profitability of American business and the global economy. The urgency of green growth has never been clearer.