The green jobs debate (cont’d)

Nat Keohane

In a blogpost the other day (Cancun can’t: Ten reasons why the climate talks will fail), I devoted a paragraph (see below) to what could have been a longer critique of the way environmental groups tried to sell legislation to limit greenhouse gas emissions as a jobs program. I was reflecting my sense that green groups, in an effort to get cap-and-trade through the Senate during a recession, had latched onto a convenient but specious argument about “green jobs” that polled well, instead of trying to make what was a politically more-challenging argument: That we ought to adopt climate protection, despite its  modest short-term costs, because it’s important to protect the climate. Let me add that this question of political messaging isn’t an either-or; of course the green groups talked about climate along with jobs, and energy security, and any other semi-reasonable claim they could make on behalf of cap-and-trade.

But the debate, it seemed to me, was not as honest as it could or should have been. One word that rarely appears in any messaging from the green groups is “sacrifice”–even though doing the right thing about climate will require some short-term sacrifice. Another word you don’t hear much is “moral.”

In any event, I singled out Environmental Defense as a proponent of the green jobs argument. I did so because I remembered TV commercials like this one from EDF which says “Carbon Caps = Hard Hats,” and leaves viewers with the impression that cap-and-trade is a jobs creation program. I could have just as easily cited the Natural Resources Defense Council, Sierra Club or the Apollo Alliance (“working to catalyze a clean energy revolution that will put millions of Americans to work in a new generation of high-quality, green-collar jobs”).

Today, two economists who work at EDF — Nat Keohane and Gernot Wagner — posted a very useful response to my blog at EDF’s excellent Market Forces blog. I’ve posted it below–note in particular the Peterson Institute study which shows that carbon caps would create some (green) jobs and eliminate other (brown) jobs.  In a phone conversation, Nat told me that he was disappointed in my comment because EDF has been extremely careful not to oversell the green jobs argument–certainly more careful than opponents of climate regulation who made wildly  overstated claims that carbon caps would kill millions of  jobs. He’s got a point, although EDF’s political messaging around cap-and-trade was, inevitably, not as nuanced as the writings of its PhD. economists. I’m hoping to have a conversation with Nat and Gernot about “lessons learned” and  “where-do-we-go-from-here” before long.

Marc Gunther lists ten reasons why “Cancun can’t.” We won’t go into his other nine points here, but number three on the list hit home:

Environmentalists have been disingenuous about the climate issue. They’ve argued that regulation of carbon dioxide will create green jobs and grow the economy. Typical is this graphic from Environmental Defense. (“Get a step-by-step picture of how a carbon cap will spark new jobs, lift the economy and clean the air.”) Uh, no. Most economists agree that dealing with global warming will entail short term costs. (See Eric Pooley’s excellent analysis at Slate.)

Talking about jobs is one of the most difficult things to do well in the arena of climate policy. The jobs issue is highly politically charged—and for good reason, given the state of the economy. But it struck us as unfair for Marc to use EDF as his bête noire.

To begin with, the graphic that Marc links to doesn’t make the claim he ascribes to it. We weren’t saying that climate policy was a free lunch. What we were pointing out was that doing something about climate can also create good jobs in some unexpected places. More on that in a minute.

Gernot Wagner

We have bent over backwards to be as balanced and rigorous as possible in our assessment of the economics of climate change.

This turns out to be perfectly illustrated by Eric Pooley’s analysis—the same one Marc links to.

Eric’s indeed excellent analysis makes two points:

First, there is a broad consensus that the cost of climate inaction would greatly exceed the cost of climate action.

That’s the main, often-forgotten point because it seems so obvious: “it’s cheaper to act than not to act.”

We should really stop here and reflect on that for a second. Many—if not most—economists do, in fact, agree on that statement and have for a while.

But that’s not our point here, either.

Small but positive

Eric’s second point concerns the cost side of the ledger. The irony here is that Eric cites our analysis as highlighting that the costs of reducing emissions will be real, but small:

The second area of consensus concerns the short-term cost of climate action—the question of how expensive it will be to preserve a climate that is hospitable to humans. The Environmental Defense Fund pointed to this consensus last year when it published a study [PDF] of five nonpartisan academic and governmental economic forecasts and concluded that “the median projected impact of climate policy on U.S. GDP is less than one-half of one percent for the period 2010-2030, and under three-quarters of one percent through the middle of the century.”

That’s a mouthful.

In short, yes, the best economic studies show that there will be a cost to climate action. The costs are so small that they often fall within the general noise of model predictions, but they are there. There’s no denying that, and we never have. And yes, it was a much-cited EDF study [PDF] that makes this point, as well as a more recent update [PDF].

