"Why Would We Not?": New Study Confirms We Can Cut Carbon Emissions and Grow the Economy
For decades, big polluters and their allies have been crying wolf that cutting pollution will severely damage the economy, and now, they're up to the same old tricks with carbon pollution. Although the benefits of stabilizing the climate have long outweighed the costs of decarbonization, a growing body of evidence suggests that climate action can grow the economy too. As Citi - one of the world's largest financial institutions - wrote in a report on climate action this August, "a very strong 'Why would you not?' argument begins to develop." This marks a major shift in the conversation around combating climate change - a fight that had long been miscast as a choice between protecting the planet or the economy, but not both.
Now, the most comprehensive study to date confirms that the United States can achieve deep carbon pollution cuts while growing the economy and increasing employment. NextGen Climate America has developed an analysis building upon the groundbreaking "Deep Decarbonization Pathways Project" (DDPP), which examines technically and economically feasible pathways to achieve our climate goals and keep global temperature increases to below 2 degrees Celsius - which scientists tell us is necessary to avoid the worst impacts of global warming.
Cutting dangerous carbon pollution also provides opportunities for economic growth
The DDPP report examines four low carbon futures for the U.S. energy system, varying in the degree of reliance on a particular technology (or set of technologies) in the electricity sector. The DDPP report did not attempt to address macroeconomic topics like the ripple effects on the economy and employment. To examine those impacts, NextGen Climate America commissioned ICF International to run a well-vetted, widely used economic model called REMI. This study focuses on two of the pathways identified in the DDPP report - one that relies on a balanced mix of nuclear, carbon capture and storage (CCS), and renewables ("Mixed Case"); and one that relies primarily on renewables ("High Renewables").
The results are resoundingly positive: the economy will grow as the country makes investments in low-carbon technologies, and jobs will be created in the process - in fact, in the "High Renewables" case, there will be up to two million more jobs in 2050 compared to a scenario where the country does not take climate action. And, the economic benefits outweigh the projected costs to the energy system, resulting in overall net economic benefits of up to 0.9% GDP growth above the no action scenario in 2050.
Table 1: National Employment (thousands of jobs)
Source: NextGen Climate America
Table 2: National Level GDP ($ billion)
Source: NextGen Climate America
Current trends suggest these estimates may even be conservative
The baseline scenario for this study was built upon the forward-looking projections in the Energy Information Administration's Annual Energy Outlook from 2013 (AEO 2013). Since 2013, the economics of clean energy technologies featured in the DDPP like electric vehicle batteries, onshore wind and solar photovoltaics have been rapidly improving, which has been accompanied by significant industry growth. Even though it was developed just two years ago, AEO 2013 drastically underestimated these technologies - for example, AEO 2013 projects utility-scale solar PV capacity to reach about 7 GW in 2030. We've already beaten that, and are on track to do even more. There is over 11 GW in operation today and the industry expects to reach 20 GW by the end of 2016 - almost triple what AEO 2013 projected by 2030.
Another reason these trends are important is because the NextGen report accounts for a "crowding out effect" of investing in low carbon technologies. In other words, there is a limited amount of capital available from the financial sector, and the large amount of spending required to decarbonize the energy system may limit the amount of investment directed to other sectors of the economy. To the extent that AEO 2013 has underestimated the rapid cost declines of clean energy, "crowding out" can be expected to decrease as clean energy companies continue to innovate and push down costs. As a result, the economic gains of moving rapidly to a low carbon economy could be even greater than projected!
In addition to the direct economic benefits, aggressive carbon reductions can improve public health, bolster national security, and help avoid the worst impacts of climate change
This report does not examine the costs of inaction - the threats that face the country if we don't mitigate the worst impacts of climate change. The direct economic costs of inaction are real and growing - the Risky Business Project details that "if we continue on our current path, by 2050 between $66 billion and $106 billion worth of existing coastal property will likely be below sea level nationwide," while by the end of the century, "some states...risk up to a 50% to 70% loss in average annual crop yields...absent agricultural adaptation."
In addition to the economic costs, climate change also poses significant risks to both national security and public health. The Defense Department released a new report in July finding that a destabilizing climate poses a security risk, concluding that "global climate change will have wide-ranging implications for U.S. national security interest over the foreseeable future because it will aggravate existing problems...that threaten domestic stability in a number of countries." Climate change is also one of the most serious public health threats facing the nation. Children, the elderly, and communities living in poverty are among the most vulnerable. Extreme heat and heat wave events intensify respiratory illnesses like asthma and can cause death. Additionally, hotter summers can make disease-carrying insects more active, for longer seasons, spreading illnesses like dengue, West Nile Virus and Lyme disease into new areas. The National Climate Assessment, a report written by a team of experts and reviewed by a panel of the National Academy of Sciences, dedicates an entire chapter to public health, describing, "Climate change presents a global public health problem, with serious health impacts predicted to manifest in varying ways in different parts of the world."
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Fortunately, we don't have to choose between the planet and the economy. By making smart, bold investments in clean energy starting now, while taking steps to ensure the clean energy economy works for everyone, we can grow the economy and create jobs while avoiding the worst impacts of climate change. Why would we not?