an egalitarian program for building a clean energy u.s. economy bob pollin and jim boyce labor...
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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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0
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Figure 1. Job Creation through $1 Million in Spending:Clean Energy Investments vs. Fossil Fuels
Nu
mb
er
of
Jo
bs
Cre
ate
d
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