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by Twenty5Degrees Team March 04, 2021 10 min read

The Paris Climate Agreement and what a Green Economy could mean for the U.S.

Written by: Riley Palmer
 

Acrid smoke filled my nostrils, and I held my breath as I quickly darted across the intersection. We are all familiar with the potent smell of exhaust. Whether you are crossing the street, waiting for the bus or sitting in a long line of traffic at the end of the day, that pungent odor is synonymous with modern life. While we do not enjoy the smell, once the offending car has driven away, we often forget all about the fumes that were plaguing us just seconds ago. While our noses may quickly forget about being temporarily accosted, our planet does not have such a luxury.

The rate of carbon emissions has increased exponentially since the industrial revolution began in the 1700s. While the industrial revolution set the groundwork for technology that has vastly improved the quality of our lives, there has been a significant cost to our progress in the form of climate change.

Carbon acts as an insulative layer, trapping heat from the sun and warming the earth. While having carbon in the atmosphere is natural and vital for life on our planet, too much carbon causes problems. As the amount of carbon in the atmosphere increases, it creates more insulation, which causes hotter temperatures. While there have been fluctuations in temperature throughout history, with extreme cold and warm spells, the current rate of change is happening too fast for life on our planet to adapt. As temperatures rise, plants and animals that are not able to adapt will become extinct and humans will face increasing health threats from the extreme warm temperatures and a degraded environment.

 

The Paris Climate Agreement: A Brief Overview

While making local or national changes can help slow the changing climate, the only way to truly address it is on a global level. If even one country continues to pollute indiscriminately, every other nation will be negatively impacted. Climate change has no borders, and to combat it, we have to be willing to step outside our own borders and work together. Until recently, a coordinated, global concept seemed far-fetched and unrealistic. However, nations were able to put aside their differences and come together under the Paris Climate Agreement, which was ratified in 2016. The Paris Climate Agreement is an international agreement to address climate change. Some of the goals are:

  • to prevent temperatures rising 2oC above pre-industrial temperatures, with the more ambitious goal of preventing the planet from getting above 1.5oC
  • to allow countries to set their own emission standards
  • to review emission reduction goals every 5 years
  • to set more intensive goals if previous goals were met

These goals will be realized through international cooperation, however there are legitimate concerns regarding the lack of legal consequences for noncompliance and the absence of strict financial obligations to the pact. If you are interested in learning more about the history of the Paris Climate Agreement and how it functions, check out our previous blog post here: The Paris Climate Agreement - Pt. 1.

While the Paris Climate Agreement is a very exciting development for the environmentally conscious, there are valid concerns about the economic impacts of the agreement. While we care about having a healthy environment and preserving the planet for future generations, more personal concerns, such as keeping a job and being able to financially support yourself, are also very valid concerns. There exists a tendency to believe that a green economy means a bad economy, but that is not necessarily the case. While switching to a renewable economy may have some negative, short-term impacts, a green economy will actually be more beneficial in the long run, creating millions of jobs and boosting Gross Domestic Product (GDP).

 

Negative Economic Impacts of the Status Quo

While increasing temperatures and economic losses might not seem linked, a study conducted by Stanford University has shown that by allowing temperatures to rise there will be significant negative impacts on the economy. By not meeting the Paris Climate Agreement’s emission reduction goals, the U.S. economy could actually end up losing $6 trillion. Global failure to comply with the Paris Climate Agreement could lower global GDP by as much as 25% by 2030.

How can this be? How does warmer weather wreak such havoc on the economy? The U.S. Environmental Protection Agency (EPA) decided to answer just that in a study they conducted in 2019. A warming climate means melting ice which raises sea levels. The increase in sea levels is already causing, and will continue to cause, catastrophic flooding. Just on the East coast, these flooding events will cause $120 billion in total property damage by 2090. Warming temperatures also means drier climates in the West and Midwest which will cause droughts. This means more forest fires in California. The forest fires of 2018 alone cost the U.S. $148.5 billion, 0.7% of GDP. Droughts will also negatively impact farming in the Midwest, and it is estimated that vegetable crop yields could fall as much as 35% by 2100.

Additionally, a hotter climate means lost labor hours. As temperatures increase, cases of heat related illness will become more prevalent. Farmers, construction workers and other individuals who work outside for a living will be at higher risk and there will be a 2% loss in global work hours due to heat related sickness by the year 2030. Heat stress and heat stroke also mean more hospital visits, increasing the cost of health care. Heat sickness also means higher mortalities, especially in more vulnerable populations like the elderly and young children. It is projected that lost labor hours due to heat stress will cost the U.S. $155 billion per year and mortalities due to extreme weather will cost the U.S. $140 billion per year. Florida, and the Southern States, will be particularly hard hit by the double blow of being coastal and already having warmer temperatures.

