The Danger of Green Stimulus

By Teryn Norris and Jesse Jenkins

Barack Obama's final appointments in December indicate a strong commitment to action on climate change. Steven Chu as Energy Secretary, Carol Browner as Energy & Climate Czar, John Holdren as Assistant for Science and Technology -- just to name a few recent selections -- are all proponents of vigorous action to cut U.S. global warming pollution and take leadership on a new international climate treaty. And Hilda Solis, Obama's new Labor Secretary, is a champion of "green jobs."

All is well on the climate front, it seems. Except that it's not.

Carbon cap and trade regulation remains the top federal policy priority for the majority of environmental groups. But in June, cap and trade legislation failed in the Senate, and sixteen Democratic Senators from coal and manufacturing-heavy states voiced their opposition to high carbon pricing. The policy faces even greater obstacles in today's economic climate, since it would increase the energy bills of the American public.

Despite Obama's appointments, climate advocates are thus left to worry: is Obama really prepared to expend his political capital championing a policy that will increase U.S. energy prices in the midst of a recession?

Not likely. Until recently Obama voiced support for carbon regulation, declaring at a governors' climate conference in mid-November that his climate agenda "will start with a federal cap and trade system." But since then, as the recession has deepened, he has said little to nothing about cap and trade. His apparent change of heart may reflect a larger global trend, with European nations increasingly voicing opposition to their Emissions Trading Scheme and Canadians rejecting the Liberal Party's proposed carbon tax in their October election.

Does Obama have an alternative climate strategy? So far, he appears to be wrapping his climate policy into a "green stimulus" plan, focusing on public investments to create "green jobs" in the construction of energy efficient infrastructure. He has even mentioned some investment to build renewable power plants. But the large majority of the stimulus seems set to go toward short-term investments that will quickly create jobs -- retrofitting buildings and constructing traditional infrastructure projects like highways and bridges.

Replacing sustained climate legislation with a short-term "green stimulus" program to create green jobs and perform energy efficiency retrofits is a dangerous possibility. Increased energy efficiency can only satisfy a portion of the necessary reductions in global warming emissions, and it will not help develop and deploy the low-carbon energy technologies that are essential to transform U.S. and global energy systems. Yet with green jobs now positioned as "the solution" to both the economy and the climate, Obama has cover to take the politically expedient route of short-term green stimulus while ignoring serious climate policy.

Avoiding this outcome demands a shift from green jobs to a broader focus on green technology. The single greatest obstacle to creating a "green energy economy" is the high cost of low-carbon energy technology. Technologies like solar photovoltaics, plug-in hybrids, and advanced geothermal are all more expensive than their conventional market competitors.

A serious alternative to cap and trade would therefore focus on making clean energy cheap, prioritizing major, sustained public investments to drive down the price of green technologies as quickly as possible. This would require federal investments on the scale of $500 billion over the next decade to support and accelerate each stage of the energy innovation pipeline: research, development, demonstration, and deployment.

Obama has made it increasingly clear that public investment is his preferred climate policy mechanism. What Obama has not made clear is whether or not he will embrace the type and scale of investments necessary to seriously confront the climate challenge.

If cap and trade is a no-go in today's economic climate, Obama must redouble his commitment to public investment in clean energy, investing at least $500 billion in green technology over the next ten years. And while cap and trade may still be the preferred policy mechanism of most environmental groups, new political circumstances demand new tactics. Public investments in green technology are clearly more viable, and climate advocates should embrace them, while remaining vigilant that Obama's climate agenda does not stop with efficiency and green jobs.

The prosperity and security of the United States in the 21st century will depend largely on the course of action set by the nation's new leadership. The scale of our climate challenge is great, and so is the scale of public investment needed to overcome it. The Obama administration and 111th Congress must seize the moment not only to stimulate short-term economic recovery and job creation, but also the long-term technology innovation and deployment that will make clean energy cheap and secure our nation's energy and climate future.

--
Teryn Norris and Jesse Jenkins are Project Director and Director of Energy & Climate Policy, respectively, at the Breakthrough Institute, and co-authors of the National Energy Education Act proposal.

Comments

[jwws007]

climate change or global warming or whatever they are calling it these days is a crock, just the next thing the global elite want you to worry about

[research]

Even IF that's true, Global wars of oil is NOT a crock.

Plenty of reasons to switch to solar and wind and green.

[David Sassoon - Huffpost Blogger]

Jesse - green jobs and energy efficiency are essential to a comprehensive climate plan, so why set them up as you do in your piece as a "dangerous possibility." I don't think anyone seriously believes that's all Obama or the Dems will try to do. You pretend to only for the sake of your polemic. Obama's said he wants to spend $150 billion over ten years on clean energy -- so you say it ought to be $500 billion. Fine. No quarrel there. But don't abandon cap and trade as a result of asking for more $$ for clean energy. You need a carbon price signal. It's essential to the comprehensive package. And the way to do it is via a cap-and-dividend approach, even in today's economic climate, because it insulates people from the costs and forces the very innovation you support from high energy users. So I'd argue for the three-legged stool of green jobs and energy efficiency, a moonshot clean energy program, and a cap and dividend program asap. Leave one of those out and the stool falls over.

[TerynNorris]

David, thanks for your comment. We never call efficiency and green jobs dangerous. We said: "Replacing sustained climate legislation with a short-term "green stimulus" program... is a dangerous possibility." In other words, the danger of green stimulus is that it becomes a replacement for large climate legislation. This seems to be a serious possibility in the short-term due to the extreme economic recession. Especially when you have mainstream magazines and newspapers like Time Magazine stating things like this, as the current issue does in its cover-story puff-piece about energy efficiency:

“Still, it's true that efficiency alone probably won't save the world. But real efficiency combined with a real shift toward conservation... well, that might do the trick."

