Two Birds with One Stone: Biden’s Plan to Save the Climate and the Economy
By Alice Zhang
Joe Biden recently released his climate policy, outlining radical items to fight climate change. He recognizes that the climate and the economy are closely connected; thus his policy packages economic stimulus with environmental policy. Key components of his plan include rebuilding infrastructure, investing in clean energy technologies, and environmental justice. His goal is to ultimately transition the U.S. to a carbon free energy sector by 2035 and achieve net zero emissions by 2050. Contrary to opposition, Biden’s plan would be economically viable, producing long term jobs and facilitating a transition to a carbon free economy.
Biden has packaged his climate policy as a way to revitalize the post-COVID19 outbreak economy from deep recession. Biden plans to create millions of jobs through his plan; for instance, mobilizing workers in a Civilian Climate Corps to work in environmental conservation, creating jobs to rebuild infrastructure across the nation, and investing in U.S. auto workers by incentivizing electric vehicle ownership. Given staggering rates of unemployment, Biden’s plan would create jobs and re-employ Americans. While his plan is expensive -- it will cost 2 trillion dollars over four years -- his plan functions as a stimulus package.
With unemployment claims rising again (1.4 million claims were filed last week) and a reported 9.5 percent drop in gross domestic product in the second quarter, there is a desperate need for a recovery plan. Biden’s plan would create an estimated 10 million jobs. This is especially critical, considering heavy job losses in the oil and gas industry as a result of the pandemic. Even while most other industries have seen a rise in employment as states begin reopening, the energy industry has continued to lay off workers -- compared to before the pandemic, employment has dropped 14 percent. Jobs in the renewable energy sector aren’t safe either; while a little over 100,000 jobs were added back in June, over 500,000 jobs were estimated to have been lost since the start of the pandemic.
With the current economic situation constantly being compared to the Great Depression, it’s difficult to not draw parallels between Biden’s climate policy and Franklin D. Roosevelt’s New Deal. The New Deal employed millions of people, aiming to mitigate the impacts of the depression and reinvest in infrastructure. Biden’s climate policy is similar: while there are less government programs like the Public Works Administration and the focus is mainly on climate, his goal is to expand employment through investment in renewable energy, infrastructure, and the auto industry.
While Biden’s plan may be good news for the economy, unions and labor groups are growing increasingly concerned. Biden’s plan does call for passing legislation to defend unions, but that still does not satisfy some groups. There are less union jobs in the renewable energy sector, and the pay and benefits in the renewable energy sector are significantly worse than oil and gas jobs. While the percentage of unionized jobs in the renewable energy industry is similar to the national average for all jobs, the proportion is still significantly less than in the oil and gas industry. For instance, between 4 percent and 7 percent of jobs are unionized in the solar photovoltaic, wind, and hydroelectric power generation industries, compared to a national average of 6 percent. However, 10 percent and 11 percent of jobs in the coal and natural gas industries are unionized, respectively. Additionally, some jobs (for example, plugging oil and gas wells and reclaiming abandoned mines) created are merely temporary, which could result in job loss later down the line. However, this could also be seen as an opportunity to expand union jobs in the renewable energy sector and improve working conditions in the industry.
While many environmentalists praised Biden’s plan as an effective way to fight climate change, there were a few key components missing that drew criticism. Environmental activists and economists alike noted the lack of a carbon pricing system. The carbon tax has been long favored by economists as an efficient price signal to the market. By having people pay for the social cost of greenhouse gas emissions, the carbon tax can become a powerful tool to disincentivize usage of fossil fuels across all industries. However, Biden’s approach to the clean energy transition is to target particular sectors individually. He proposes separate policies in areas such as public transportation, energy, and the auto industry, each with their own incentives implemented. While curating a set of individualized policies for each area can produce results immediately, his policies risk redundancies or inefficiencies that the market could have been able to resolve on its own. Additionally, a carbon tax would provide a separate source of funding. The money collected from a carbon tax could even be reinvested into research and development of clean energy technologies, which would speed up the transition to a green economy.
While Biden has committed to continuing investment in the development of renewable energy, the plan lacks a divestment from fossil fuels. In 2019, nearly 80 percent of energy production in the U.S. came from fossil fuels. Even if domestic demand for fossil fuels declines, the fossil fuel industry will continue to produce -- whether in the form of increasing exports or producing plastic. Without policies disincentivizing companies from extracting fossil fuels, climate change will remain a problem.
The strength of Biden’s climate policy comes in simultaneously addressing the climate and the economy. Especially considering current unemployment rates and the economic situation, the policy may be precisely what the U.S. needs to prevent even greater economic damage. However, while his policy is a step in the right direction to fight climate change, more must be done if we want to save the planet.