Graph depicts the increase in the number of hours lost to heat stress from 1995 to 2030. Courtesy of "World employment and social outlook: greening with jobs"

 

The increase in temperature will also put a heavy demand on energy sources. People like being comfortable and in hot weather, everyone likes to blast the A.C. With warmer temperatures year-round, there will be a higher demand for electricity to keep people cool. The changing climate will also increase the cost of energy. Droughts and water shortages will become more common. Nuclear and Hydroelectric powerplants need water to operate. Without a steady water source, energy will become more expensive.

In addition to increased energy costs and lost labor, a hotter climate will also negatively impact infrastructure. Railroad tracks will begin to buckle under the heat and rails will have to be replaced more frequently. Bridges will also be threatened. As snow melt increases and precipitation patterns become more intense, rivers will overflow their banks more frequently and cause damage to bridge supports.

The recreational industry will also be hard hit by climate change. Car emissions release nitrogen into the air and this atmospheric nitrogen is then absorbed by water. Increases in nitrogen create harmful algal blooms which use up all the available oxygen in the water and cause mass die-offs of fish and other aquatic animals. These oxygen-poor zones negatively impact recreational fishing, scuba diving, and other forms of ecotourism. Florida alone earned $91.4 billion in 2018 from ecotourism, and degradation of these marine habitats would have a huge negative impact on the ecotourism industry. Warm temperatures will also reduce the amount of snowfall each year which will devastate skiing and snowboarding resorts. Skiing has decreased by as much as 80% in the Northeastern states since 1986 and will continue to decrease.

Unfortunately, the list of negative impacts due to climate change is large and there are even more examples than the ones included here. However, through the Paris Climate Agreement and climate mitigation policies, the negative economic impacts outlined above may be greatly mitigated.

 

Positive Economic Impacts of Change

How much of an impact could the Paris Climate Agreement actually have on the economy? Does investing in renewable energy outweigh the negatives of jobs lost in the oil and gas industry? How much will a green economy cost? If you are asking yourself these questions, you are not the only one. Many organizations, such as the EPA, the World Resource Institute and the International Labor Organization had similar questions and, through a series of studies, they came upon some pretty compelling answers.

The fossil fuel industry is projected to create 6 million jobs globally by 2030, whereas the renewable energy sector will create a whopping 24 million jobs in the same time frame. In 2019, 54,000 green energy jobs were created in the U.S. compared to only 18,000 in the oil and gas sector. Additionally, the World Resource Institute found that zero emissions energy sources, like wind and solar energy created twice as many jobs as the fossil fuel industry even when the initial monetary investment was the same.

The District of Columbia and 41 states have also been able to prove that it is possible to reduce energy emissions while actually increasing GDP. Most notably, Missouri only dropped its level of emissions by 13% from the years 2005 to 2017 but were able to increase their GDP by 40%. Overall, switching to a green economy could actually earn the U.S. $19 trillion dollars while continuing on the “business as usual path” could cost the U.S. $6 trillion.

A report by the International Labor Organization studied 163 different economic sectors and found that only 14 of these sectors were negatively impacted by switching to a greener economy. Only petroleum refining and extraction jobs were shown to have job losses that amounted to 1 million jobs. While some jobs will be lost initially, the number of jobs created will far exceed the number of jobs lost, and with the right policies, the negative short-term impacts can be mitigated.

Table depicts the sectors most affected by switching to a more sustainable economy, both in terms of absolute numbers and percentages. Courtesy of "World employment and social outlook: greening with jobs"

 

In addition to job creation, the cost of switching to a green economy will not be high. At most, it will cost the U.S. just 2% of its total GDP. Remember, it cost the U.S. 0.7% of GDP to deal with the forest fires in California for just the year of 2018. Switching to a more environmentally friendly economy will cost the same as it costs to deal with the fires in California for just three years. By not switching over, forest fires, and other natural disasters will worsen and end up being more expensive than simply reinvesting U.S. energy interests into renewable sources. Historically the U.S. has spent as much as 13% of GDP on energy, so even if switching to a green economy cost 2% of GDP it is still substantially lower than current spending. Not only does a green economy create more jobs, but it is also far less expensive than relying on gas and oil and can actually earn the U.S. money.

Even with these clear positives, there will be short-term negative consequences to switching to a greener economy, but policy can mitigate these negative impacts. Governments need to work at providing social protection for workers in the form of social insurance and financial assistance. Putting limits on the fossil fuel industry could encourage faster growth of the renewable energy sector and help workers better transition. Additionally, providing job training and focusing on sustainable agriculture are some other ways to start mitigating the transition to a more energy efficient economy. 

