Q&A: How to Slash Emissions While Creating Jobs

(Photo: Imaginechina/AP/Li zhongxian)

Workers install solar panels in China.

World leaders meeting in Paris this week and next face a monumental challenge: slashing global emissions by 40 percent by 2030, as recommended by the International Panel on Climate Change. In his new book, Greening the Global Economy, economist Robert Pollin contends that large-scale investments in renewable energy and energy efficiency will not only help countries meet those targets, but will stimulate the economy and boost employment around the world.

The American Prospect spoke with Pollin about his research and about what needs to be done to stabilize the climate—for the planet, and for workers. This is an edited transcript of that conversation.

 

Economist Robert Pollin, author of Greening the Global Economy.

What led you to write this book and focus on green technology and environmental investment?

The goal was to put down what I’ve been saying in these much more technical and lengthy studies into a format that a normal person might want to read, or an intelligent high school student who cares about the world but isn’t necessarily focused on environmental issues per se. Because this is such a huge issue, [it’s for] anyone who has any concern about the planet, jobs, the economy.

What are your hoped-for outcomes for the upcoming Paris talks, and what are your expectations?

A hundred and fifty-six countries have made pledges for emissions cuts, which is good. But they’re nowhere near adequate for getting close to the emission-reduction goals that climate scientists say are necessary to have a good chance of stabilizing the climate. I want to think of Paris as a step forward, in that countries are starting to take it seriously.

But I want to also convey that much more needs to be done. It doesn’t have to require sacrifices in terms of economic growth or jobs. It will have a lot of positive spin-offs in terms of creating opportunities for small-scale energy systems, especially in rural areas. We have opportunities to go 100 percent renewable. I have a short discussion [in my book] of this rural town in Germany that’s 100 percent renewable now. If you can do it in Germany, which isn’t particularly sunny or windy, you can do it anywhere. It just takes organization and will.

Is the scale you’re proposing of investment big enough to produce the major macroeconomic impact hoped for, as well as the transition to a global green economy?

The key research question was what would the scale have to be in order to bring the emissions down to where climate scientists [advise]. Those simple goals, as I read them, were that we need to get a 40 percent absolute reduction in emissions relative to today within 20 years, and we need to get an 80 percent reduction by 2050—35 years, it’s not that long. So then I approached the question, how much does it cost to get one unit of emission reduction in terms of raising energy efficiency levels and expanding renewable energy production? What I came up with was (and obviously we can’t be precise on something like this) in the range of a percent and a half increase in GDP on spending. Today, we’re at about a half a percentage point of GDP. So basically triple that to get to a total of around 2 percent of global GDP, by investing in and expanding renewable energy (solar, wind, geothermal, bioenergy, some hydro) and investing in efficiency.

China and the U.S. are 40 percent of total emissions—that’s a lot for two countries—but it still means 60 percent is from everybody else. India has the second biggest population; they expect to grow at a rate of about 6 percent a year, and if they grow on the basis of their existing fossil fuel energy infrastructure, their emissions will increase fivefold within 20 years. Same story you can tell for Indonesia, every other big Asian country. So even if the U.S. and China make massive advances, they will be counteracted by other emerging countries. I’m certainly not in a position to tell India to stop growing. That would be hypocritical, I would say even immoral. But the point is, they can grow on the basis of transforming their energy system.

Could you outline the types of funding that will be used? Will the stimulus effect be from deficit spending, or will it be from tax-supported outlays?

It’s a combination of public and private, majority private, incentivized by policy. So if we want to think of it in crude terms, I would say the 1.5 percent of global GDP that we’re spending now on expanding the fossil fuel economy just gets transferred over. We don’t even have to think about deficit spending in the aggregate; we don’t have to think about raising overall levels of investment.

Obviously, it’s not that simple. But that’s a clean way to think about it in its basics. Right now, probably about 3 percent is spent on fossil fuel infrastructure. So there’s plenty of room to find the money to contract that and transfer it into green investments. It doesn’t matter where there’s new discoveries. Brazil has these pre-salt mines, and in South Dakota, they’ve got fracking—it doesn’t matter. We have to go off of fossil fuels, and it has to be steady. We have to reduce fossil fuel consumption by about 2.2 percent globally every year, in absolute terms, not rate of increase.

You mention in your book the need for governments to ensure a just transition for workers, especially those who work in the fossil-fuel industry. What kinds of policies would this entail?

The best analogy comes from Tony Mazzocchi, who was this labor leader in the U.S. for the oil and chemical workers. His term was “Superfund for workers”—that’s how the term “just transition” came about. We need to have alternative employment opportunities, we need to have investments in the communities that are affected, we need to have retraining, and we need to be able to do that at scale.

If we think about every coal miner and anyone working for oil companies or natural gas, and gave them $40,000 a year for two years, and on top of that invested in the community and retraining, we’re looking at something like a billion dollars a year. So in the U.S., we’re talking about something like $200 billion overall. This is one half of 1 percent. I’m talking about a 20-year transition. It’s not like everyone’s going to lose their jobs next week. There will be retrenchment. You’re going to have too much political resistance to a transition unless you have some kind of compensation for people.

Unions have typically been wary of public service employment, out of fear that lower-paid, non-union government jobs might take the place of good union jobs. How do you think organized labor can get on board with this large-scale investment, and do you think they could be a game-changer?

I think that the single most important constituency that we need to bring along is labor. Two sources of resistance are the workers and the communities that think they’re going to get shafted, and the people that own the fossil fuel assets. We can’t do anything about the people that own the companies; they’re just going to have to figure out new ways to invest over time. They will.