Just to be clear: Marc points to us as proponents of the “free lunch” theory, and then points to Eric as the best source on the costs—while Eric actually cites us as fairly and accurately surveying the available evidence on costs.

So did we contradict ourselves? Uh, no.

There is no contradiction between the following two assertions:

  1. There will be modest short-term economic costs associated with reducing emissions (although those will be much smaller than the economic costs of not reducing emissions!); and
  2. Policies to reduce emissions, like a cap-and-trade program, will lead to job creation. [click to continue…]

Cancun can’t: Ten reasons why the climate talks will fail

For the next couple of weeks, thousands of government officials, NGOs, environmental activists and reporters will gather in Cancun, Mexico for international climate negotiations, officially known as the Sixteenth Conference of the Parties (COP-16) of the United Nations Framework Convention on Climate Change (UNFCCC). It’s fitting that the talks are being held in a vacation resort, where people go to escape–because only by ignoring what’s happening in the rest of the world is it possible to take these UN negotiations seriously.

Heading into the Cancun talks, expectations are low. They aren’t low enough. Here are 10 reasons why it will be hard, if not impossible, to bring about meaningful action to curb global warming through this UN process. Many are admittedly U.S.-centric, all of them matter and if you want to skip ahead through this unusually long post, No. 10 is the biggest reason why I doubt that these Cancun talks, or the successor negotiations–COP17 in South Africa, COP18 in South Korea, etc.–will get us the change we need.

So as not to be too gloomy, I’ll conclude with a thought or two on what might work instead…but first the discouraging news.

What's the climate equivalent of a river on fire?

1. Global warming pollutants are invisible. So it’s hard to get people to care about them. Winning broad public support to regulate soot or smog or soiled rivers or polluted beaches iseasier. A 1969  fire in the Cuyahoga River in Cleveland lasted just 30 minutes, but it helped fuel the environmental movement and  passage of the Clean Water Act in 1972.

2. The costs of curbing climate change are immediate and the benefits are in the future. Any effort to reduce emissions will cost money because low-carbon energy sources (solar, wind, nuclear) are more expensive than burning fossil fuels. Electric cars are pricier than gas-powered vehicles. But Americans don’t like to sacrifice today for a better tomorrow. We’re lousy at saving. Instead of  raising taxes or cutting government benefits, we run up huge deficits that will burden future generations. Government debt is close to 90% of GDP. Deferred gratification is not our strong suit.

3. Environmentalists have been disingenous about the climate issue. They’ve argued that regulation of carbon dioxide will create green jobs and grow the economy. Typical is this graphic from Environmental Defense. (“Get a step-by-step picture of how a carbon cap will spark new jobs, lift the economy and clean the air.”) Uh, no. Most economists agree that dealing with global warming will entail short term costs. (See Eric Pooley’s excellent analysis at Slate.) Their estimates of those costs are generally in the range of 0.5 to 1% of U.S. GDP (Harvard’s Robert Stavins) or 1 percent of global GDP (The Stern Review, PDF). The costs of inaction will eventually be much greater. But carbon regulation will likely slow economic growth in the short run by raising energy costs. It’s not a free lunch, and we should be honest about that. [click to continue…]

Obama: Sitting out the climate war

obama-thoughtfulTalking about the Gulf oil disaster in a speech last week at Carnegie Mellon University, President Obama said we need an energy-and-climate bill because

the only way the transition to clean energy will ultimately succeed is if the private sector is fully invested in this future — if capital comes off the sidelines and the ingenuity of our entrepreneurs is unleashed.  And the only way to do that is by finally putting a price on carbon pollution.

Now, many businesses have already embraced this idea because it provides a level of certainty about the future.  And for those that face transition costs, we can help them adjust.  But if we refuse to take into account the full costs of our fossil fuel addiction — if we don’t factor in the environmental costs and the national security costs and the true economic costs — we will have missed our best chance to seize a clean energy future.

The House of Representatives has already passed a comprehensive energy and climate bill, and there is currently a plan in the Senate — a plan that was developed with ideas from Democrats and Republicans — that would achieve the same goal… the votes may not be there right now, but I intend to find them in the coming months.  (Applause.)  I will continue to make the case for a clean energy future wherever and whenever I can.  (Applause.)  I will work with anyone to get this done — and we will get it done.

“We will get it done.” Wow. Sounds good. The question is, when will the president’s actions match his words?

