During the George W. Bush presidential administration, I worked for the Government Accountability Office. One project on which I worked was a look at the economic costs and benefits of the U.S. not taking action on climate change. We conducted an iterative survey of some of the leading economists and unsurprisingly, the consensus was that the costs of inaction are much greater than the benefits. And yet, over a decade later, this country has struggled to make a successful economic argument about why we must act on climate change. A thoughtful Biden climate plan can change that trajectory.
We still continue to see increasing the surging economic costs of unchecked climate change, from wildfires to floods to hurricanes. We can now be cautiously optimistic that President-elect Joe Biden is stacking his economic team with climate hawks.
Take Janet Yellen (pictured above, right, speaking with then-IMF head Christine Lagarde), Biden’s pick for Treasury Secretary. In addition to being the first woman leading the U.S. Treasury in its 231-year history, Yellen has a long history of supporting action on climate change. As a top economic advisor to President Bill Clinton, she saw the risk of climate change to the financial system as far back as the 1990s.
Later, as Chair of the Federal Reserve, she was the first head of that bank to talk about income inequality head on. Further, since stepping down as the Fed’s chair in 2018, she has actively spoken out for a tax on carbon emissions—an policy supported by economists across the political spectrum as the most cost-effective solution to addressing the climate crisis. In fact, she is a founding member of the Climate Leadership Council, which advocates for a carbon tax and is backed by companies like BP, ExxonMobil and Shell. Her perspective could help make a Biden climate plan successful in the long term.
Yellen’s qualifications uniquely place her to tackle the complex nature of the climate problem. She was a top Fed official before, during, and after the Great Recession of 2007-2009 and chair of the Financial Stability Oversight Council, which was set up after the 2008 housing crash to coordinate financial regulations and identify market risks. The incoming administration is going to be faced with the double impact to the economy of COVID and climate change, so having someone at the helm could shorten the ramp up. In addition, as the department in charge of taxes, a closer look at tax credits for clean energy industries like solar power that have been hit hard by the pandemic could be a lifeline should a Biden climate plan be allowed to come to fruition.
Other economic policy picks are also well-placed to help a Biden climate plan succeed: Brian Deese as the director of the National Economic Council and Cecilia Rouse as the first Black American and fourth woman to chair the Council of Economic Advisors (CEA).
While Deese has raised some hackles on the left about his time at BlackRock, an investment firm, it could be argued that his time as head of the financial giant’s sustainable investing work could have given him some deeper insight into risks related to climate change. Further, he has been vocal about prioritizing energy efficiency and electrification - two issues that are absolutely key to tackling climate change.
Cecilia Rouse will come to the CEA from a position as dean of Princeton’s School of Public and International Affairs, but she has long been outspoken about the economics of income inequality. With Rouse in such a prominent position, we can hope that a Biden climate plan can ensure that its economic policies address climate change impacts that disproportionately fall on communities of color and low-income communities.
Climate change has never been only an environmental issue. Economics have always been at the heart of taking on this huge challenge. Now that we’re seeing the impacts of climate change, the economic reality is much more apparent.
One study found that if global temperatures rise 4.5 degrees Celsius from pre-industrial levels by 2100, the long-term impacts on at least 22 sectors could cost the U.S. $520 billion every year. Another study found that under our current trajectory, the U.S. will suffer the second highest losses of any country in the world except India.
Nevertheless, we don’t have to project to see how much it’s already costing the U.S. According to the National Atmospheric and Oceanic Administration (NOAA), since 1980, there have been 279 weather and climate disasters that have totaled over $1 billion in damages. The sum for all of those disasters combined tops over $1.8 trillion. Climate-minded economic policies are essential to both mitigating future disasters and building resilience to the ones we can’t avoid.
We know that the impacts of climate change are complex and wide-ranging. Taking on that challenge will require policies driving a Biden climate plan to be at the center of the new administration’s plan, one that should focus on creating new investment opportunities while protecting communities and businesses.
Image credit: U.S. Federal Reserve
Kate is a writer and policy wonk, with a focus on water, clean energy, climate change and environmental security. She spent over a decade running energy-water nexus and energy efficiency programs at Environmental Defense Fund as well as time at the U.S. Departments of Energy and Defense, U.S. Government Accountability Office, and state and federal legislatures. She serves as an Advisory Board member of CleanTX, which aims to accelerate the growth of the clean tech industry in Texas.