Building a Green Economy

The Economics of Carbon Pricing & the Transition to Clean, Renewable Fuels

(A Report for Citizens Climate Lobby)

EXECUTIVE SUMMARY

Putting a price on carbon creates a contextual incentive for diversification and innovation in the energy economy. When Germany shifted its tax-base from income to energy, it spurred a decade of aggressive public and private investment in renewable resources. In just four years, it became the world leader in clean energy export, taking 70% of the world market just eight years after the initial policy shift.

German firms are driving investments of €400 billion in the Desertec solar project in North Africa, part of a plan to connect two continents via multi-gigawatt undersea transmission cables and advanced smart-grid technology. The project will revolutionize the energy sector in Europe and Africa, creating wealth for businesses and communities large and small. Morocco, for instance, plans to use its desert and mountain terrain, as well as its wind-intensive coastal areas, to generate enough renewable energy to become an export leader for the European market. This model can be duplicated in mountainous, desert-rich and coastal states across the U.S.

Concerns that coal country will be adversely affected by a price on carbon are understandable but somewhat unfounded. Communities dependent on coal for employment are not generally more prosperous than the national average, so a transition to clean renewable resources can help to overcome problems of endemic persistent poverty. Studies comparing cost-benefit analysis for mountaintop removal mining and wind energy show wind is more effective at generating prosperity over the long term, for all but a narrow group of interests.

The regional disparity in impact from a carbon tax is projected to be negligible, starting at just two-thirds of one percent and moving to just one-third of one percent over time. If revenue from a carbon fee is returned to all households, any wider regional disparity might be reduced by targeted dividend adjustments. Communities in remote areas, or which rely on coal for cheap energy or for employment, can benefit economically from diversifying into and taking ownership of clean renewable-energy technologies.

Job creation will be the hallmark of the clean energy revolution. Studies show the potential for millions of new jobs in industries ranging from manufacturing to installation and maintenance, as well as administration, marketing, energy efficiency and other related fields. The potential for efficiency gains from clean energy and smart-grid technologies will free up massive amounts of consumer spending over time and relieve dependence on fossil fuels from hostile states.

CONCLUSIONS

Clean energy & emissions reduction are a national imperative.

A transition toward a clean-energy economy, resulting in CO2 levels of 350 ppm or less, is a national imperative. Our economy, environment and security depend on it. The transition will require investment, but all costs need not be borne by the U.S. government or households and consumers. Studies cited show a commitment in both form (legislation) and function (incentives, standards, goals) from government can shift investment priorities in the private sector.

Carbon pricing is an engine for major private investment.

Germany’s success in spurring private-sector investments through effective public policy has made it the world leader in exporting clean energy technology. Some of its leading industrial and financial firms are now world-leading stakeholders in the clean energy future. It is estimated that provisions of the American Recovery and Reinvestment Act, coupled with legislation that puts a price on carbon dioxide emissions, would lead to $150 billion per year in mostly private investments, over the next decade, creating millions of new jobs.

Renewables will out-compete fossil fuels with policy shift.

Conventional wisdom holds that renewable resources like wind and solar are “intermittent” and do not have the capacity to meet current energy demand. This is true insofar as the current infrastructure is not sufficient to meet active demand with clean energy. However, the potential for expansion of existing clean energy technologies is sufficient to cover energy needs if a sufficiently smart power grid is deployed to correct for localized fluctuations in wind flow or solar intensity. Putting a price on carbon dioxide emissions can steer investment to energy sources like wind and solar that are more sustainable, economical and environmentally healthy.

Regional disparities in carbon tax impact are minimal.

The American Enterprise Institute has found that regional disparities in the economic impact —primarily energy costs— resulting from a carbon tax are “sufficiently small that one could argue that a carbon tax is distributionally neutral across regions.”[1] Wider disparities can be minimized with targeted dividend adjustments and other incentives.[2]

Clean energy & energy efficiency = Massive job creation.

Job creation resulting from a transition to a zero-combustion transport economy and clean renewable energy resources, along with industries that foster energy efficiency, have the potential to create millions of new jobs essential to the resulting economic landscape, jobs that could not be outsourced.

Rural & coal-intensive communities will benefit.

Rural communities, and communities tied to the coal industry will experience an injection of new capital and the expansion of new economic opportunity. The job market in rural and coal-intensive communities will not only expand, but will see income levels rise, if the right investments are made for developing clean energy resources. Major impacts to human and environmental health related to coal will be reduced and/or eliminated. The very same companies that presently depend on mining or burning coal for their revenues can benefit from diversifying into a broad-spectrum clean energy portfolio.

U.S. could lead a global clean energy economy.

The United States enjoys a unique geographical wealth in terms of clean energy resources, with some of the most abundant reserves of easily accessible wind, solar and geothermal energy. It could, with astute policy planning, take the global lead both in clean energy production and in manufacturing and exporting clean energy technology. The United States military is actively participating in the clean-energy transition, with major investments in R&D, retrofitting and efficiency, and could be a testing-ground for consumer-level technologies.

Sustainable energy policy is a matter of national security.

“A business as usual approach to energy security poses an unacceptably high threat level from a series of converging risks.”[3] Competition among leading regional and minerals markets —China, E.U., Russian Federation, OPEC, North America— means the rapidly expanding demand for combustible fuels is a threat to agriculture and the security of the world food supply. Diplomatic independence requires energy independence, which in turn requires distributed, localized clean renewable resources, an advanced smart grid, and the new enterprises that come with building and managing this new paradigm.

Leading now costs less than catching up later.