Almost everyone loves green jobs for efficiency retrofits -- it provides a really positive, uplifting agenda, especially in the midst of a recession. But imagining that increased efficiency, green jobs, and conservation is enough to “do the trick” on climate change is dangerous enough to warrant a serious wake-up call.

Based on our analysis, we think cap and dividend is a critically flawed proposal that's nearly politically impossible to achieve. We're releasing a study on this soon, but Jesse wrote a couple important posts about it already:

http://thebreakthrough.org/blog/2008/10/discussions_with_eric_pooley_o.shtml
http://thebreakthrough.org/blog/2008/10/cap_and_dividend_sorry_wrong_a.shtml

[sheila]

the real "shortcut" we need to fear is millions and millions of acres of functioning, healthy ecosystems which are currently absorbing tons and tons of C02, being permanently destroyed by wasteful, remote Industrial Wind and Solar. i will decline to use the term "renewable" in connection with any process which destroys habitats, destroys carbon sinks, depletes aquifers, and much of the time pulls electricity FROM the grid (Big Wind) and/or burns gas (Concentrating Solar).

the only solution to sustainable energy issues is at point of use. we cannot perpetuate the pyramid scheme of socializing all the costs of Big Energy onto ratepayers, taxpayers and the environment, while privatizing the profits in Industrial Wind and Solar. it is inherently unsustainable, unconscionable and inefficient. generation and transmission losses are at least 10% and often up to 35% for remote power plants, and are 0 at point of use. conservation, storage and generation should be decentralized, and preferably owned by US instead of by monopolists.

please work hard on getting us generous feed in tariffs, financing and other incentives to each of US generating and conserving power right where it is used.

[coupeditor]

In 2001, in the landmark court case Coleman-Adebayo v. Browner, Carol M. Browner and the agency she administered, the EPA, were found guilty of race, color, and sex-based discrimination as well as tolerating a hostile work environment. The case provided the impetus for the passage (unanimous in both chambers) of the No FEAR Act (Notification of Federal Employees Anti-discrimination and Retaliation) that was signed into law by President George W. Bush. The law was heralded as the first civil rights law of the 21st century. Study of Coleman-Adebayo v. Browner is now mandated study for all new Federal employees within 90 days of their being hired, and every 2 years for all Federal employees. The extent of the racism and retaliation within Ms. Browner's EPA was so pervasive that Congress and the Executive required study of it as the penultimate example of what was WRONG with government. When asked in Congressional hearings whether she accepted the judgement of the jury, Ms. Browner said she did.

The question for Mr. Obama, is: Given her unrepentant position on the deplorable conditions she oversaw at EPA, how is Carol Browner qualified to hold administrative position again?

[Greenenvy]

You make many good points, but I think there is a serious misconception about the costs of renewable energy technologies. First, your use of the word "cheap". "Cheap" is a relative term. So to make renewable energy technologies cheaper than conventional fuels makes sense. However, the price of conventional fuels fluctuates, so we can make renewables cheaper by making conventional fuels more expensive. This is infinitely more expedient that actually trying to lower the cost of generating renewable energy. RE isn't as expensive (or cheap) as it is now simply because some people want to make more profit. RE costs what it costs due to the cost of materials, capital, and energy required to build and install the technologies.
Second, economic stimulus only makes sense in the short run, so the effective measures cannot be expected to provide all the long-term climate benefits that we eventually want to see.

[Jesse Jenkins - Huffpost Blogger]

Cheap is certainly a relative term, and I do in fact mean "cheaper than fossil fuels."

But when I say "cheap," what I really mean is "cheaper than fossil fuels... in China."

You know how you always add "...in bed" to the end of fortune cookie fortunes? Well when we talk about global warming, you'd better add "...in China" to the end of every phrase.

You see, in order to halt and reverse the rise in global emissions, we need clean and massively scalable energy sources that are cheap enough to power sustainable development in the Chinas of the world. These rapidly developing nations are where the bulk of future emissions growth will occur, and policymakers in these countries have repeatedly said they will not impose on themselves higher prices for dirty energy if it means sacrificing their economic development efforts. After all, they are pulling billions of global citizens out of poverty on a development path that's no worse than the one we already pursued in the US, so how can we begrudge them in their efforts.

I call this the Development Trap: until we have both clean AND cheap energy sources to power sustainable development, we'll be stuck either sacrificing our climate in the name of global development, or condemning billions of global citizens to energy poverty in order to save our climate. Neither course is tenable, and we need clean AND cheap energy sources to break out of the trap.

[charliesherman]

I appreciate your article very much, though I think we need to expand public discussion of the environment beyond energy policy. Obama has certainly emphasized climate action, and for this and many other things he should be applauded. But even if he were to substantially widen the scope of his solution to create a larger role for renewable energy in his global warming strategy, he would still only be scratching the surface. Manufacturing and building hybrid cars, solar panels, and wind mills requires an enormous amount of natural resources and produces very harmful pollution, both of which contribute to global warming as well as ecological destruction. There are numerous ways that building, manufacturing, transportation, waste disposal, and individual lifetsyles can be more environmentall friendly, and the administration needs to focus on solutions aimed at all of these.

[research]

Wind and Solar are already cheaper than coal or nukes per KWH.

They have a 200-500% ROI over 20 years.

Even if we skip Carbon trading, we should shift all the massive discounts and subsidies from coal nukes and oil to solar and wind.

Since Solar and wind safe money over the long run, they are a great investment for the public works programs we so desperately need.

Roof top solar and wind are the best.

http://www.huffingtonpost.com/users/profile/research