Turns Out, Saving the Planet Also Saves Money
Climate change comes with a cost. Critics of carbon-reduction efforts often rely on rhetoric about how expensive regulations would be, but a new report from economists at New York University found that international efforts to reduce carbon have already benefited the United States some $200 billion, and more reductions would lead to greater benefits.
The economists looked at the social cost of carbon and found that the benefit of other countries lowering carbon emissions is a compelling reason for the United States to show leadership on climate at the United Nations conference on climate change that begins at the end of the month.
“Americans right now are really benefiting from other countries’ actions,” Peter Howard, an economist at NYU Law School’s Institute for Policy Integrity and an author of the report, told ThinkProgress.
And the benefits are huge.
In addition to the $200 billion in benefits so far — seen in everything from reduced healthcare costs to reduced agricultural damages — significant action from outside the country could have $10 trillion in direct benefits to the United States through 2050, the report found. That’s not even counting the benefits of U.S. action or “ancillary benefits” from reductions in other harmful pollutants.
“There’s actually a lot of monetary reasons — just economic reasons, from a good cost-benefit analysis perspective — that we should think about protecting the climate and reducing emissions,” Howard said.
Despite the rhetoric, it’s debatable whether carbon reduction programs actually cost the economy.
“These regulations, when you really look in both directions, the general evidence is that a lot of them don’t have much effect either way on jobs. They are really pretty job-neutral,” Howard said.
Other countries doing something does depend on America acting.
The United States already uses a social cost of carbon metric to evaluate regulations, such as the Clean Power Plan, which limits carbon emissions from power plants under the Clean Air Act. Addressing carbon emissions has been a priority for the Obama administration, which has been limited in its actions by an intractable Congress. A 2009 effort to pass cap-and-trade legislation never reached the Senate floor.
Many economists, though, argue that an out-and-out carbon price, particularly a carbon tax, would be the most effective, market-based approach to save the planet.
“I’m an economist, so I would clearly prefer — as many people would — a carbon tax, but that’s just not the political reality right now,” Howard said. “The reality we face is the Clean Air Act.”
The Clean Power Plan could end up reducing emissions from the electricity sector by more than 30 percent over 2005 levels. And while some states have sued (arguing, as usual, that the regulation is too expensive), a group of states announced yesterday they will intervene on behalf of the EPA’s Clean Power Plan. The group essentially made the same argument as the Institute for Policy Integrity: Other states’ carbon emissions are causing extreme weather and climate disruptions for all of us. Or, in other words, anyone decreasing their emissions benefits us all.
For that reason, Howard said, policymakers should be looking for ways to encourage emissions reductions wherever they can.
“It would be in America’s best interest to secure other countries’ actions,” he said. The United States is not only a world super-power, it is also the second-largest carbon emitter, giving the country a meaningful role in emissions reductions.
“Other countries doing something does depend on America acting,” Howard said.
In some cases, “doing something” may mean implementing a carbon fee. In recent months, the World Bank, International Monetary Fund, and several world leaders have joined the call for putting a price on carbon. After commitments are made at COP21 in Paris this year, it’s expected that many countries — or groups of countries — will design and implement cap-and-trade or carbon fee systems.