More weather extremes, plus reduced agricultural yield, plus droughts, plus dwindling marine life as a result of growing ocean acidification, are what the overwhelming majority of climate scientists tell us to expect if we continue to spew carbon into the atmosphere in growing amounts.The U.S. economy continues to stutter:roughly 20 million people unemployed or wanting more work than they can find, and business investment hesitant. Europe is in worse shape – it has tumbled into a crippling longterm recession. Is there a way to address soaring carbon emissions and stimulate economic growth at the same time?
Can one response address both challenges – help create jobs and avert a global recession on one hand, and help avoid frying the planet on the other? The answer is yes.That response is a pro-gram that mobilizes large-scale investment to stimulate the economy and create jobs, and directs that investment to energy efficiency and built-space retrofit around the world in order to reduce carbon emissions. More carbon emissions come from built space than from any other source if you count total emissions – directly from the buildings and in-directly from the power stations that send them electricity for heating, cooling and operating. With most countries trying to reduce their indebtedness, is there anyone who could finance such a program?
There is. It’s the World Bank Group and its sister institutions, known as the International Financial Institutions, such as the Asian Development Bank, the Inter-American Development Bank, the African Development Bank,the European Investment Bank, and others.The investment program would have to be global and large, covering both the faltering economies of the north and the emerging markets of the south, such as China and India.Even-handed treatment of all the large economies, north and south, would be a politically attractive feature. Some of the emerging economies, such asBrazil and China, have huge national development banks that could mobilize investment,and some of the sovereign wealth funds could chip in as well. The money raised by the IFIs would go to national governments to launch extensive retrofitting of buildings with energy saving improvements and appliances, and lend money to businesses and industry to make them more energy efficient. The global investment and mobilization means at least $1trillion for the first round, and if that goes well, more for subsequent rounds.The word “trillion” makes our eyeballs spin.
But let’s put this in perspective: the global gross product was roughly $70 trillion in 2012.If our planet were a family earning about$70,000 per year, that would mean devoting about $1,000 to this new investment. That is doable.And the IFIs enjoy leverage. The entities that fund them – the sovereign nations of the world – only contribute as a capital base about 10 percent to 12 percent of the total amount the IFIs borrow in the capital mar-kets. So in our example, it’s as if their neighborhood bank required the family earning$70,000 per year to come up with about $100in collateral in order to lend them $1,000 for their investment. Is borrowing a smart way to respond to a recession?You bet. It uses credit and borrowing power to raise new funds that can be used to generate growth. The trick is to make sure that money is invested in something that creates new jobs and makes the economy more efficient as opposed to the kind of financial gimmicks that got the U.S. into so much trouble in 2008. And low-carbon high-efficiency in-vestments do just that. And by the way, what is the No. 1 priority of the new American president of the WorldBank? It’s to address climate change globally and thereby help protect the poor from the massive disaster of global warming that they will soon face.
There is another promising track for theU.S. that we would initially have to pursue alone, primarily for our own benefit. And that is to recast our transportation sector so that the high cost of oil-based gasoline no longer cripples our economy.Oil costs a lot today and its price is going togo on rising, with its normal ups and downs,over this decade. Most of the new oil that theU.S. is drilling is very expensive. We in theU.S. spend a fortune on oil – about three quarters of a trillion dollars per year. About $300billion of that goes overseas.
Shipping $300 billion overseas every year isa huge drain on our economy, and that, plus the high price of gasoline, are two of the reasons that transportation has been the fastest rising part of most family budgets. It would be a strategic masterstroke for the U.S. to get off its dependence on oil-based gasoline. The tools are available – if we have the will. It would require four measures. Make cleaner, cheaper American-produced vehicle fuels legal. These fuels, some of them based on new, cheap natural gas, exist – but an old set of regulations that the White House could change with a stroke of the pen makes it illegal to adjust your car to use them without prohibitive cost and complication.Make sure these new fuels emit less carbon than the internal combustion engine process we now use, by steps such as plugging me-thane leaks in the natural gas supply chain and tapping low-carbon fuel sources like bio-fuel from garbage dumps.Invest in supply and distribution facilities to deliver the alternative fuels. As you read this,cars like the one you drive are filling up on ethanol or methanol in Brazil and China. Accelerate the gradual spread of electric vehicles – and the clean electricity sources to power them. The American political system, even though divided, could come together to support this course of action. Because it relies on free market dynamics, it should be acceptable to conservatives. Because it reduces carbon emissions, it should be acceptable to liberals. And because it lowers the price of vehicle fuel,families will welcome it. These two tracks together – energy efficiency and retrofit globally and converting to cheaper, cleaner fuels in the U.S. – constitute a growth plan for the U.S.and for the global economy as a whole.