The costs inherent in building a clean energy economy now will ultimately be far lower, given the negative externalities —including environmental, economic and political security risks— inherent in not moving away from carbon-based fuels. Whether one accepts or rejects projections about mounting, compounded fallout from global climate destabilization, a wide array of security-related and economic costs can be mitigated or averted by moving ahead with the clean energy transition now. Using carbon-pricing policy to motivate this transition is the most responsible economic response. It will create jobs and provide clarity of cost-projection for businesses and investors.

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[1] Hassett, et al., p. 3.

[2] Resources for the Future reports that regional disparities could reach as high as 2% of total annual income, but planning with regard to how dividends are paid from a carbon pricing plan can reduce that disparity. In later years, a steadily increasing fee, coupled with a 100% uniform dividend, could also potentially cover such a disparity.

[3] CNA, 2009, p. ix.


From the conference:

Energy Security: Building Our Future in the Southern Tier.
Dealing with: Conservation, Efficiency & Renewables. Solar-Wind-Fuel Cells-Retrofitting-Passive House Construction

Corning Community College
November 12, 2011

Joseph has presented this talk to community groups in New Jersey and Pennsylvania, this energy security conference in Corning, NY, the Citizens Climate Lobby international conference, in Washington, DC, and will be appearing throughout the fall and winter of 2012-2013. For more information, please contact: Booking.

11 thoughts on “Building a Green Economy

  1. [...] The only way to achieve that is by building a smart-grid-based distributed clean renewable-energy market. [...]

  2. On Tuesday, October 4, 2011, Joseph Robertson delivered the fourth in a series of ClimateTalks, as a live webcast presentation of his book, Building a Green Economy: The Economics of Carbon Pricing and the Transition to Clean, Renewable Fuels. The talk was intended to focus on the technologies and strategies that can allow for a smooth, rapid, intelligent, and prosperity-inducing transition to a clean-energy economy. Click here to view the slides and video.

  3. [...] Building a Green Economy, we used Department of Energy data to show that by the most conservative estimate possible (in [...]

  4. 1. Bureau of Labor Statistics, 2010 Green Jobs Estimates

    According to the BLS, the US had 3,129,112 green jobs in 2010, which accounted for 2.4% of all jobs in the national economy

    EconomicModeling.com

    2. Bureau of Labor Statistics, 2009 Oil & Gas Jobs Estimates

    Employment in the oil and gas well drilling industry accounted for 63,012 jobs in September 2009, which is the most recent period available from the Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages (QCEW) program.

    BLS.gov

    3. Broad estimate of all jobs related to oil and gas, EMSI

    By the broadest estimate of what defines “related to the oil and gas industries”, there are 806,831 jobs total, in all related industries, as of 2011. This is with record growth over the 6 years prior.

    EconomicModeling.com

    4. From Building a Green Economy, citing ASES/MISI

    According to a 2008 report conducted by the American Solar Energy Society (ASES) in Boulder, Colorado, and Management Information Services, Inc., (MISI), in Washington, DC:

    We found that, in 2007, the U.S RE&EE55 industries generated $1,045 billion in sales and created over 9 million jobs – including $10.3 billion in sales and over 91,000 jobs in Colorado. The U.S. RE&EE revenues represent substantially more than the combined 2007 sales of the three largest U.S. corporations — Wal-Mart, ExxonMobil, and GM ($905 billion).

    ASES/MISI, p. xii. – (updated hyperlink: ASES.org)

  5. We Don’t Need to Dam Rivers to Get Clean Energy

    The key to a fuel free energy economy is clean, renewable energy. For a long time, the most abundant, most economically productive source of clean, renewable energy has been river water, which produces hydroelectric power through turbines that turn inside major dams. Dams can have catastrophic environmental impacts, even where their use for irrigation and flood-control have a positive impact on human populations. 

    The truth of the matter, however, is that we no longer need dams to produce clean energy, and we can achieve a 100% clean renewable energy economy without building any new dams. There is enough wind to power all of our energy needs many times over. And there is far more solar energy available than that. All we need to do is build the infrastructure to harness that energy and convey it to the end users (households, transport, military and industrial). 

  6. The World Will Not Need Liquid Fuels in 20 Years

    In the July 23, 2012, edition of CQ Weekly, on page 1483, Randy Udall, brother of Sen. Mark Udall (D-CO), is quoted as saying, regarding the potential for development of environmentally unsound oil shale development, “underlying it is this question that everyone is asking: ‘Well, where is the world going to get its liquid fuels 20 years from now?’” The truth of the matter is: there is no reason we should be using liquid fuels 20 years from now.

    Thanks to the work of Mark Jacobson, of Stanford, and Mark Delucci, of UC Davis, we know it is possible to power the entire global economy without carbon-based fuels, by 2030, using technologies already in existence, and in use, in 2009. We also know it is possible to do this without spending more than we will have to spend to upgrade and maintain the existing energy infrastructure, designed to deliver fossil energy to consumers and industry.

    [Full text…]

  7. [...] Robertson#8217;s report Building a Green Economy focuses on the question of whether it is possible to effect a comprehensive transition to clean, renewable fuels, #8220;at wartime speed#8221;, as suggested by the Earth Policy Institute#8217;s founder and president Lester Brown. He laid out a series of case studies, economic analyses and technological breakthroughs, which suggest that ambitious goal can and should be met, with informed and decisive federal policies and a combination of public and private investment. [...]

  8. [...] Building a Green Economy: The Economics of Carbon Pricing & the Transition to Clean, Renewable F… [download pdf] [...]

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