In addition to creating more jobs and earning the US more money, switching to a green economy will mitigate the effects of lost labor hours due to heat sickness, will prevent premature deaths due to higher temperatures and will mitigate the intensity of natural disasters, causing less destruction and lowering the price tag.

There is no way to reverse geologic time. Humans have already put a lot of carbon dioxide into the atmosphere and a certain amount of heating is already baked into the system. Even if we were to reach net zero emissions tomorrow, the climate would still be warmer, seas would still be higher, and weather would still be more extreme than in the past. However, by cutting emissions, we would prevent these issues from becoming worse. The longer we wait to act on climate change the more severe the problems we will face and the more expensive it will be to fix.

Climate change will cost the U.S. billions of dollars. By mitigating climate change impacts, the U.S. will save money in the long run. Chart is color-coded and visually represents the amount of money (lighter color) that the U.S. can save. RCP8.5 represents a high emissions scenario and RCP4.5 represents a moderate emissions scenario. Courtesy of Rosen, J. 2019

 

Climate change causes sickness and death, damages infrastructure and hurts recreational industries. Energy will cost more, and natural disasters will become more intense and more frequent. However, by switching over to a green economy, the U.S. can create job growth, increase GDP, and mitigate the negative impacts of climate change, saving lives and money. While the numbers in this paper refer to the United States, if other members of the Paris Climate Agreement are also able to meet their goals, the global impacts will be substantial, providing benefits to everyone. While the initial switch may cause a temporary loss of jobs, policies can mitigate these negative impacts. Ultimately, by not complying with the Paris Climate Agreement goals, we are preventing ourselves from achieving a healthier, more prosperous and more sustainable future.

 

 

 

References

COP21, United Nations. (2016, September 12). The Paris AGREEMENT: Frequently asked Questions – United Nations sustainable development. Retrieved February 10, 2021, from https://www.un.org/sustainabledevelopment/blog/2016/09/the-paris-agreement-faqs/

COP26, C2ES. (2020, November 17). Paris climate Agreement Q&A. Retrieved February 10, 2021, from https://www.c2es.org/content/paris-climate-agreement-qa/

Corey, K. (2020, December 07). Full cost of California’s wildfires to the US revealed. Retrieved February 10, 2021, from https://www.ucl.ac.uk/news/2020/dec/full-cost-californias-wildfires-us-revealed#:~:text=California's%202018%20wildfires%20cost%20the,researchers%20from%20universities%20including%20UCL.

Denchak, M. (2021, January 19). Paris climate Agreement: Everything you need to know. Retrieved February 10, 2021, from https://www.nrdc.org/stories/paris-climate-agreement-everything-you-need-know

Hansen, S. (2021, January 21). Republicans claim REJOINING Paris Climate Agreements will Cost American jobs, but Here's what's really happening. Retrieved February 10, 2021, from https://www.forbes.com/sites/sarahhansen/2021/01/21/republicans-claim-rejoining-paris-climate-Agreements-will-cost-american-jobs-but-heres-whats-really-happening/?sh=1908975f4f57

ILO News. (2018, May 14). 24 million jobs to open up in the green economy. Retrieved February 10, 2021, from https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_628644/lang--en/index.htm

ILO. (2018). World employment social Outlook 2018: Greening with jobs. In World employment social outlook 2018: Greening with jobs (pp. 35-50). Geneva, Switzerland: International Labour Office. doi:ISBN 978-92-2-131647-3(web pdf)

Jaeger, J., & Saha, D. (2020, September 15). 10 charts show the economic benefits of US Climate Action. Retrieved February 10, 2021, from https://www.wri.org/blog/2020/07/economic-benefits-climate-action-us

Rockport Analytics. (2019). Picking up the Pace: Florida’s Tourism Performance Jumps into a Higher Gear. Retrieved February 8, 2021, from www.visitflorida.org

Romm, J. (2018, May 29). Trump's abandonment of Paris climate deal to cost U.S. Economy Trillions, new study reveals. Retrieved February 10, 2021, from https://thinkprogress.org/trump-climate-policies-cost-us-economy-6-trillion-new-study-575120a5870a/

Rosen, J. (2019, April 08). From ruined bridges to dirty AIR, EPA scientists price out the cost of climate change. Retrieved February 10, 2021, from https://www.latimes.com/science/sciencenow/la-sci-climate-change-costs-billions-20190408-story.html

United Nations. (2020). GREEN ECONOMY IN THE CONTEXT OF SUSTAINABLE DEVELOPMENT AND POVERTY ERADICATION. Retrieved February 9, 2021, from https://sustainabledevelopment.un.org/partnerships/greeneconomy

United Nations. (2020, September 24). The Paris Agreement. Retrieved February 10, 2021, from https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

USGCRP, 2018: Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.


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