The attention #GreenNewDeal is attracting for the issue of climate change is 💯👍🙏 but I wonder if it’s also contributing to a misconception about the costs of climate action (1/8)
I keep reading suggestions that paying for decarbonization is similar to how the government picks up the tab for priorities like military spending. This isn’t really how it works. (2/8)
The costs of decarbonization primarily come from putting constraints on the economy: when people can no longer buy and sell higher-carbon goods and services for (artificially) low market prices, stuff costs more. That’s where the bulk of the costs come from. (3/8)
We can achieve decarbonization via pathways involving a ton of gov’t spending (think: massive subsidies), pathways involving little gov’t spending (think: mandates or carbon prices), or an infinite # of pathways in between these extremes. (4/8)
Here’s the key: we pay the costs of decarbonization (stuff costing more) regardless of the pathway, i.e., regardless of the degree to which government spending does the heavy lifting (5/8)
So my unsolicited advice to #GreenNewDeal supporters is to continue making full-throated arguments in favor of increased government spending on climate and other priorities (strong arguments to be made IMHO)… (6/8)
But also to recognize that these arguments are not answers to the question “Can we afford to decarbonize?” (7/8)
Much better arguments for the affordability of climate mitigation are: (1) increasingly affordable low-carbon technologies (2) the availability of cost-effective policy mechanisms that minimize the costs of the transition (3) the high costs and risks of inaction (8/8)
