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Adam Collins

Professor Laurence Gesell

STS 304

4/27/2016

Will Restricting Carbon Emissions Damage The Economy?

Congress is enacting a national policy that will cut carbon emission by up to 40 percent

over the next 20 years. However, stakeholders coming from diverse fields are arguing that

reducing carbon emission may increase economic growth rate, or completely destroy the

economy. Though the truth of the matter is that if climate change persists without any action to

minimize on the scourge, then there is a likelihood of severe economic consequence. The best

approach is to reduce fossil fuel consumption, and the best way to do this is to shift away from

fossil fuels towards renewable energy sources. Another method would be to minimize on energy

demand through enhanced efficiency, whereby the government partners with the private sector to

develop more energy efficient products. Then at the same time encouraging consumers to use

eco-friendly products, for example Light Emitting Diode (LED) products (Wang, p.11).

Failure by the U.S government to enact legislation to achieve this transition will undercut

efforts that foster international cooperation geared towards stabilizing the global climate. There

is the likelihood that other countries may also not make efforts from their side without

committed action from the U.S. because they are considered to be the highest emitter of carbon.

International cooperation is crucial because no single country or region can attain climate

stabilization without cooperation from all the other major players.

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If international efforts are prevented, nations are likely to be faced with many climate

change damages including, sea level rises, ocean acidification, crop losses, disease and pest

outbreaks, frequent forest fire, disruption of regular water supply, and more frequent extreme

weather conditions.

Despite the inherent risks, queries are now being put forward by experts on whether

leading economies such as the U.S can withstand the transition from fossil to low-carbon fuels

without incurring unacceptable costs and economic changes. This particular brief is going to

summarize recent attempts to use economic analysis to assess these concerns.

Forecasting on the economic consequence and impacts when cutting carbon emission

develops a different representation of the economy. To begin with, the economy is known to

evolve via technology innovation, through the development of new products. Organizations are

constantly in search of profit potential, and these companies achieve profitability through the

exploitation of new technologies and markets, and these entities are known to set off cascades of

innovation and growth. Through innovation, new companies and industries are brought up, while

others die naturally. At any particular time, individual companies are on the leading edge of

technological change by bringing new products to the consumers, and at the same time

companies are dragging themselves down by not responding to change fast enough to impress

the customer. Innovation and entrepreneurship respond to business opportunities in ways that

cannot be adequately seen by ordinary people, and this is why the best business minds can

foresee demand for an individual product at the invention stage. As a technological

entrepreneurship and management major at ASU, other people and I recognize the benefits that

technology offers towards constructing ways in diminishing the carbon footprints left behind by

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companies. For instance, scientists are already working inside research laboratories trying to

develop algal-based biofuels, fuel cells, and better batteries among other innovations, with little

uncertain results; though, it seems that these experts are never heartbroken.

With a keen view of the economy, there is a suggestion that the transition towards low-

carbon fuels would set a stage of new economic innovation and growth analogous with energy

transition from the past economic history. We have already seen such change in other sectors

such as from animal transport to petrol powered mode of transportation, or even transition from

steam power to electricity. Carbon emission is a serious concern especially from advanced

economies and the problem is correctly displayed in the graph below. Even though in some

regions such as Africa and the Middle East, the carbon emission rates is still small, these

countries should not be left behind because the problem is a global issue.

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Fig 1.0 Annual carbon emission by region

Another idea is that forcing carbon cuts may lead to a stagnant economy. These people

believe that the shift towards renewable energy is likely to result in job losses because the cost of

production will go up. Manufacturers will, therefore, be forced to pass on the prices to the

consumers, who will be compelled to dig deeper into their pockets. When customers feel they are

economically strained, they will buy few items, and due to less product demand, the

manufacturers will resort to cost cutting measures such as downsizing the workforce.

Besides, leading economies will have to dig deeper into their pockets to shift towards

renewable energy sources which are known to be capital intensive. These countries must seek to

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finance either through debt, or raise the money in the form of new taxes. Through the move,

taxpayers must feel the pinch when taxes are raised.

According to statistics from International Energy Agency (IEA), the global economy has

expanded by roughly 6 percent, but carbon dioxide emissions from energy generation and

transport have remained constant. Surprisingly, CO2 emissions in China, Europe, and the United

States have been falling. The figures are raising a crucial question, on how and when the world

should embark on mitigation measures. IEA has also reported that the global carbon emissions

from energy-related activities have remained constant at 32.1 billion tons, even as the entire

world’s economy expanded (Zhang & Wang p.97).

Industry groups preferring to block action on climate change are arguing that the United

States finds it difficult to wipe carbon emission without harming their economy. For instance, the

U.S Chamber of Commerce has indicated that the proposed Environmental Protection Agency

(EPA) initiative to curtail carbon emission is likely to be burdensome on American businesses,

and may further on threaten the economy and jobs.

