Does fighting global warming hurt the economy?

It’s fair to say that Hurricane Sandy put climate change back into the national discussion. And if we’re going to move forward on addressing it, we should know what’s been tried and what works.

Is there any reason to believe catastrophic economic claims about controlling greenhouse gases? Well, no. The Regional Greenhouse Gas Initiative, which has encompassed ten states (NJ was in and now out), is a cap-and-trade program that slowly limits carbon-dioxide emissions. I have little doubt that most folks in these states have very little idea that they’re under such a regime right now. It works. It cuts emissions. And it’s good for the economy, said a report from The Analysis Group last year.

  • ƒƒ The regional economy gains more than $1.6 billion in economic value added (reflecting the difference between total revenues in the overall economy, less the cost to produce goods and services)
  • Customers save nearly $1.1 billion on electricity bills, and an additional $174 million on natural gas and heating oil bills, for a total of $1.3 billion in savings over the next decade through installation of energy efficiency measures using funding from RGGI auction proceeds to date
  • 16,000 jobs are created region wide
  • Reduced demand for fossil fuels keeps more than $765 million in the local economy
  • Power plant owners experience $1.6 billion in lower revenue over time, although overall had higher revenues than costs as a result of RGGI during the 2009-2011

I have personally benefitted from one such program: MassSave does free energy audits, changes out your incandescent light bulbs with CFLs for free, and gives generous subsidies for conservation work, like insulation. I’ve twice availed myself of their subsidies. My heating bills are lower, and the house is warmer in the winter and cooler in the summer. Quality of life = better. Cash flow = better. CO2 footprint = smaller.

MassSave is paid for partly out of proceeds from cap-and-trade. But there are other uses for cap-and-trade revenue:

Funds were also invested in other ways, all with positive economic outcomes, including worker training, community-based renewable energy projects, bill-payment assistance to low-income and other energy customers, land protection, and contributions to a state’s general fund to help close budget gaps.

Obviously, I think it would be best to keep that money flowing to conservation programs to max out the greenhouse gas benefit, which should be Object #1.

This is not killing us. In fact, RGGI is helping us, right now. On the other hand, the dead-weight of cleaning up after storms like Sandy is immense. So why not expand a program that’s actually good for the economy and for quality of life, which also cuts the risk of climate catastrophe? Any other states want these nice benefits we’re getting?


9 Comments . Leave a comment below.
  1. Good post!

    I too have benefitted from MassSave’s insulation program. Plus the solar subsidies made it make economic sense to put solar panels on my roof. There are some good programs in our state, but more should be done.

    For example, to take advantage of the insulation program folks still have to pay 1/4 of the total cost, and have to do it up front. Not everyone can affort to pay $1000+. Wouldn’t it be nice to let people (below a certain income level) pay for it over 3-4 years after the work is done–where their energy savings will be offsetting what they pay.

  2. In comparison to doing nothing?

    I wonder if a better question might be something along the lines of “Is fighting global warming worse for the economy than doing nothing?”

    In your conclusion, your reference to cleaning up after Sandy alludesto this — I think the actual present value of doing nothing is significantly higher than the anticipated costs of fighting global warming. Sandy was just one of a series of increasingly intense events that we can expect, and that reflects just the impact of weather.

    What happens to the economy when the American Southwest becomes an arid sun-baked desert? When BILLIONS of people flee the Himalayan watershed because global warming has dried up their water supply, how does the resulting global instability affect the economy? When our military has to prepare for water as well as oil wars, what happens to our economy?

    The fact that we have already done nothing for so long is a colossal failure of our free-market economy. I suggest that NOT fighting global warming will destroy what’s left of it.

    • Gov. Cuomo in NY

      said on the Rachel Maddow Show, shortly after the storm, that we can’t afford NOT to address global warming. He said he told the President we’re now having a 100-year storm every two years. Sandy caused a billion or two in damages to the subway in lower Manhattan.

      Next storm it could be Boston’s turn, or Western Mass. getting flooded out as with Irene.

  3. It won't hurt the economy if we can be grown ups about it.

    I have concerns that we can’t though, and that every step forward is looked at as an opportunity to scrape more wealth and prosperity from modest incomes. Cape Wind is a good example of that, with the cost of energy coming in at more than twice the rate of costly fossil fuel generated energy. Wind and sunshine are free, remember? As soon as that savings is passed onto the consumer, I will stand solidly behind any cap and trade, carbon tax, or other green energy initiatives presented as a solution to curb global warming. If it’s simply a money grab opportunity enveloped in fresh air language, I won’t be able to encourage other people to support it. I want to be able to encourage support for clean energy legislation. So, help me out here.

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Tue 28 Mar 11:50 AM