Climate change is our nation’s greatest challenge—left unaddressed, it will have devastating impacts on our economy, our environment, and our communities and families. The good news is that addressing this challenge presents a tremendous opportunity to grow our economy and increase our shared prosperity.
Today, NextGen Climate America released a new economic analysis based on data from E3’s Pathways to Deep Decarbonization in the United States report, showing that as a nation meeting carbon emissions reduction goals will help grow our economy, create millions of jobs, increase household disposable incomes, and lower energy bills.
Key findings of the report are that a clean energy economy will:
- create more than 1 million additional jobs by 2030 and up to 2 million jobs in 2050 nationally, including 1.2 million additional jobs in the construction sector;
- increase U.S. GDP by $145 billion, or 0.6%, in 2030 and by $290 billion, or 0.9%, in 2050 compared to the reference case;
- increase household disposable income by $350-$400 in 2030 and by as much as $650 in 2050;
- save families $5.3 billion on energy bills in 2030 and $41 billion in 2050.
And that’s just the beginning.
The economic analysis confirms that transitioning to clean energy isn’t just good for the environment—it is also a key to job creation and to ensuring a prosperous economic future for our country.
This transition has already begun, particularly in the power sector. Energy efficiency is increasing, renewable energy production is booming, and obsolete coal-fired power plants are retiring. The result is less pollution and more jobs. At the same time, as jobs shift from coal to clean energy some workers and communities will be adversely affected. To help them adapt we need to provide dedicated new resources for economic diversification, job creation, job training and other employment services for workers and communities affected by job losses at coal mines and coal-fired power plants. The transition to clean energy will strengthen our economy and increase America’s prosperity—fairness requires that we ensure workers and communities affected by the transition are able to share in the benefits.
This report does not take into account the negative impacts that climate change will have on our economy, and so understates the economic benefits of a transition to clean energy. Information on the damages from climate change continues to become more alarming—recently a team of leading researchers released a new estimate that inaction on climate change will reduce the United States’ GDP 36 percent by the end of the century. This follows a Citigroup report that estimates failure to act on climate change will result in $44 trillion worth of lost global GDP by 2060. Failing to address climate change is an option we simply cannot afford.
E3’s report, which is the foundation of the ICF economic analysis, examines the technical feasibility of achieving an 80% greenhouse gas emission reduction below 1990 levels by 2050. Using the U.S. Energy Information Administration’s 2013 Annual Energy Outlook as a basis for the Reference case, study authors developed multiple pathways to a clean energy economy. While alternative pathways employed clean energy technologies in varying combinations, they all rest on three basic pillars: energy efficiency, decarbonization of electricity, and switching from fossil fuels to clean electricity or other lower-carbon energy sources. The study concludes that there are multiple ways to use existing commercial or near-commercial technologies to provide the energy services our economy will demand in 2050 with 80% less carbon emissions our economy produced in 1990. The E3 Pathways report demonstrates that it is possible to achieve a clean energy economy by 2050; today’s report by ICF shows the positive economic outcomes this necessary transition would bring for workers, families, and our nation as a whole.
In both the “High Renewables” and “Mixed” cases, E3 has calculated that approximately 60% of our nation’s electricity can come from clean and carbon-free electricity sources by 2030, putting our nation on a pathway to a completely clean energy economy by 2050. Doing so will create millions of jobs, increase household income and raise GDP.
We have the solutions today for a cleaner, stronger America—we can transition to a clean energy economy largely with existing technology that is currently on the market. Even more, if we do not reduce our carbon emissions, the consequences of climate change will be dire for both our economy and our health. But, as this new report demonstrates, investing in clean energy will boost our economy and create quality jobs while reducing our carbon emissions and averting the worst impacts of climate change. Investing in clean energy is the right choice—for our economy, our country, and our planet.
Not every part of the country will see growth. Two of the nine census regions examined in the study — two fossil-fuel-heavy regions — would see some job losses. The report authors acknowledged that action is needed to support workers that are adversely affected by the shift to clean energy. “To help them adapt, we need to provide dedicated new resources for economic diversification, job creation, job training and other employment services for workers and communities affected by job losses at coal mines and coal-fired power plants,” the authors wrote.
Despite slowing job growth in some regions, researchers determined that the high-renewables case ultimately provides greater overall benefits than the “mixed case,” which assumes a mix of renewables, nuclear, and natural-gas generation with carbon capture and storage. By 2050, the report finds that there would be nearly twice as many jobs created in the high-renewables scenario than in the mixed scenario, with 1.2 million new jobs in construction alone. The high-renewables case would also increase household disposable income by as much as $650 by 2050. At the same time, gross domestic product would grow by $145 billion by 2030 and $290 billion by 2050.
According to Dan Lashof, NextGen chief operating officer, these figures are conservative, because the report did not consider the economic costs of inaction on climate change, or the risks to national security.
“The argument that we can’t address climate change without growing our economy is simply not true,” said Steyer. “And we can do it with existing technologies. We don’t have to wait for some new invention to transform the American energy landscape. American business is already innovating and leading the way.”
The U.S. clean energy sector has seen record growth rates. As of August, renewable energy generation totaled 13.2 percent of all U.S. electrical production, not including the contribution of distributed energy resources. The U.S. has also seen big percentage gains in renewable energy investments. In the third quarter of 2015 compared to the third quarter of 2014, the U.S. saw investments increase by 25 percent to $13.4 billion, according to Bloomberg New Energy Finance.
At the same time, however, publicly traded clean technology companies have seen their stocks plummet in recent months. The Wilder Hill Clean Energy Index, which includes a diverse group of clean energy companies, fell from a recent high of around $62 in April to around $46 this week. Renewable energy YieldCos have been especially hard-hit. Jeffrey Sachs, director of the Earth Institute at Columbia University, said there’s a “dearth of investment” because of so much uncertainty in the clean energy sector. “We don’t have a national strategy yet, and so without a national strategy, the signals to investors simply are not very clear,” he said. “What kind of energy system are we going to have?”
It all comes down to demand, said Steyer. Investors are dropping stocks because they’re unsure about the long-term demand for clean energy. “Once we’ve taken that [concern] off the table, because we have a policy driving it, then all of those issues about constancy and certainty go away very quickly.”
* Updated: Nov. 12, 2015