Global Warming, the Economy, and the Get Out of Jail Free Card

If 2007 was the year that ended the debate over the science of global warming, 2008 is going to be the year when the economics of solving this crisis will take center stage.

Of course, the economy is front-and-center anyway, now that so many indicators are going south. The White House is likely to use the current market instability to further excuse its inaction on climate change by saying that tackling global warming will break the economy. The reality is that scores of companies--including corporate giants that make up a large portion of the U.S. economy--don’t agree.

Here is just on example. I belong to the U.S. Climate Action Partnership--a group of environmental leaders and CEOs committed to passing rigorous national limits on greenhouse gas emissions. I am not talking about earth-friendly favorites such as Seventh Generation. These are economic heavy hitters like GE, Alcoa, DuPont, Duke Energy, Lehmann Brothers, and even automakers like GM and Ford.

Why are so many corporate giants lining up with environmentalists to ask Washington for more regulations?

More than anything, businesses want predictability--especially as the economy enters into a rough patch. Businesses need to know that their long-term investments in global warming solutions--things like the cheapest solar panels, energy efficient building designs, or technology to capture carbon emissions from coal-fired power plants--will pay off. And the only way for them to find out is for Washington to give them a clear signal in the form of mandatory global warming laws.

With the right policies in place, America is poised to solve global warming without denting our economic recovery or growth. Don’t take my word for it. Listen to the analysts. 

  • In December, McKinsey released a report concluding that the United States can reduce greenhouse gases at little or no net cost to the economy.
  • In July 2007, the EPA did an economic analysis of the promising Lieberman-Warner “Climate and Stewardship Innovation Act.” The study’s bottom line: reducing global warming pollution will have an imperceptible affect on economic output overall. (See my colleague Dan Lashof’s review of the study.)

This is remarkable news: we can stave off the biggest humanitarian and environmental crisis of our time without disrupting the economy. That’s like having a get-out-of-jail-free card. Chances like this don’t come around very often.

But to achieve this positive economic outlook, we have to act right away. One of the fastest ways out of a downturn is to get people to invest--that’s why everyone in Washington is talking about economic stimulus packages. The best packages will inspire businesses and consumers to make long-term investments in energy efficient appliances, renewable energy, and other global warming solutions. This way, we can have our cake and eat it to: create jobs and economic growth and solve the biggest crisis of our time.