Green Stimulus

Dave Roberts has a good piece on green measures that could stimulate the economy:

Conventional wisdom inside the Beltway is these goals—addressing climate pollution and creating jobs—are in tension. Senate Democrats cower at the thought that climate legislation might be seen as a job-destroying tax, a politically out-of-touch alternative to a jobs bill. Pundits tut-tut that the climate fight has to go on the back burner for now, no matter what the international community thinks.

The politics appear dismal, but they need not be: there are plenty of investments in reducing emissions that would create jobs. The government can create jobs by paying people to make buildings more efficient, to buy more efficient appliances or cars, or to build wind turbines. In a full employment economy, this government spending might displace private spending, but we’re not in a full employment economy. This economy is mired in severe downturn and 10% unemployment. In those circumstances, the primary economic directive is to create demand to soak up all the idled capacity. The Fed already has interest rates as low as possible, so the other choice is public spending. In other words: more stimulus. So spend it on things that reduce GHGs!

The “cash for clunkers” program had, in my view, a lot of problems of program design. But the same general concept could actually be applied to a wide array of household appliances—give people subsidies to upgrade refrigerators and washing machines to more energy-efficient alternatives. Give people subsidies to upgrade to programmable thermostats. This kind of thing is not a long-term substitute for a thorough emissions control policy, but it works great as economic stimulus and would help in ecological terms.

Even better would be “cash for caulkers” schemes aimed at nudging people toward home weatherization projects. Surveys show that normally people vastly understate the carbon footprint of heating and cooling their home, and make up for it by slightly overestimating the impact of transportation and massively overestimating the importance of lighting. This is a real problem, since an approach focused on carbon pricing isn’t going to work if people can’t figure out where they’re using the carbon. Weatherization-oriented stimulus could take a big bite out of this problem, and would directly target the troubled building trades segment of the labor market.

Hopefully we’ll hear about some of these ideas in the president’s speech.