The Possibility of a Zero-Carbon Economic Recovery
U.S, Stimulus Strategy; Recommendations for a Zero-Carbon Economic Recovery
Ben Holland, Greg Hopkins, Uday Varadarajan, et al, June 2020 (Rocky Mountain Institute)
In response to the economic fallout from the Coronavirus outbreak, Congress acted swiftly in providing critical fiscal support to American households, business owners, healthcare providers, and key industries. Congress’ actions have provided much-needed aid to many in need.
However, the consequences of COVID-19 continue to ripple through the US economy, leaving many industries with uncertain futures. The past decade has seen significant growth in clean-tech, advanced buildings, and sustainable transportation—industries that are poised to grow further and provide significant job opportunities to a diverse group of Americans. However, these and other industries with great potential to decarbonize our economy face a challenging road ahead.
As Congress considers another stimulus package, Rocky Mountain Institute (RMI) recommends that our nation’s leaders consider providing financial assistance for industries, technologies, and practices that are proven to improve public health, decrease costs, create enduring job opportunities, and reduce greenhouse gas emissions.
To jumpstart the economy, address equity, and advance a low- or zero-carbon future for the United States, RMI encourages policymakers to pursue the following key programs:
Build Back Better Buildings
A comprehensive national building retrofit program can catalyze residential and commercial building improvements at an unprecedented scale—putting money back into consumer pockets, creating new jobs, and improving equity and health outcomes for communities disproportionately affected by COVID-19 and the systemic challenges it is exposing. The program would include four components: mobilize the workforce to increase the energy retrofit rate tenfold, accelerate construction productivity breakthroughs, expand access to capital for all (especially underserved market segments), and bolster the workforce and project pipelines.
Enhance Access and Electrify Mobility
The United States needs a comprehensive approach for decarbonizing transportation that includes strategies for supporting the growth of the electric vehicle market while prioritizing pedestrians, cyclists, and public transit over the automobile. Such an approach would increase equitable access and convenience of mobility, while maximizing the opportunities for emissions reductions from this sector.
RMI’s proposal would involve funding to build and improve infrastructure to enhance modes of transportation including bicycling, walking, and public transit that have lower or no emissions, including prioritizing “complete streets” programs. In parallel, it would provide the investment necessary to propel the US transportation system into an electric future, by launching a nationwide deployment of charging infrastructure for personal and commercial electric vehicles and accelerating domestic electric vehicle and battery manufacturing to support that transition.
Debt Forgiveness for a Sustainable Recovery
Linking verifiable, additional emissions reductions to debt forgiveness could be a simple way to simultaneously ease the financial consequences of COVID on industries and workers while building a more economically and environmentally resilient future. A competitive process to provide such relief requiring a plan for worker transition support could provide economy-wide incentives to spur investment that can help support a more just, financially secure, and sustainable recovery.
Economic Recovery Facility for Financing Low- and Zero-Carbon Activities
The Economic Recovery Facility would accelerate the clean recovery for all Americans by providing necessary financial tools and know-how and by crowding in private investment to multiply public dollars for clean projects across the country. It creates a federal “bank” focused on clean projects with unique financing needs.
Assuming the facility is capitalized at $5 billion, RMI estimates that it would create 388,000 clean jobs in the first eight years and reduce energy costs for nearly 800,000 homes and businesses during the same period based on the impacts of the Connecticut Green Bank.
In the ten years since the previous financial crisis, clean energy industries, technologies, and practices have grown to great prominence in the United States. Thanks in part to emergency funds and seed investments made available through the American Recovery and Reinvestment Act (ARRA), clean tech, energy efficiency, and sustainable transportation solutions are helping transition our economy to a low-carbon future. However, the current COVID-19 pandemic raises a great deal of uncertainty for future progress, as the country heads into the unknown territory of another economic crisis.
More so than the industries, it is individual Americans that face the most significant challenges and uncertainty in the months and years to come. In just three months, over 40 million Americans lost their jobs, as the US unemployment rate rose to levels not seen since World War II. This reality should remind us that any stimulus recommendations we put forth should ultimately reduce costs and increase equitable access to clean energy, better quality housing, and sustainable mobility options.
RMI recently released a paper, Global Stimulus Principles: The Economy We Build Should Not Be the Same Economy We Decarbonize, that provides a framework for planning and evaluating future stimulus efforts. This report emphasizes four priorities: create jobs and grow the economy; support public health and reduce air pollution; enhance economic, energy, and climate resilience; and decarbonize.
There are several possibilities for US federal policy that can address recovery from the societal and economic impacts of COVID-19 and climate change at the same time. Based on potential scale of impact and urgency, RMI has identified top four concrete policy recommendations for both short-term stimulus and long-term recovery efforts, which can be used to inform federal policy as well as state- or municipal-level implementation of federal funds.
We must not only rebuild from this crisis, but also build back better, to create a cleaner, more resilient, and more fair and humane economy and society…
The full effects of the COVID-19 pandemic may not be fully understood for years to come. However, we are already bearing witness to the catastrophic impact that this virus and its economic fallout pose for the industries, technologies, and practices that are most critical for achieving a sustainable US economy. Given the many competing interests that will inevitably seek stimulus support across the energy sector, US leadership must act decisively to ensure that the clean energy progress we have made to date continues to accelerate in the years to come.
The stimulus programs recommended here are by no means meant to be all-inclusive of the full breadth of programs capable of driving a clean energy future, nor should the absence of other potential options suggest a dismissal of other opportunities. Rather, these ideas reflect Rocky Mountain Institute’s current perspectives on urgent projects with potential for near-term job growth and long-term potential for decarbonizing the US economy.