“He hasn’t begun to fight,” declares Eric Pooley, the author of The Climate War: True Believers, Power Brokers and Fight to Save the Earth (Hyperion, $27.99), a terrific new book on the politics of global warming.

“I hope he will,” Eric adds. After spending three years closely following the campaign to get climate and energy legislation through Congress, Eric says: “The missing ingredient here has been presidential leadership.”

How true. And even in this speech–which has won praise from environmentalists–Obama manages to avoid using the words “global warming” or “climate change,” as David Roberts noted in Grist. Bold leadership this is not.

Eric Pooley

Eric Pooley

Eric is my former boss at FORTUNE, and he’s now the deputy editor of Bloomberg BusinessWeek. He’s a good reporter and a smart guy but I have to say that I wasn’t planning to reading this 481-page book (including notes and an index) about the repeated, failed attempts to get a climate bill through Congress. Why suffer through that again? But once I began reading, I couldn’t stop. Eric found a way to tell the story by bringing the climate crusaders to life–especially Fred Krupp of Environmental Defense Fund, Jim Rogers of Duke Energy and Al Gore–and by taking readers behind the scenes on Capitol Hill and into the  strategy sessions of the green groups that have labored, not merely for years, but for more than a decade to get the U.S. government to impose a cap on greenhouse gas emissions. Hard to believe that a book about Congress, climate policy, utility companies and environmentalists, with Al Gore in a lead role, could be a page turner, but there you have it. [click to continue…]

Shame on you, Carly Fiorina.

I’ve long believed that we’d be better off if more successful business people entered politics. They tend to be pragmatic and action-oriented, they’re proven leaders, they understand economics and they’re not beholden to special interests. Look, for example, at the job Michael Bloomberg has done in New York City.

fiorinaAnd then there’s Carly Fiorina, the former CEO of Hewlett Packard, who is running for the U.S. Senate in California, hoping to unseat the incumbent Democrat, Barbara Boxer. She is giving business a bad name, notably with a new TV ad about climate which is unfair, stupid and destructive.

In the ad (below), a shrunken image of Boxer says:

One of the very important national security issues we face, frankly, is climate change.

To which Fiorina replies, dismissively:

Terrorism kills—and Barbara Boxer is worried about the weather….I’ll keep you safe.

My goodness. I’m no fan of Boxer (who comes across as perhaps the least appealing character in Eric Pooley’s excellent new book, The Climate War), but she is well within the mainstream in seeing climate change as a national security issue. Others who link climate to national security include so-called green hawks like James Woolsey, the former head of the CIA, and the military and intelligence analysts at the National Defense University, as the New York Time reported last year.

Last fall, the CIA opened a Center on Climate Change and National Security to study

the national security impact of phenomena such as desertification, rising sea levels, population shifts, and heightened competition for natural resources.

So Boxer’s right and Fiorina’s wrong: climate change is, in fact, a national security issue. Indeed, it’s a pretty good bet that climate change will kill more people that terrorists in the next decade or two.

Fiorina’s derisive comment that Boxer is “worried about the weather” is even more objectionable because Fiorina surely knows the difference between weather and climate. Not long ago, she talked up climate change as a serious issue. In 2008, as an advisor to  John McCain during his presidential campaign, Fiorina told Kate Sheppard of Mother Jones:

I think it’s important that when we think about taking on some of the great challenges now as opposed to leaving them to future generations, we have to talk not only about Social Security and medical care, but also about leaving our planet cleaner for the next generation than we found it.

I suspect that’s what she really thinks, but Fiorina is now running hard for the Republican nomination as a conservative and so she appears willing to say anything to get elected–even if it muddies the debate about climate.

Maybe the key difference between Mike Bloomberg and Carly Fiorina is their respective track records. He built a great company from scratch and made a fortune doing it. She worked her way into the job of CEO of Hewlett Packard, did a lousy job running the company (but a good job promoting herself) before she was sent off by the board with an undeserved $21 million severance package. She’s now using some of her wealth (which rightfully belongs to HP shareholders)  to finance ads like this one.

It really is shameful.

