December 6, 2018

Time To Wake Up: The Economic Case for Climate Action

As-prepared for delivery

I am grateful to join my colleague Senator Warren today to discuss the financial and economic risks posed by climate change. You just heard her lay out a powerful case.  Given the gravity of these risks, and our recent experience of the 2008 financial crisis, we should be doing everything we can to prevent another economic meltdown.

We know exactly what we need to do to mitigate these economic threats.  We need to transition from polluting fossil fuels to clean renewable energy.  And we can do this simply by giving renewables a fair market chance against the gigantic public subsidies on which the fossil fuel industry floats. 

Put a price on carbon emissions, so the price of the polluting product reflects its pollution costs to society, is the Economics 101 answer.

Fossil fuel producers are desperate to duck the costs of their pollution.  They want to protect this massive market failure.  Why do you suppose they are the biggest special-interest political force in the world? 

Look over in the House, where just recently an army of fossil fuel lobbyists and front groups pushed through an industry-scripted resolution declaring — falsely — that pricing carbon would be bad for the American economy.  All but eight House Republicans voted the way the industry instructed; for a resolution that was politically correct, in a polluter-obedient kind of way, but was factually false.

Today, in my 217th Time To Wake Up climate speech, I’ll relate recent testimony of a prominent and well-respected economics professor, the Nobel prize winner, Joseph Stiglitz.  Unlike all the cheap political chicanery around that House resolution, Professor Stiglitz’s views were presented under oath, and subject to cross-examination. 

Fat chance the climate deniers ever let themselves get cross-examined, under oath.  Truth is kryptonite for them. 

Stiglitz’s expert report came in Juliana v. United States, a case where the plaintiffs are children, suing the United States government for violating their constitutional rights, through a knowing failure to protect them from the costs of unlimited carbon emissions.

Stiglitz’s testimony asserts:

[The U.S. government’s] continuing support and perpetuation of a national fossil fuel-based energy system and continuing delay in addressing climate change is saddling and will continue to saddle Youth Plaintiffs with an enormous cost burden, as well as tremendous risks, which is causing substantial harm to the economic and personal well-being and security of Youth Plaintiffs.

Obviously, when Stiglitz talks about “Youth Plaintiffs,” his testimony covers all the children and future generations who will bear the terrible, foreseeable costs of climate havoc.

In particular, Stiglitz notes that “rising sea levels will lead to massive reductions in property value” and that children and future generations will have to “bear the enormous cost of relocating the people and infrastructure that are now on this [inundated] land to higher ground.”  This testimony echoes warnings I have related in recent speeches about a looming coastal property value crash — warnings from sources as diverse as Freddie Mac, the Union of Concerned Scientists, and insurance trade publications.  Peer-reviewed research shows a gap emerging between coastal and inland property values, which you’d expect as an early warning signal. 

But Stiglitz’s report isn’t gloom and doom; it actually shows economic gains result from a wise transition to sustainable energy sources.  Stiglitz writes:

[R]etrofitting the global economy for climate change would help to restore aggregate demand and growth.  [C]limate policies, if well designed and implemented, are consistent with growth, development, and poverty reduction.  The transition to a low-carbon economy is potentially a powerful, attractive, and sustainable growth story, marked by higher resilience, more innovation, more livable cities, robust agriculture, and stronger ecosystems.

Think about that.  The fossil fuel industry and its phony front groups cook up a phony hobgoblin of economic harm that just so happens to protect the industry at the expense of everyone else.  Here’s a Nobel-prize-winner economist telling us that shifting to renewable energy will actually help us grow the economy. 

The need for this transition is also echoed in warnings I’ve spoken about concerning a “carbon bubble” and crash. 

Why does the clean-energy economy grow?  Same reason the economy grew when we went from horse and buggy to automobile, or landline to cellphones.

The key word is innovation; “more innovation.”  Renewable energy, electric cars, battery storage, carbon capture, energy efficiency, low-carbon and zero-carbon fuels – these are technologies of the future, promising millions of great jobs.  The question is whether these will be American technologies and American jobs, or whether China, Germany, Japan, and other countries will win the transition to a low-carbon economy.

