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…]