An Egalitarian Program for Building a Clean Energy U.S. Economy Bob Pollin and Jim Boyce Labor Network for Sustainability Conference Washington, DC March.

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An Egalitarian Program for Building a Clean Energy U.S. Economy

Bob Pollin and Jim BoyceLabor Network for Sustainability Conference

Washington, DCMarch 11, 2014

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Building a Clean Energy Economy is Good For Jobs and Economic Growth

• Nothing original in this– Comparable to case for military-based industrial

policies• Ruttan: Is War Necessary for Economic Growth?

• Trade-offs are real but limited and manageable

• Specific to regions/communities/industries– Can compensate regions/communities– Mazzocchi: Environmental “Superfund”for displaced fossil

fuel workers

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Focus on US: Meeting 2030 Emissions Reduction Target

• U.S. Emissions as of 2010– 6,800 mmt from all greenhouse gas emissions– 5,600 mmt CO2 emissions from burning oil, coal and natural gas

• IPCC and Obama Administration Targets– 40 percent absolute decline in emissions

• 4,200 million metric tons (mmt) of all Greenhouse Gas Emissions by 2030

• 3,200 CO2 mmt from energy-based sources

– 80 percent absolute decline by 2050 • 1,200 mmt of emissions by 2050

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How to Achieve 2030 Emissions Targets

• Energy Efficiency– Cutting absolute U.S. energy consumption by ~30 percent

• From ~ 100 to ~ 70 Q-BTUs

• Clean Renewable Energy– Roughly quadrupling supply from clean renewables

• Low-emissions bioenergy, wind, solar, geothermal, small-scale hydro• From ~3.5 to ~15 Q-BTUs

• Non-Renewable Energy– Reduce consumption overall of oil, natural gas, coal, and nuclear power by ~ 40

percent• Investment Levels Necessary

– ~ $190 billion/year for 20 years; 1.2% of GDP– Most investment costs recouped in 3-5 years

• Based on mainstream sources: National Academy of Sciences, U.S. Energy Department, McKinsey

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Alternative Consumption Scenarios

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Figure 1. Job Creation through $1 Million in Spending:Clean Energy Investments vs. Fossil Fuels

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mb

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Jo

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Clean Energy:16.7 Jobs

Oil/Natural Gas/Coal5.3 Jobs

Sources: See Pollin, Heintz, Garrett-Peltier (2009).

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Job Creation through $190 Billion/yearClean Energy Program

• 4.2 million jobs in total job creation– New Capital Expenditures in Efficiency and Clean

Renewables– Operations and Maintenance for Clean Renewables

• Mostly low-emissions bioenergy

• 2.7 net job creation – after subtracting job losses through retrenchments in

coal, oil and natural gas.• Roughly equal to 1.5 percent employment in 2030

labor market

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Clean Energy Policy Agenda

• Market-shaping Rules– Carbon Cap or Tax– Enforcement of Clean Air Act

• Direct Public Spending– Energy Efficiency/Renewable Public Investments and

Procurement• Private Investment Incentives

– Feed-in Tariffs• Regional Equity and Worker/Community Transition

Assistance– “Superfund” for Workers

Who pays?

Carbon pricing – via a cap or a tax - converts an open-access resource (the biosphere’s carbon absorptive capacity) into property. It therefore poses the fundamental question:

Higher fossil fuel prices = payment of rent for use of the carbon sink.

Who owns the sink functions of the environment?

CAP-AND-GIVEAWAY (aka Cap-and-Trade)

GOVERNMENT

FOSSIL FUEL FIRMS CONSUMERS

$100 billion

Free permits

CAP-AND-SPEND (& Carbon tax)

Auctioned Permits

$100 billion

$100 billion

GOVERNMENT

FOSSIL FUEL

FIRMSCONSUMERS

CAP-AND-DIVIDEND (& Fee-and-Dividend)

Auctioned Permits

$100 billion

$100 billion

GOVERNMENT

FOSSIL FUEL FIRMS CONSUMERS

$100 billion

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Environmental Legislation and GDP Growth

• Alternative estimates of GDP growth under Waxman-Markey cap-and-trade legislation

• CGE models– Wide range of assumptions– American Council on Capital Formation/National

Association of Manufacturers Model with “high cost” estimates

• Worst-case scenario

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Conclusion for Reaching 2030 -35 Greenhouse Gas Emissions Goal

• Energy Efficiency: Overall U.S. energy consumption needs to fall from ~ 100 – 70 Q-BTUs

• Renewables: Clean renewable energy needs to supply 15 Q-BTUs

• Oil: 21 Q-BTUs for automobiles• Remaining 34 Q-BTUs: Mix of natural gas, nuclear, coal• Job Creation: Investing in clean energy transformation

will be substantial source of net job creation• GDP Growth: Clean energy transformation will not

significantly affect overall GDP growth