Making Good Climate Policy Profitable

Energy companies and environmental activists must learn to do well by doing good.

Reality deniers are hard at work, with $100s of millions supporting them, arguing that doing something about global warming would be disastrous for the economy. Let us be clear: THIS IS FALSE! Smart climate policy will, even within traditional economic definitions, pay off for the economy. But, in fact, there are a multitude of payoffs here:

  • Insurance: Reducing emissions (even going to carbon negative) is an insurance policy against potential impacts of catastrophic climate change. There will be impacts but we have, hopefully, the chance to control how bad they will be.

  • Security: Reducing Global Warming impacts will improve national security (by reducing risks), but a key path will also mean reduced oil imports which might lead to lower global tensions and fewer drives for deployments of military forces into conflict situations.

  • Economics: Well, the economic payoffs are enormous, from reduced health care costs from lowered pollution, to improved balance of payments due to lowered oil imports and increased exports of green technologies, to green jobs, to …

  • As for the last, let’s take two great examples from the Sightline Institute that each highlight the payoff potential, along with innovative thoughts on how to accelerate and improve the payoffs.

    Riding Herd on Refrigerators: “Financing free fridges for fairness.”

    Refrigerators are a great poster child for energy efficiency and the value of standards. Average annual power use for refrigerators has fallen roughly by two-thirds over the past 20 years, meaning new refrigerators use about 1000 kilowatt hours less per year. For every 10 old refrigerators replaced, that is about the equivalent of taking a house off the grid. Hmmm … not bad.

    But, this bumps into the classic upfront capital versus long-term savings from efficiency challenge. One that is difficult for those lower on the economic spectrum to deal with and one counter to how our culture considers economic payoffs (individuals in their own lives), as we discount future savings too heavily.
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