The co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform, also known as the debt commission or deficit commission, released their recommendations for United States budget policy this week. Nowhere in their discussion of the prospects for the next generation did they mention the challenge of global warming, nor did they integrate climate policy into their economic suggestions. Leaving the critique of the co-chairs’ proposal itself for others, the plan’s first guiding principle is:
We have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today.
One might naively think that the plan would thus address the generational threat from manmade global warming.
The plan purports to reduce the deficit to sustainable levels by 2015 and balance the budget by 2037. Coincidentally, those dates are not dissimilar to what is needed for a sustainable planet. The Copenhagen Prognosis, prepared by top climate scientists in 2009, indicates that for a good chance (75 percent) of avoiding “major societal and environmental disruptions through the rest of the century and beyond,” “global GHG emissions would almost certainly need to decline extremely rapidly after 2015, and reach essentially zero by midcentury.”
Climate scientists have been warning about the threat of unrestrained fossil fuel pollution for decades, and have more recently worked to establish a clear “budget” for policy makers — like those on the debt commission — to work with. Again working with a risk tolerance of a 25 percent chance of catastrophe, the carbon-dioxide budget for 2000-2050 is about one trillion tons, with about 380 billion tons already burned away. Our remaining carbon budget is thus 620 billion tons.
If greenhouse pollution from fossil fuels and ecological degradation continue at their present rate — without any increase, “we would exhaust the CO2 emission budget by 2024, 2027 or 2039, depending on the probability accepted for exceeding 2°C (respectively 20%, 25% or 50%).”
The International Energy Agency has calculated that inaction in 2009 has increased the cost of climate stabilization by $1 trillion, an amount that will grow each year at a faster rate until we have passed the point of no return. As the changes to our climate system that we’ve already experienced demonstrate, we’ve passed the threshold of safety and security.
Unfortunately, most economic analyses of the climate threat, such as the work by William Nordhaus, are not “qualitatively consistent with the much better established science of climate change” and, like the Stern Review, “have understated the potential costs of climate change.” That is to say, economists like Dale Jorgenson use models that tell them that there would be practically no discernible economic impact from rates of warming that scientists say would cause worldwide ecological collapse.
On the flip side, the debt commission and other economists are ignoring the profound economic benefits of action. An analysis by the Center for Climate Studies finds that instead of slowing the economy, household wealth and jobs will grow faster in a green economy. Carbon limits and efficiency-focused policies would have a net positive employment impact of 2.8 million jobs and expand the economy by $154.7 billion by 2020, while US emissions are cut to 27 percent below 1990 levels — if standards consonant with our carbon budget are set.
If a hawkish climate budget is adopted, US investment will flow into jobs and, yes, into drawing down both the national debt and the federal trade deficit. About half the trade deficit — approximately $200 billion — is oil imports. Estimates for the social cost of carbon — what economists believe to be the optimum current price for a ton of carbon dioxide — range from about $20 to $100. The upper range is consonant with the scientific carbon budget of 620 billion tons, as global GDP — all of which is at stake — is $61 trillion. An American market at $100 a ton would have a capitalization of $580 billion — about three times as much as the debt co-chairs recommended cutting from the national budget.