It's not Environment vs. Economy: Green is the Path to Prosperity

The day after the href=””
climate bill failed in the U.S. Senate, the New York Times’
conservative columnist Ross Douthat gave his take on “href=””
Right and Climate” in a piece that on the surface sounded
reasonable. Maybe it was best that the bill didn’t pass, he

While he displays some bravery in calling out the climate change
deniers, who remain almost entirely on the right, for “making a
spectacle of their ignorance,” he nevertheless himself betrays a
much greater ignorance about what climate change means for us and
our economy. Douthat espouses the dangerous idea that doing nothing
to combat climate change is the best course for business and for
the world.

In doing so he relies on a set of arguments against the pursuit
of a clean economy that have little basis in fact and mainly defend
the untenable status quo. The overall pitch has two main parts: (a)
promoting a clean economy through the use of market mechanisms like
cap-and-trade is a perversion of free markets, since the renewable
energy industry shouldn’t need tax subsidies if it’s a real
business; (b) going green will cost jobs and hurt the economy.
Let’s look at both ideas.

First, the notion that fossil fuels do not rely on subsidies is
absurd. A href=””
new analysis from Bloomberg New Energy Finance compares the
roughly $45 billion of global government subsidies for renewable
energy (mostly tax breaks) to the $href=””
title=””>557 billion
of subsidies for fossil fuels in 2008 alone. That 12-to-1 ratio
of dirty-to-clean subsidies is surely understated.

Let’s just say that the International Energy Agency, which
calculated that larger number, is not a liberal think tank, and it
is measuring only the most literal subsidies. In reality, the
market for energy is not currently “free” at all. So if putting a
price on carbon helps us support new industries of the future,
drive innovation and, say, preserve the ability of the planet to
support our species, it seems like a good deal.

Second, this general notion that green will hurt the economy is
simply the easiest defense of doing nothing. This concept - that
that there’s some tradeoff between economic development and what he
calls a “growth-slowing regulatory regime” - is the heart of
Douthat’s argument. This idea is so very dangerous since it keeps
us tied to the past, and abdicates leadership to other countries
that are pursuing the real growth and prosperity agenda.

The most thorough studies - such as the well-regarded href=””
Stern Review on the Economics of Climate Change - tell us that
the cost of ignoring climate change (including the possible
devastation to our species) will be far higher than addressing it.
Using less energy and material, or switching to electric vehicles
and renewable energy, will help everyone from homeowners to
businesses save money. As one CEO said to me, “I don’t know about
climate change, but it seems pretty clear that producing less
carbon is better than producing more.”

And the flashy side of this “kill the economy” argument remains
the odd notion that a green agenda will kill jobs. Of course it
will destroy some old-school jobs, but clearly the move to a clean
economy will create jobs as well - millions of them. Installing
insulation and solar panels, building wind turbines, and managing
buildings for energy efficiency are just some of the obvious ones.
Every industry that makes components for these new sectors will
also have new markets and customers.

So what part of the economy is actually hurt by the race to
clean economy? Which companies will lose jobs? In essence, only one
sector, oil and gas, will truly get hit. If everyone uses less in
general, and switches from fossil fuels overall, then of course
those companies that only provide fossil fuels will shrink-unless
they decide to play a role in the new energy economy).

But the big mistake is that protecting these particular jobs,
and keeping us pinned to the status quo, does not represent a path
to growth. Consider this: at the macro level, the world produces
roughly href=””
85 million barrels of oil per day. Nobody reputable seems to
think that the number will rise much if at all; in fact, “href=”” target=”_blank”
title=””>peak oil”
theories have gone quickly from fringe to mainstream (even Kuwaiti
scientists recently predicted href=””
a global peak in the next five years).

My point is that even with optimistic numbers, fossil fuels are
not a growth industry, and not a job creator. Relying on that
sector is not a path to prosperity for the world or for the United
States. Creating new technologies and products, building greener
buildings and businesses, and just plain using less energy to do it
all: those actions will make almost all companies more profitable -
just not the ones providing only fossil fuels.

Our current path, and commitment to doing nothing, is in effect
protecting one sector at the expense of all the others…and
risking our planet and economy as well.

works with leading companies to drive growth with environmental
thinking.  He is a globally recognized expert on
sustainability and is author of
target=”_blank”>Green Recovery and co-author
target=”_blank”>Green to Gold, the best-selling guide to what
works - and what doesn’t - when companies go green.
This post
first appeared at target=”_blank” title=””>Harvard
Business Online
 and is reprinted here with the kind
permission of the author.


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