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

1. An Egalitarian Program for Building a Clean Energy U.S. Economy Bob Pollin and Jim Boyce Labor Network for Sustainability Conference Washington, DC March 11, 2014

2. 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

3. 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 CO2mmt from energy-based sources • 80 percent absolute decline by 2050 • 1,200 mmt of emissions by 2050

4. 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

5. Alternative Consumption Scenarios

8. 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

9. 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

11. Who pays?

12. 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: Who owns the sink functions of the environment? Higher fossil fuel prices = payment of rent for use of the carbon sink.

13. CAP-AND-GIVEAWAY (aka Cap-and-Trade) GOVERNMENT Free permits FOSSIL FUEL FIRMS CONSUMERS $100 billion

14. CAP-AND-SPEND (& Carbon tax) GOVERNMENT Auctioned Permits $100 billion FOSSIL FUEL FIRMS CONSUMERS $100 billion

15. CAP-AND-DIVIDEND (& Fee-and-Dividend) GOVERNMENT $100 billion Auctioned Permits $100 billion FOSSIL FUEL FIRMS CONSUMERS $100 billion

16. 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

18. 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