Guest Blog: The economics support ambitious climate policy

From guest blogger Kristen Sheeran, director of Economics for Equity and the Environment Network (E3), a nationwide network of more than 150 economists, developing new arguments for environmental protection with a social justice focus.

As the climate debate shifts from the science to the economics, some are using economics as the rationale for inaction. So, the Economics for Equity and the Environment Network (E3) recently launched RealClimateEconomics.org. It's a reader’s guide to peer-reviewed economics literature that supports action to reduce the risks of climate change. The weight of economic evidence puts to rest concerns that well-designed climate policy will be too costly.

Some argue that the costs of achieving ambitious national emissions reduction targets will be too high. But this assumes that all of the costs involved in moving to a clean energy economy represent new costs, without acknowledging the massive market failure in our economic system that equates the price of carbon emissions to zero. Since emitting carbon appears to cost nothing on a balance sheet, all steps to reduce carbon pollution count as "new costs."

But the real cost of carbon emissions is far from zero. Each new scientific report brings proof of a changing climate that promises to disrupt agricultural patterns, set off a scramble for dwindling resources, raise sea levels, propel population shifts and require massive emergency spending as we try to react to the growing crises. These are the costs of inaction – costs we currently ignore and pass on to our children.

A climate policy that sets a firm price signal for carbon will correct the underlying inefficiencies in our economic system and direct capital toward new and existing clean technologies. A cap-and-trade program that auctions permits will generate the revenue stream we need to invest in renewable energies, energy efficiency and assist the households that will be most impacted by climate policy. Compared to the costs of inaction, the costs of switching to cleaner energy and reducing emissions are low.

But will lowering our emissions compromise our quality of life? Evidence from around the country demonstrates that this fear is unfounded. U.S. states vary only modestly in average incomes, but have widely differing per capita emissions. This is one of the findings of a new report, Greenhouse Gases and the American Lifestyle, produced by the E3 Network and Stockholm Environment Institute. States like New York, California, Rhode Island, Oregon, Vermont and Washington have per capita emissions roughly one-half of the U.S. average. They prove that it is possible to have a US lifestyle, with a European sized carbon footprint. If all fifty U.S. states could emulate the per capita emissions of these states, we would go a long way toward our national emissions goals.

Supporters of climate action take note: economics is a powerful tool in support of fair and efficient climate policies. The economics is on your side.