Then there’s the workers. I’ve spent a lot of time trying to convince unions and other representatives of workers that this is a good transition. In the U.S., we show that basically, for a given amount of money, you get three times more jobs investing in the green economy versus maintaining a fossil fuel economy. If we think about investing in energy efficiency—buildings for example—a lot of it’s construction. They’re more labor-intensive than transporting oil over a pipeline. Now it’s true, as people say, that once you’ve done your retrofit, or once you’ve built your public transit system, you’re done. But if you do it for the whole economy, you’ve got 20 good years. There’s a lot of work that could be done.

Is it possible for current fossil-fuel companies to transition into renewable energy?

Roughly speaking, there’s about $33 trillion of fossil fuels in the ground. Of that, $30 trillion is owned by public, state-owned corporations. We’re talking about Saudi Arabia, Russia, Brazil. About 10 percent is private. So let’s take the $3 trillion that’s private. That’s a lot of money they’re going to lose. But when you break that down, if you say OK, this will depreciate over 20 years, that’s $150 billion every year.

That’s still a lot of money, but total financial assets in the global economy are more like $250 trillion. So we’re looking at less than 1 percent—half of 1 percent—reduction based on this fossil fuel issue. In the Great Recession, U.S. households lost $17 trillion in asset value in one year. I’m talking about $150 billion over 20 years. It’s less than 1 percent of what U.S. households experienced. But of course [fossil-fuel companies] are going to fight it; of course they don’t like the idea. But this is what needs to be done.

How are external costs and benefits, particularly the public-health costs associated with burning fossil fuels, factored into your projections? Can they be taken into account?

They are harder to measure. I haven’t done that, but I’m working on that. I’ve seen different studies and I’m sure they’re very valuable, but they’re not tangible enough in terms of the health benefits. I was just in Delhi two weeks ago, and the pollution [is] disastrous. I used to live in Riverside, which is one of the worst in the United States. And my wife and I, we were like, “What are we doing to our kids?” But if you actually look up the global index of air pollution, Delhi is ten times worse than Riverside. And Delhi has 20 million people. So the issue of pollution is not just something a few environmentalists need to care about. It’s a massive health issue.

In the book, you describe the benefits of community-based or alternative ownership projects and planning as an effective way to advance green technology, but a drawback is their smaller scale. What do you think is an appropriate mix of locally planned or centrally planned processes?

It depends on the situation. Right now, 40 percent of the rural households in India have no electricity. They’re [not] going to get utility-scale operations and transmission systems quickly. So you simply leapfrog altogether over that technology, to small-scale distributed energy systems, solar being the most important. But not just solar; you can have wind, you can have geothermal, you can have small-scale hydro.

It’s already happening in the United States, with people putting solar panels on their roofs. In Germany, they’re talking about every building that gets built being net-zero. The upfront investments are higher, but over time, you save money. So it really becomes a financing problem, not a problem of sacrificing and spending more money than you would otherwise.

Given that climate change is likely to exacerbate ecological disasters and other destabilization crises that governments will need to respond to, how might the costs of dealing with such incidents cut into building a green economy?

Hopefully it will go the other way, that we see the cost we’re bearing due to climate destabilization, and our commitment to climate stabilization intensifies. And again, I’m talking about 1.5 to 2 percent of GDP, from public and private—the number is doable. Especially if we say that we’re doing something in the range of 3 percent of GDP in fossil fuel investment.

The devastating fires in Indonesia have released millions of tons of carbon into the atmosphere each day, which many blame on corruption and practices like deforestation. Can investments in renewables and efficiency mitigate such situations?

In Indonesia, for anyone to take you seriously, you have to convince them that investing in a green economy is not bad for growth. Indonesia has over the last decade become an oil importer; they had been a heavy oil exporter. So they’re already starting to lose whatever benefits they have from fossil fuels.

I don’t talk about deforestation policies or agriculture—that’s probably another book. About 80 percent of all greenhouse gas emissions come from energy, and 20 percent come from everything else, [including] agriculture practices, and deforestation and wood burning. We need to change the agricultural system and rely a lot less on animal grazing. Some forms of bioenergy are clean and others are not clean. Wood burning is not clean. You might as well be burning coal; the emission level per unit of energy is about the same.

How do you address the “de-growth” position held by those who believe that the only way to address climate change is to prevent economic growth?

I’ve strongly opposed that position. To me it’s incoherent—I don’t even know what it means. You say, “We’re going to have a policy to contract GDP.” I don’t think they know what it looks like.

On top of that, and this to me is the killer, de-growth does not reduce emissions. Say we have to reduce emissions by 40 percent within 20 years, and say de-growth means we’re going to cut GDP. In the Great Recession, global GDP went down by 2.5 percent. So let’s double that. Let’s say 5 percent. Unless you change the energy system to a clean energy system, if you bring GDP down by 5 percent and you keep the same energy system, emissions will go down by 5 percent. So the only way you can actually fight climate change effectively is by changing the energy system.

By the way, a 5 percent reduction in GDP is a Great Depression. I think it’s a really bad position on the left, and it’s not going to gain any adherents to a climate stabilization agenda that’s viable.

Your book is optimistic, in that it makes the case that effectively addressing climate change is possible. Are you optimistic?

I don’t know if you’ve ever heard of Antonio Gramsci, a great Italian political thinker of the 1930s, ’40s. His line was “pessimism of the mind; optimism of the will.” I try to just do things that I think are pushing in the right direction. Do I think they’re going to work? I don’t know.

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