Growth will come from new jobs; and also from lower costs.  Stiglitz notes, “Many energy efficiency technologies actually have a negative cost to implement.”   “Negative cost” is economics-ese for “that’s a good thing.” 

The reverse case is the Trump administration’s recent decision to freeze fuel economy standards for cars.  That’s a bad thing: it will cost American consumers hundreds of billions of dollars more at the pump.  No surprise, all that extra cost in gas money goes to Big Oil, which has the Trump administration obediently in its pocket.

Stiglitz’ testimony estimates the total benefits to the U.S. economy from shifting away from fossil energy sources at around $1 trillion by 2050.  Again, a trillion-dollar “negative cost” is a good thing — a really good thing — and if we weren’t completely in tow to the fossil fuel industry around here, we’d be striving for it. 

Stiglitz recommends the policies to get us to a low-carbon economy.  First, we must put a price on carbon.  He testifies that putting a price on carbon could all by itself be beneficial to the economy:

[A] carbon tax . . . could substitute for other more distortionary taxes.  If governments made such a substitution, the aggregate cost of curtailing carbon emissions could even be less than zero, providing net benefits to the economy.

Second, he testifies that we must end the enormous subsidies we grant to the fossil fuel industry:

[T]he full amount of post-tax subsidies in the U.S. [to the fossil fuel industry] has been estimated at nearly $700 billion a year, more than half of the Federal government’s forecasted deficit for the next fiscal year.  Eliminating all fossil fuel subsidies (implicit and explicit, many of which go to large corporations) could, therefore, both curtail fossil fuel production, through forcing companies to bear more of the true costs of fossil fuel production, and substantially reduce our national deficit in one fell swoop. 

For the record, Stiglitz adds that “Equity would also be improved with corporations paying more and individuals, such as Youth Plaintiffs and Affected Children, benefiting.”  Corporate interests get better service around here than the American people, so that probably won’t count for much, but there it is.

There’s one last bit of Stiglitz’s testimony that’s important: “the more time that passes, the more expensive it becomes to address climate change.”  Time is not our friend.  This doesn’t get better or go away.  Every day that we delay is a missed opportunity.  Every day that we delay bears a cost. 

And we have been delaying for decades. 

James Hansen appeared before this body 30 years ago to sound the alarm about climate change, in a hearing called by Senator John Chafee.  Stiglitz cites a 40-year-old report to President Carter that subsidies to the fossil fuel industry were stifling competition from solar.  For decades, the fossil fuel industry has jerked Congress’s chain to keep anything from happening.  Even now their mischief is present in the lies about economic harm.

It’s not just Nobel prize-winning economist Joseph Stiglitz who says that pricing carbon emissions would be a good thing.  Economists across the political spectrum agree.  Just last month, economic researchers at Columbia University found that, even if you look only at the pure economic effects, a carbon fee is a winner.  A $50/ton carbon fee and a $75/ton fee, paid back through payroll tax reductions, actually grows the economy.  

Remember, this is only the tax effects.  This doesn’t count the health benefits—which are huge.  This doesn’t count the environmental benefits—another big bonus.  These carbon fees are a winner on their own, and it’s win/win/win when you add the environmental and health benefits. 

So who are we to believe?  Front groups paid by the fossil fuel industry?  If there were Olympic medals in having a conflict of interest, these phonies would take the gold (of course, you’d have to hose off the medals platform afterwards). 

On the other side, you have actual experts—the ones cited by Senator Warren, the economists I’ve mentioned here today, and many others—who all agree. 

They are all saying that we need to act now.  They are all telling us that failure to act puts us in harm’s way for serious economic disruption.  They are all telling us that pricing carbon and ending fossil fuel subsidies will actually be a boon to the economy.

Our choice is clear. 

Going with the corrupt guys is not a good look, not when the day of reckoning comes.  And warnings are more and more widespread and clear that a day of reckoning draws nigh. 

So go with the oddballs and the fossil fuel flunkies, not the Nobel-prize winners; go with the scripted disinformation, not the sworn testimony; go with the industry protecting a $700 billion subsidy, not the actual scientists.  And good luck looking your grandchildren in the eye. 

It is time to wake up.

I yield the floor.