Energy Reform Can Be an Economic Boon

Critics of moving toward a low-carbon economy generally argue that doing so is far too costly. That frame, that energy transformation will hurt the economy, is alive and well in the media. Today's Washington Post features a front page article asking, "As Fuel Prices Fall, Will Push For Alternatives Lose Steam?" The analysis, in which Steven Mufson talks to energy experts from Greg Kats (who spoke to NDN on August 1) to Shai Agassi (March 12), makes the point that lower cost conventional fuels (oil), will hurt the ability of alternatives to compete.

This analysis is fine, but, as Kats points out, lower energy costs should not be thought of as a reason to place a hold on changing energy policy. The Post’s editorial page also goes after the cost of enacting climate legislation, arguing that cap and trade may be difficult because of the current recession. This is a political problem, not an economic one, as any climate change legislation will not actually begin capping emissions for well until after a recession has passed. (The Post’s solution, incidentally, of recycling revenue from cap and trade, is a novel idea, and is similar to a tax shift that has been studied extensively by NDN’s Dr. Robert Shapiro.)

The real point here is that moving toward a low carbon economy must be done to ensure future prosperty. When enacted properly, energy policy shifts can be game changing. Today’s New York Times tells us that California’s energy policy, which, since the late 1970’s, has kept per capita energy use stable while the rest of the country’s has increased, has been a boon for the state.

California’s energy-efficiency policies created nearly 1.5 million jobs from 1977 to 2007, while eliminating fewer than 25,000, according to a study to be released Monday.

The study, conducted by David Roland-Holst, an economist at the Center for Energy, Resources and Economic Sustainability at the University of California, Berkeley, found that while the state’s policies lowered employee compensation in the electric power industry by an estimated $1.6 billion over that period, it improved compensation in the state over all by $44.6 billion.

"Consumers were able to reduce energy spending," the study said, adding that "these savings were diverted to other demand."

"When consumers shift one dollar of demand from electricity to groceries," the report said, they create jobs among retailers, wholesalers, food processors and other businesses.

So, instead of being afraid of changing energy policy in the midst of a recession, we must realize that the status quo has far greater costs. Congress and the president-elect will have an excellent opportunity to begin this crucial transition in mid-November, when a lame duck session is likely. They must pass a stimulus package that invests in clean infrastructure, which will both create jobs now and ensure future prosperity. Moving forward, policy makers must consult with leaders in the energy field like Kats and Agassi, as their innovation will be key in creating the 21st century economy.


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