America’s New Climate Economy: A Comprehensive Guide to the Economic Benefits of Climate Policy in the United States
This working paper draws on the latest economic research to demonstrate how climate policy and investments in low-carbon infrastructure can reboot America’s economy and set it up for long-term success. On the other hand, delaying action on climate will further expose the United States to costly damages from climate impacts, air pollution, and public health crises.
The United States has made substantial progress towards a low-carbon economy over the past several years. Low-carbon technologies have become more efficient and affordable, and U.S. clean energy investment and deployment grew to new heights, creating millions of jobs. Whether this continues will depend on how the government responds to the COVID-19 crisis.
In addition, addressing climate change can allow the United States to secure a share in the booming domestic and global cleantech market by manufacturing and exporting low-carbon technologies. Moreover, it will help revitalize rural communities by diversifying rural economies and providing affordable clean energy.
Inequalities highlighted by the COVID-19 crisis make it clear that the United States must ensure that moving forward climate policies are fair and equitable by supporting fossil fuel workers and communities and ensuring the benefits of climate policies are shared by all.
Key FindingsExecutive Summary
KEY FINDINGS
The costs of climate change will increase the longer we delay action. Without new policies, the United States will face economic damages equivalent to 1-3% of GDP per year by 2100. In a worst-case scenario, the damages could reach 3.7-10%.
Renewable energy and storage are becoming cost-competitive with fossil fuel generation, even without subsidies. About three-quarters of the U.S. coal fleet is now more expensive to operate than it would be to build and operate new solar and wind energy farms. Recent research also suggests that new natural gas plants could be a risky investment, given continuing improvements in the cost and performance of clean energy technologies.
Led by wind and solar, U.S. clean energy investment climbed to a record $78.3 billion in 2019 and, despite COVID-19, the long-term drivers for investment remain strong. The United States is second only to China in total clean energy investments.
The low-carbon economy is emerging as a major U.S. employer, though COVID-19 is threatening that progress. In the power sector, zero-emissions generation like solar and wind was responsible for about 544,000 jobs in 2019, more than twice as many as the 214,000 jobs in fossil fuel generation.
$1 million spent on clean energy in the United States generates more than twice as many jobs as $1 million spent on fossil fuels in the short- to medium-term. Other low-carbon sectors are job creators, too. For example, investments in public transit, walking, and cycling create more jobs than investments in highways. The most important thing will be to ensure the quality of clean energy jobs, as there are still important concerns about job quality, security, and pay.
The investments needed for low-carbon infrastructure are substantial, but manageable. A range of studies estimate that ambitious U.S. climate action will require additional energy investments equivalent to 2% of GDP at the most, though much of this will be offset by reduced fuel expenditures. Even at 2%, that is well within the historical range. Energy spending in the United States is at a low point now at around 6% of GDP, but has fluctuated to as high as 13%.
Emphasis on low-carbon technologies can help the United States to boost its manufacturing sector and secure a share in the booming domestic and global cleantech market. The U.S. advanced energy industry generated $238 billion in revenue in 2018, about 15% of the global total. That’s roughly equal to that of aerospace manufacturing and double that of the biotechnology industry.
Energy efficiency can reduce energy costs for rural households. Low-income, rural households face the highest energy burden in the country, spending 9% of household income on energy bills compared to the national average of 3.3%. Energy efficiency upgrades such as adding insulation and sealing air leaks can reduce rural energy burdens by as much as 25%, translating into more than $475 in annual savings for rural households.
Wind energy provides new streams of income for farming and ranching communities. Wind farms paid $761 million in state and local taxes in 2018, plus $289 million in lease payments to farmers and landowners who hosted wind turbines on their land.
41 U.S. States and the District of Columbia reduced their energy-related CO2 emissions while increasing real GDP between 2005 and 2017. This includes states in all parts of the country, including Maryland and Maine in the Northeast, Alabama and Georgia in the South, Indiana and Ohio in the Midwest, and Alaska and Nevada in the West.
BLOG
10 Charts Show the Economic Benefits of US Climate Action
by Joel Jaeger and Devashree Saha - July 28, 2020
Advancing U.S. climate action will spur economic growth, create jobs, reduce costs for Americans and help fight the effects of climate change.
