Is a bad economy good for the environment?

The phrase “It’s not easy being green” may never seem truer than during this economic slide.

For the first time in 25 years of asking the question, the Gallup Poll recently found that a majority of Americans, 51 percent, say that economic growth should be given priority over environmental concerns.
As recently as 2000, only 23 percent of Americans wanted the economy considered first, with 70 percent saying the environment should rank higher.

That’s enough to make Al Gore want to hit “delete” on his slide-show presentation on global warming.

But a number of environmentalists and economists, while concerned about changing attitudes, say the picture is far from one of total gloom. For one thing, the downturn in worldwide industrial production has meant fewer greenhouse gases are being emitted, slowing their growth in the atmosphere and, in turn, the pace of global warming.

Other pockets of good news have emerged, too. A recent report on the state of the world’s forests, for example, suggests that pressure to clear stands of trees, which absorb carbon dioxide, has declined because of lower demand for wood products and for growing crops such as palm oil, soybeans, and rubber, which often displace forests.

And while low gasoline prices, as well as price-cutting by desperate car dealers, means that buying a huge SUV may be more attractive, low prices for crude also have slowed interest in projects such as extracting oil from Canadian tar sands and shale in the Rocky Mountains, projects whose potential environmental effects worry environmentalists.

By one set of calculations, for example, Europe will produce 7 percent fewer carbon emissions by 2020 than earlier thought.

In the US, the No. 2 emitter of greenhouse gases, demand for oil in January was down 7 percent from January of the previous year, says Trevor Houser, a visiting fellow at the Peterson Institute for International Economics and director of the Energy & Climate Practice at the Rhodium Group in New York.

In China, the world’s No. 1 greenhouse-gas emitter, power demand in January was down 14 percent, compared with the year before, Mr. Houser says. “That’s following five years where we’d seen 15 percent year-on-year growth.”

All the talk about China building two new coal-fired power plants a week is outdated, he says. “Existing power plants are losing business and new power-plant construction has slowed to a crawl.”
If that 15 percent decline in power persisted for all of 2009 – far from certain, he concedes – it would mean that China had cut its carbon emissions by an amount equal to the entire greenhouse-gas emissions of Germany over that period.

Environmentalists realize that a recession is a cruel remedy for climate change. “No one would argue that a recession is the way to solve our climate problems,” says Manish Bapna, executive vice president and managing director of the World Resources Institute. But, he allows, “it puts a little time back on the carbon clock.”

“It gives us a moment of breathing room,” says Rick Duke, director of the Center for Market Innovation at the Natural Resources Defense Council. “But it’s not something you can count on.”

“It’s not a blockbuster impact,” adds Frank O’Donnell, president of Clean Air Watch. “You would have to have a screaming downturn and no manufacturing at all to change that [worldwide greenhouse-gas emissions] in a huge, measurable way.”

Environmentalists are more encouraged about how efforts to stimulate economies, especially in China and the US, may have “green” effects. Japan and South Korea also have announced stimulus plans that contain “green” aspects.

China has pledged to spend roughly 4 trillion yuan (about $586 billion) to prime its economy. There are indications that some of its most energy-intensive heavy industries, such as steel and cement, may not be rebuilt in favor of less-polluting light industries that are more efficient job creators. And given its huge air pollution problems, China is committed to steering its flourishing auto industry toward nonpolluting electric vehicles.

“If China takes advantage of the crisis to consolidate heavy industry, improve its energy efficiency, and free up investment capital for lighter manufacturing and services, then it will emerge from the crisis with a growth model that pollutes less and employs more,” Houser says.

The US stimulus package includes a number of “green” provisions. “Much of the stimulus funding is going toward clean energy, and that is fantastic,” Mr. Duke says.

Among the most effective in both lowering energy demand and creating jobs, economists say, is funding to cut energy usage, including insulating homes and public buildings. “Such projects are highly labor-intensive, can be done quickly, and will save energy,” says Robert Stavins, director of the Environmental Economics Program at Harvard University. “And, importantly, they will reduce the long-term cost of meeting climate objectives.”

On average, concludes a report from the World Resources Institute, for every $1 billion invested in well-thought-out green programs, 30,100 jobs will be created, “saving the economy $450 million per year in energy costs.” (See chart for a program-by-program analysis.)

What is more difficult, environmentalists concede, is passage of carbon-reduction legislation in Congress. Also under pressure is the Obama administration’s commitment to reach an international agreement on carbon-cutting at a key meeting in Copenhagen, Denmark, in December.

“If the Obama administration had come into office with a thriving economy, I think it would have been easier for them to get a cap-and-trade or [carbon] tax bill through Congress,” says Peter Wilcoxen, director of the Center for Environmental Policy and Administration at Syracuse University.

Congressional Republicans already have attacked the administration’s proposal for a cap-and-trade plan, in which industries would buy and trade among themselves permits to emit CO2. They call it a burdensome tax on consumers in a time of economic hardship.

The Obama cap-and-trade plan would generate more than $600 billion in revenue, by some estimates. Some of it would fund programs to fight climate change and the rest would be returned as tax cuts to offset higher prices for electricity and other goods and services.

Despite the worldwide recession, the urgency of reaching an international agreement on reducing carbon emissions “cannot be overstated,” Mr. Bapna says. “The science has been increasingly unequivocal that the world is warming at a pace that is even faster than projected” by a UN-sponsored report from the world’s top scientists issued in 2007, he says.

Yet “the challenge of striking a deal should also not be underestimated,” he says. “It is a tall order.”

Any agreement among nations to cut greenhouse-gas emissions now would not take effect for several years, Duke points out. That means that the recession could be long over before any drag on economic growth would be felt.

If an international agreement can be made by 2010, “we can still solve this problem,” he says. “But we can’t let things slip any further.... We have just enough time.... We just don’t have another five years to wait.”

Both a cap-and-trade plan in the US and an international pact must be addressed regardless of the economic situation, Professor Wilcoxen says.

One thing matters above all in climate policy, he says: “The price of fossil fuels needs to go up.” That’s the only thing that will send the right signals to the private sector to boost energy efficiency and take other steps to reduce greenhouse-gas emissions.

The key question, Houser concludes, is, “Do we emerge from this crisis in a more globally sustainable pathway?”