If the American people will not make economic sacrifices to hedge against global warming, they must be convinced that they will not have to, or better yet, that actions will reap benefits. Current proposed legislation certainly fulfills the first claim–making a barely noticeable economic impact. Paul Krugman–a Nobel Laureate and Princeton economist–uses a Congressional Budget Office estimate to project that the bill would only reduce annual economic growth between now and 2050 from 2.37 percent to 2.32 percent.
That slight hit could be converted to a major economic boost through one change to the proposed policies: robust federal investment. President Obama’s original request for $15 billion in annual investment for clean-energy development, recommended by a group of 34 Nobel Laureate scientists, has been considerably weakened. It must be reinstated. Yes, the federal budget is strained, but these investments are vital for American competitiveness and would pay back many times over.
Energy efficiency would be the most obvious place to start. A recent McKinsey study showed such investment could save the United States $1.2 trillion by 2020, freeing up money businesses would use to create many more jobs.
Renewable energy also holds massive potential for economic growth. With a global population that will hit nine billion by 2050 and standards of living rising around the world, demand for energy will skyrocket past its current supply, global warming or not.
If the United States does not rise up to fill this market, other countries will. China plans to invest $660 billion in clean energy over the next 10 years and is already beginning to dominate the industry. American inaction would mean continued reliance on imported energy, millions of lost jobs and another blow to a frail economic foundation. Federal investment in research and development, as Fareed Zakaria notes in Newsweek, has brought us the Internet, lasers, MRIs and DNA sequencing. It can bring us renewable energy, too.
Ideally, a cap-and-trade would mandate emissions cuts and finance such investment. Such is the case in Denmark, where they have cut carbon emissions by 14 percent since 1990 while increasing GDP by 40 percent and fostering a thriving clean energy industry. And those who claim cap-and-trade would cost American jobs ought to check the unemployment rate in Denmark: an astonishingly low four percent.
But if the political will for this cap-and-trade ‘sacrifice’ does not exist in the United States, then energy investment should garner bipartisan support, improve the economy and make a significant impact on the climate problem. Thomas Friedman, Zakaria and commentators around the country have started trumpeting this idea, originally popularized by the Breakthrough Institute think tank: Going green can pay. And only when the American people believe this will solutions follow.