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Guest Post: Green Jobs Didn’t Fail to Sell the Climate Bill

by Michael Levi
July 28, 2010

This is a guest post from Jason Scott, Managing Partner and Co-Founder of EKO Asset Management Partners.

Thanks to Michael for the opportunity to guest post. I consistently enjoy his often contrarian analysis, but in this case – re the politics of green jobs – I think he’s wrong.

First of all, on the pure messaging front, we (the pro “price on carbon” crew) hardly even tried to share the jobs message broadly until the desperate last few weeks. We can argue back and forth on the strategy and tactical shifts but my evidence is this: the media narrative after the bill died was that “enviros” were disappointed. That’s just bunk – INVESTORS AND LARGE PARTS OF THE BUSINESS COMMUNITY RE DISAPPOINTED TOO. Large corporates holding up cap ex for regulatory certainty, sellers of equipment, private equity firms financing projects (think Blackstone not John Doerr) and small businesses starting nascent energy efficiency and manufacturing companies were all very disappointed. Not just greens. Their businesses might die and their access to capital and therefore ability to hire will go away. The fact that the media still thinks it was just “greens” are disappointed means we never broke through on the economic message to the media, much less the general public.

Second, putting aside the substance of whether or not one can “prove” the bill would have created jobs, lets talk about the politics of the typical left-right dynamics. Frankly, I’m a bit puzzled by the opposition to carbon pricing from some conservatives. Nothing is more conservative than a market-based solution. Pricing carbon as the economic externality makes sense – it is obstructionism and plain politics, not truly ideological. But most conservatives are painting a market-based solution as a liberal, big government tax on the economy.  (Never mind that today’s seemingly “cheap” gasoline is heavily subsidized by dozens of hidden taxes on consumers from the cost of our military in the Middle East and providing security for oil tankers to the BP Gulf Coast disaster). If politicians are so concerned that putting a price on carbon will hurt taxpayers’ wallets, we have a simple solution: Return the money that the government collects through carbon pricing to taxpayers.  Businesses will become more efficient, pollution will drop, and taxpayers – not government — will get the revenues. What conservative could oppose that?

Now, can I talk about substance just a little bit? THIS REALLY REALLY IS ABOUT JOBS. Regulatory Certainty = Investment = Jobs. And before this November, had we passed a price on carbon, the jobs could have started. Surely by 2012, there will be REAL results from a price on carbon. If that’s dead, in the short term, if we don’t pass extensions of tax and grant programs for efficiency and renewables, the clean economy as we know it in America will die. Every dollar that would have been invested here will go to China, India or Europe and they will get the resulting jobs and we will never get them back. Capital flows like a river, looking for highest returns for a given risk. It doesn’t wait for the US Senate to decide what to do!!!

Finally, whether we like cap and trade or not, or the jobs argument or not, a price on carbon would create the revenue (“polluters pay”) to fund energy R&D, Carbon Capture and Storage and address regional disparities in any energy and climate legislation. Plus carbon offsets lower compliance costs and create revenues in impacted sectors like agriculture. But many of the “good guys” thought we could pass an energy bill with a renewable energy standard if we just gave up on the price on carbon. Looks like they were wrong. A price on carbon creates the revenues to pass a real energy climate bill. Dozens of well meaning pieces of legislation that look easy to pass, aren’t. Putting a cap on some carbon emissions is the best chance we have to pass meaningful climate and energy legislation. Messaging snafus be damned!

Post a Comment 3 Comments

  • Posted by Michael.

    I’m glad you gave Jason the opportunity to post because he is dead on with one specific aspect of job creation – the certainty of carbon pricing and regulation will lead industry and the wider economy to adjust accordingly. Michael is right to point out that there are always winners and losers in economics, and there certainly will be losers in any climate addressing legislation that is passed by Congress, but inaction is also creating losers and ensuring the status quo continues to win.

    I do want to applaude one other aspect of Scott’s post – his calls for a carbon price while leaving out any notion of a carbon cap. Caps on carbon are exceptionally difficult to manage in order to achieve a target price. One needs only to look at the Northeast’s RGGI or Europe’s EU ETS to see how difficult it can be. A real solution would be to set a straight forward carbon tax on ton of carbon produced levied both against domestically produced goods as well as foreign produced good (including transport) – and it should be levied without exemptions or exceptions. It should start off low and be set to increase on a regular but increasing rate. Businesses will be able to forecast future costs and change accordingly.

    While I am skeptical of (and see the inefficiency of) taxing someone only to return their money to them, I could see negotiation a portion of the tax to be returned to individuals. I would much rather see a majority of any tax spent on the huge local, state and federal infrastructure changes that will be needed; funding for clean energy RD&D; and for loans/grants to individuals and businesses to make changes/improvements in buildings, equipment, etc. If some would like to maintain the concept of offsets to spur investment in areas such as agriculture I could see allowing offsets at a set lower rate than the current price of carbon.

    The reality is that while such a plan would certainly achieve the goal of drastically reducing our carbon emissions via market based solutions – such a plan is DOA in the US Congress and has no chance of even being proposed. What the rest of the world fails to realize is that large sectors in business are not opposed to climate legislation, in fact many businesses are pushing to constantly do more. What we have in the US is bitter partisanship and a absolute dearth of political leadership. Consequentially, international and national solutions (within the US) are simply not possible at this point. The remaining solutions, however inadequate, now lie with regional coordinated efforts, states, local governments, businesses and individuals.

  • Posted by Chris_sticks

    “First of all, on the pure messaging front, we (the pro “price on carbon” crew) hardly even tried to share the jobs message broadly until the desperate last few weeks”

    There are some really good points on industry support and the economic desirably of regulatory stability, but I don’t know how you can say that. Lots of groups have been talking about ‘green jobs’ since 2008 and ‘clean energy economy’ was practically the official line in 2010.

  • Posted by ThisOldMan

    I’m a bit puzzled by the opposition to carbon pricing from some conservatives. Nothing is more conservative than a market-based solution. Pricing carbon as the economic externality makes sense – it is obstructionism and plain politics, not truly ideological. But most conservatives are painting a market-based solution as a liberal, big government tax on the economy.

    I’m a bit puzzled about where you’ve been these last 20 or 30 years. The Republicans are against it because the Democrats (by and large) are for it. Right now, conservatives are doing their level best to halt economic recovery and job creation in order to be able to blame Obama for not being able to accomplish just that. I don’t think most of them really understand just how much worse what they’re doing to the environment is going to eventually be, but why should they? All that matters is winning as many seats as possible this coming November. Hooray for our side!

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