Climate Compass Blog
It’s an issue that will affect the prosperity of our children and our children’s children. It’s an issue that requires we make cuts today in order to avoid far greater burdens on future generations. It’s an issue that is steeped in complexities and arcane detail that is difficult to communicate to the public, and often requires advanced training in order to understand fully. And it’s an issue that requires bold public leadership today in order to avert consequences that will affect future well-being and quality of life.
Readers of this blog can be forgiven for immediately assuming that these statements are meant to describe the political challenges of climate change; but the political issue du jour in Washington these days is the federal budget deficit and mounting national debt, and these statements apply for that issue equally as well. We, here at Climate Compass, are not the first to note the similarities in the discourse – but for those of us working in the climate field, or who care deeply about the issue, the parallels are hard to ignore. There is an important difference, however, that seems to affect the public debate.
While both are complex issues that are at times inherently difficult to understand, the budget provides a much simpler scoring system of dollars and cents; in comparison to the climate debt that we are accruing in the form of greenhouse gases in the atmosphere. We can see on a chart or graph the totals that budget projections show – and we know from our daily household experiences that increasing debts imply increasing interest payments and costs.
The climate deficit that continues to accumulate, on the other hand, shows no clear balance of payments or future due dates. But make no mistake; the charges we are putting against our climate credit card will eventually create even greater costs over time as changes accelerate. Greenhouse gases, once emitted, stay in the atmosphere for centuries. Any emissions made today, tomorrow, and over the next several years commit the planet to warming over the lifetime of those gases.
Even though it is not as easy to track the mounting costs of our climate deficit, we know the debt will have to be paid in the form of increasingly severe weather events, changes in agricultural productivity, mass migrations, and sea level rise – just to name a few. This means that the unchecked emissions we continue to create are racking up a greenhouse gas debt that will force increasingly expensive costs on current and future generations.
So as the debate continues inside the beltway on how to address the federal deficit – remember that in the case of both the budget deficit and climate change, it will be far less expensive to pay a little today and avoid paying far more later.
Historical National Debt (to 2009): Congressional Budget Office - http://www.cbo.gov/ftpdocs/120xx/doc12039/historicalTables.xls
Projections of National Debt (from 2010): Congressional Budget Office - http://www.cbo.gov/ftpdocs/120xx/doc12039/BudgetTables.xls
Historical GHG Emissions (to 2009): EIA IES - http://www.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm
Projected GHG Emissions (from 2010): EIA AEO, Table A18 - http://www.eia.doe.gov/analysis/projection-data.cfm#annualproj
Russell Meyer is the Senior Fellow for Economics and Policy
First there was the warning about a construction moratorium – all new major stationary sources would come to an immediate halt because of EPA’s new source review requirements for greenhouse gas emissions (GHGs). Soon after the alarm went out about the approaching regulatory “train wreck” that would result from a series of EPA rules impacting electric utilities. A large number of power plants would shut down, the reliability of our energy supply would be sacrificed, and consumers would face skyrocketing costs.
There was only one problem with these warnings – they were made before anybody knew what the actual regulations would require. Now that EPA has issued several of these rules, it is useful to revisit these doomsday scenarios and see if the reality of the proposals matches the rhetoric before the fact.
At the moment, our attention is riveted by the events unfolding at a nuclear power plant in Japan. Over the past year or so, major accidents have befallen just about all of our major sources of energy: from the Gulf oil spill, to the natural gas explosion in California, to the accidents in coal mines in Chile and West Virginia, and now to the partial meltdown of the Fukushima Dai-ichi nuclear reactor. We have been reminded that harnessing energy to meet human needs is essential, but that it entails risks. The risks of different energy sources differ in size and kind, but none of them are risk-free.
For many Americans, U.S. oil dependence has become a concern for reasons ranging from climate change and environmental protection to national security and the economic impact of higher gas prices. But there are other important impacts of our oil dependence, including how foreign oil contributes to the U.S. trade deficit and how rising oil prices decrease American jobs – both particularly salient issues on the current U.S. political agenda.
A recent article from Daily Finance shines light on the 2010 trade deficit, more than half of which is from petroleum-related products. In 2010, the U.S. petroleum-related trade deficit was $256.9B, which represents a 29.6 percent jump from the 2009 petroleum trade deficit. This rise is largely due to increased prices, as the consumption of petroleum-related products in the United States grew by only 1.9 percent from 2009 to 2010 while the price per barrel of oil grew 31.1 percent to $74.66. An issue currently receiving a lot of attention in Washington, the $61B worth of cuts to the national budget sought by the U.S. House of Representatives, is equal to only one fourth of the country’s 2010 petroleum-related trade deficit.
Numbers that large can be hard to put into perspective, so let’s look at how this affects the average American. The graph below shows the U.S. petroleum-related trade deficit per capita (left axis), which is closely related to oil prices (right axis). In 2010 the petroleum-related trade deficit per capita was $832 and has ranged from $600 to $1200 in the past several years. This translates into each American household sending roughly $2,155 out of the U.S. economy in 2010 to pay for oil.
Rising oil prices not only increase the trade deficit, they decrease the number of jobs in America. As energy prices rise, businesses and consumers must spend more on energy and thus have less to spend elsewhere. In his presentation at our recent conference on state and federal roles in climate policy, Mark Doms, Chief Economist at the Department of Commerce, explained that when the price of oil goes up by just $10 per barrel, it translates into a loss of tens of thousands of jobs per month, or up to a quarter of a million U.S. jobs per year. Instead of losing jobs in order to maintain our use of oil, we should focus on creating jobs by investing in domestically produced alternative fuels and vehicles.
In June 2008, oil prices spiked to $145 per barrel, and Americans paid for it at the pump as gas prices reached $4 per gallon. We could be headed into a similar situation, as oil prices rose above $105 per barrel earlier this month and are expected to continue to rise in 2011 and 2012. Because we rely on oil, a resource that is concentrated in the Organization of the Petroleum Exporting Countries or OPEC, we face oil prices that are much higher than a competitive market would yield. This makes U.S. gasoline susceptible to price shocks, and American consumers pay more at the pump than they would in a competitive market.
Here we have highlighted two other important reasons why Americans should care about rising oil prices: they increase the U.S. trade deficit and can decrease domestic jobs. As oil prices continue to rise, these negative economic trends will also worsen. In order to mitigate the impacts of rising oil prices, we need to work towards a clean energy economy and promote the use of domestic alternative fuels and energy efficiency. This would decrease our oil dependence, making the United States less susceptible to rising oil prices while also creating more jobs here at home.
Monica Ralston is is the Innovative Solutions intern
This blog post also appeared on Edmunds Auto Observer
In movies like the iconic Demolition Man, we’re led to believe the future will be filled with cars well advanced from those on the road today (in the case of the Sylvester Stallone action flick, our cars will instantly fill with foam upon a collision). But what do the real experts think about the cars we’ll be driving in the future? For example, will our cars drive themselves like Google’s modified Toyota Prius?
We answer some of these questions in our recently released report that focuses on reducing the U.S. transportation sector's greenhouse gas emissions and oil use. The report details options available to automakers for building the cars of the future. It doesn’t attempt to predict the makeup of the car market in the future – that’s up to the consumer. Instead, the report highlights that many combinations of vehicles could significantly reduce oil use and greenhouse gas emissions in the future.