Ranking 41 US States Decoupling Emissions and GDP Growth
by Devashree Saha and Joel Jaeger - July 28, 2020
In the United States, over four-fifths of states are debunking the myth that slashing greenhouse gas emissions comes at the expense of economic growth.
RELATED EVENTS
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From John Porterfield to Everyone: 11:20 AM
Question presented to panelists > Would Energy Innovation and Dividend Act, HR763, proposed Jan 24 2019, aid US households with a monthly check, and not require additional federal tax, revenue, or debt? Will a fee and dividend bill direct business and consumer spending toward green jobs? Given IPCC schedule, does WRI advocate passage of one of the eight GHG pricing bills now before the 116th Congress? Would advocating passage reveal elected official's position on responding to majority public opinion that Federal govt should do more? What is WRI position on fee and dividend legislation in 116th Congress?
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From Me to Everyone: 11:45 AM
I am passionate about better metrics. Some of Walmarts numbers are very big ... but how do they relate to the even bigger sales revenue numbers and the profit numbers?
Better metrics should include more talk not so much on simply more jobs, but more income for people doing work. There has been massive growth in the flow of wealth to owners over the past 40 years, but almost no growth in the money going to people doing the work.
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From John Porterfield to Everyone: 11:47 AM
Is there a role for sea-board states, such as Maryland, to support technologies that may dramatically reduce the cost of renewable energy? For instance, the European Union supports development of airborne wind (AWE), which is entering the market > https://www.airbornewindeurope.org/about-airborne-wind-europe/
Also see > http://euanmearns.com/high-altitude-wind-power-reviewed/
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From Ted Weber to Everyone: 11:49 AM
Also, rate of reduction per square foot doesn't mean much if the area is increasing. Total emissions are what's relevant.
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From Rhys Gerholdt to Everyone: 11:50 AM
Attendees, thank you for your participation! Please submit your questions via the Q&A feature instead of the chat box.
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From Rhys Gerholdt to Everyone: 11:59 AM
Are you active on Twitter? Please consider retweeting about the paper 'America's New Climate Economy', here
https://twitter.com/WRIClimate/status/1288107228474433545
Here is a post-event reading list - enjoy!
Read the paper 'America's New Climate Economy':
https://www.wri.org/publication/us-new-climate-economy
Blog post 'Ranking 41 US States Decoupling Emissions and GDP Growth'
https://www.wri.org/blog/2020/07/decoupling-emissions-gdp-us
Blog post '10 Charts Show the Economic Benefits of US Climate Action'
https://www.wri.org/blog/2020/07/economic-benefits-climate-action-us
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Sanjay Kapoor 11:13 AM
Looks like this is being recorded. Will a recording be made available?
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Rhys Gerholdt 11:21 AM
Yes a recording will be available, and posted to the WRI.org event page by tomorrow.
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Steven Zhu 11:24 AM
I am curious if you looked into the imact of green investments in the trade sector. How much of the job creation and GDP growth is attributed to america exporting green products.
Devashree Saha would like to answer this question live.
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You 11:34 AM
I am passionate about better metrics. Some of Walmarts numbers are very big ... but how do they relate to the even bigger sales revenue numbers and the profit numbers?
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Anonymous Attendee 11:39 AM
What is the name of the WRI report that panelists are referring to?
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Rhys Gerholdt 11:40 AM
America's New Climate Economy. Read it here:
https://www.wri.org/publication/us-new-climate-economy
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You 11:42 AM
Better metrics should include more talk not so much on simply more jobs, but more income for people doing work. There has been massive growth in the flow of wealth to owners over the past 40 years, but almost no growth in the money going to people doing the work.
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Anonymous Attendee 11:54 AM
What is the name of your report? Please share the link if you can. Thanks.
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Rhys Gerholdt 11:54 AM
America's New Climate Economy. Read the report here:
https://www.wri.org/publication/us-new-climate-economy
DOWNLOAD 3.6 MB / PDF
PUBLICATION
CONTACT:
Devashree Saha
PROJECTS:
New Climate Economy
TOPICS:
Climate, WRI United States, Economics
PAGES:
66
LICENSE:
Creative Commons
by Devashree Saha and Joel Jaeger
July 2020
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