Can Addressing Climate Change Provide Economic Benefits?

From heating our homes to powering our factories to filling our gas tanks, the U.S. economy has an annual energy bill that will approach one trillion dollars in 2010. This number is expected to more than double by 2050, with much of the projected growth driven by inefficient uses of energy. There is a wide range of technology, design, and behavioral opportunities to improve energy efficiency across the economy, through the use of semiconductor devices, information and communications technology systems, new building materials and design, and more efficient appliances and lighting.

The report featured in this briefing models three scenarios involving different levels of policy to encourage and support cost-effective energy efficiency investments. The first scenario, based within the framework of the House-passed American Clean Energy and Security Act of 2009 (H.R. 2454), could save businesses and consumers $724 billion, generate up to 2.6 million net jobs, and reduce greenhouse gas emissions 76 percent by 2050.

On November 6, 2009, the Environmental and Energy Study Institute (EESI) held a briefing on the economic benefits of taking action today to slow the rate of climate change. Much of the Congressional debate over climate change solutions has focused on costs. This briefing focused on a new study, Climate Change Policy as an Economic Re-development Opportunity: The Role of Productive Investments in Mitigating Greenhouse Gas Emissions. It asks the question: how do we achieve the twin goals of a healthy economy and a healthy climate? Its findings suggest that a climate policy that drives investments in energy efficiency can significantly reduce greenhouse gas emissions, increase jobs, and generate net savings -- even without accounting for the avoided costs of more extreme weather, rising sea levels, public health impacts, and other effects of climate change.

• Much analysis to-date has focused on the relative costs of reducing the greenhouse gas (GHG) emissions that cause climate change. Properly-designed policies, however, can achieve the twin goals of emissions reductions and economic growth. Energy efficiency is critical to achieving both goals.
• Improvements in energy productivity -- the delivery of equivalent energy services with reduced energy consumption -- have the potential to provide as much as 60 percent of the needed reductions in total GHG emissions by 2050 in the United States.
• Since 1970, efficiency improvements have satisfied 75 percent of the nation's increased demand for energy.
• Putting a price on carbon sends a strong signal that will help improve energy efficiency; however, additional sectoral measures that promote new industries, cultures, and standards, also are vital.
• Many energy efficient technologies and practices are known and available today, and implementing them now can help us meet stringent 2030 GHG reduction targets while allowing more time for clean energy generation technologies to develop and come down in costs.
• Climate legislation can spur much needed investment in transmission and construction of generation facilities, leading to large-scale job creation. Together with efficiency measures, these investments would create a net increase of more than 2.5 million jobs across the economy by 2050.
• Decarbonization of the transportation sector provides another route for economic opportunity, with a number of car companies poised to redevelop the industry.
• Directed investment in opportunities where economic and environmental goals merge can drive growth, create jobs, achieve emission reductions, and buy time for new technologies to emerge.