The phony green jobs debate

As the battle over climate change legislation heats up, several Big Green groups–the Environmental Defense Fund, the Natural Resources Defense Council and the Sierra Club–are rolling out TV and Internet ads designed to persuade voters that regulating greenhouse gas emissions will create green jobs. David Yarnold, the president of EDF’s Action Fund, sums up the message in an email: “Carbon Caps = Hard Hats.” Clever. Here’s an ad from EDF’s campaign, launched in partnership with the United Steelworkers union and the Blue Green alliance, a group of enviromental groups and unions.
Think of this ad, and the one below, as the “Harry and Louise” ads of the campaign to pass global warming legislation. You remember Harry and Louise, right? They were the couple who turned a devilishly complicated issue, health care reform, into a soundbite (“If we let the government choose, we lose”) and helped kill the 1994 Clinton health plan. These ads take what may be an even more devilishly complicated issue, climate change regulation, and use images of brawny construction workers to turn it into an even shorter soundbite: “Green jobs.” Take a look at this spot from The Blue Green Alliance:

Maybe I missed it, but did you hear an environmental message in either of those ads?

Of course, there’s research to support the claims about green jobs. In the interests of full disclosure, I need to say here that I’ve been doing some freelance work for EDF and NRDC—organizations I admire a great deal. But these claims about green jobs deserve greater scrutiny.

Last June, for example, the Blue Green Alliance, Sierra Club, NRDC and the steelworkers issued a green jobs report from the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. It said:

…millions of U.S. workers—across a wide range of familiar occupations, states, and income and skill levels—will benefit from the project of defeating global warming and transforming the United States into a green economy.

A second report from PERI, issued last September under the auspices of the Center for American Progress, got more granular. In my home state of Maryland, for example, the authors project that a $100 billion green economic recovery program would create 36,739 jobs. They would be created in such industries as building retrofitting, mass transit and freight rail, smart grid, wind power, solar power and advanced biofuels.

It sounds great, doesn’t it?

Not according to the four lawyers and economists who produced “7 Myths About Green Jobs,” a 97-page report published by the University of Illinois College of Law.  They argue that “the green jobs literature is rife with internal contradictions, vague terminology, dubious science, and ignorance of basic economic principles.” Studies by conservative think tanks go further, claiming that climate legislation will destroy millions of jobs. A 2008 Heritage Foundation study claimed that passage of last year’s Lieberman-Warner bill would create “extraordinary perils for the American economy” and cause annual job losses of between 500,000 and 1,000,000 after a few years of job gains. (This report was pretty thoroughly discredited by NRDC.) The best thing I’ve read about this debate (and one of the most balanced) is this fine Slate article by Eric Pooley, my former editor at FORTUNE, who finds that there’s an emerging economic consensus that the costs of dealing with climate change are significant but manageable–and that given the risks, those costs are likely worth paying.

My point here is not that economists disagree. My point is that the climate change debate shouldn’t be about green jobs. It’s intellectually dishonest to pretend that we can forecast, with any degree of accuracy, the impact of a complicated government policy on a dynamic global economy decades into the future. Both sides know that their projections are based on a host of assumptions which may or may not come true. What if we decide as a nation to turn to nuclear energy as a source of low-carbon power? That probably won’t create many long-term jobs. What if there’s a breakthrough in the solar PV business in China? That may not bring green jobs here. Are farmers who grow corn for ethanol doing green jobs? That hasn’t turned out so well.

Let’s get real: We can’t predict oil prices 12 months out. Last spring, virtually no one anticipated the global financial crisis of last fall. And we are projecting the number of green jobs that will be created or lost on a state-by-state basis by a law that won’t take effect until 2012? Who are we kidding?

I called Russ Roberts, an economist at George Mason University who hosts the fine EconTalk podcast, for some guidance on how to think about green jobs and the economics of climate regulation.  “Creating green jobs is easy,” he told me. “We could employ millions of people picking up litter, and we could make them very good-paying jobs if we want. But of course that would make us poorer as a nation. There’s a cost to providing those jobs that would have to be borne by other people in the economy.”

It’s not just the cost of higher taxes that needs to be factored into the equation, he noted. To the degree that the government makes policy that favors, say, vast construction of wind turbines throughout the upper Midwest, the people doing those jobs will be drawn from somewhere else, maybe even from more productive work. If policy leads to the hiring of  thousands of contractors to do energy efficiency, the cost of building a new home or renovating your basement may go up because many of the good construction workers are busy.

“As voters and citizens and readers, what we want to think about is the big picture—are we moving in the right direction when it comes to environmental policy?” Roberts says. Put another way, are we spending enough money today to head off the threat of global warming in the future? Because if anyone tells you that we can deal with climate change at no cost, they probably shouldn’t be trusted.

Maybe that’s what bothers me about the green jobs ads. They’re like political campaign ads. They promise something for nothing. They treat the voters like children. They’re emotional and not educational. And they’re not helping to build a movement around climate change.

Other than that, they’re fine.

And I do hope they work.