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Fig 2.0 Historical and Projected U.S energy-related carbon dioxide emissions under

existing policy, and national GDP, carbon dioxide in millions of metric tons, GDP in billions of

chained 2009 dollars

However, research from credible sources has revealed that the bigger picture is rather

different. Americans are not required to select between a healthy economy and a safe, low

carbon future. With proper policies, nations are likely to minimize their carbon footprint and at

the same time improve their overall economic outlook. Attaining significant reductions in carbon

pollution is necessary to prevent the costly economic impacts brought about through climate

change, because of the future price tag of postponing the underlying issue. Besides, the

consequences of climate change on human beings regarding health, is too difficult to ignore,

because the rising temperatures deteriorate the ecosystem regarding triggering storms, causing

dangerous heat waves, and causing ailments such as asthma. The time is now right for countries

to take the issue of climate change seriously to avoid the unreasonable risks of failing to take

immediate action.

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It is, therefore, advisable for countries, in particular, the highly industrialized nations to

enact policy and grab the opportunity to minimize greenhouse gas emissions for their economies

to directly benefit. In real markets, green products such as solar and wind energy are more cost-

effective compared to using non-renewable products such as coal. Besides, modern natural gas-

fired plants are almost 20-40 times cost effective to operate compared to plants that utilize coals.

It’s advised that we consider our policy options when developing a cost effective solution so that

our industrial sector will not diminish (Easton, page 116).

Internationally carbon pollution has been successfully minimized while the economies

improve. According to 2015 March IEA report, global carbon emissions coming from the energy

industry was unchanged in 2014, and the scenario is the first time in 40 years when IEA began to

collect carbon emission data. In another separate data, it is was revealed that emissions froze or

declined between 1982-1992; yet this period was associated with economic downturns. Contrary,

in 2014 the global economy expanded by 3 percent, yet emissions dropped in the major

economies such as the U.S., China, and South Korea (Corsi p.38).

Information from Organization for Economic Development and Cooperation (OECD) has

shown that environmental policies and regulations can help economies to expand rather than to

stall. Between 2007 to 2012, OECD affiliated countries have minimized emissions by roughly 7

percent while their GDP was expanded by around 13 percent.

Implementing a cap-and-trade systems allows companies that produce a high level of

pollution content to limit the pollutant that gets emitted per year. By obtaining a permit, either

free or through an auction process, it provides the incentive for companies to manufacture at a

low emitting rate in order to improve efficiency. However, this particular system does have the

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need of spending money for initial permits; additional permits depending on the management of

controlling the emissions and for improved technology. The cap-and-trade system, however,

remains unsettling to a variety of businesses as this will develop added expenses form these

profitable organizations. Whether economic or environmental protections is a priority, still

remains as a debatable question among companies and the people as a whole.

Global Warming Effects on the Society

The world is already grappling with serious and economic concerns if we fail to tackle

global warming. If the world decides to move slowly, then there is the likelihood of severe

economic consequences, and these will be outlined below:

Damage to Infrastructure

Due to global warming, the sea level will rise, and there will be floods and extreme

storms that all require money due to the havoc caused by these calamities. Seawalls, dams,

power lines, airport runways, railroad tracks, bridges, roads, and homes will have to be regularly

repaired.

Climate change is also affecting water availability, access, and to a certain level, the

quality of the commodity itself. The urban system is likely to overflow during heavy rains, and

untreated systems may find themselves mixing with tap drinking water. Also, there shall be

shrinking of mountain glaciers, a scenario likely to threaten drinking water supplies to millions

of people especially individuals living in rural areas who have no access to piped water.

Lost Productivity

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Disruptions that come as a result of climate change means that people will have to miss

constantly work while kids will always fail to report to school. There will be a tendency when

virtually all the sectors namely tourism, energy production, fisheries, agriculture, transportation,

and general trade gets disrupted, hence making it difficult for people to proceed with their day to

day business in a normal manner. Climate-related health concerns are also known to reduce

productivity because the air will be polluted and more people will be spending their time in

hospital beds.

Mass Migration and Security Threats

Global warming is likely to precipitate the number of mass refugees. These are

individuals who are forced to flee their homes because of flooding, drought or any of the

climate-related disasters. Through the mass migrations, issues such as civil unrest may emerge

together with social disruption, and may even call for military intervention and other inhuman

consequences such as initiating a ban on people coming from a particular area or even country.

Coping Costs

Even though society has found a way to cope with the climatic impacts, the present

carbon emissions level should not be left unchecked. However, reconstruction after a disaster has

strike has been very expensive, and therefore it is advisable to undertake preventive measures.

Besides, these costs are just the expenses incurred when disasters strike and rebuilding efforts

starts, but, they are not costs associated with lost lives or the gasses that accumulate in the

atmosphere that brings diseases.

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Besides, the productivity of crops and livestock is likely to decline significantly, and this

may even include milk yield due to the extreme temperatures experienced throughout the year.

Regions that previously used rain water, may be forced to go for irrigation, due tot eh

inconsistent rain patterns, and as a result, food production cost will go up, as well as new

conflicts may emerge in terms of access to water whereby the society may start experiencing

inter-clan wars because everyone wants to use water from a particular point

However, there are all reasons to be optimistic. More than 180 nations who represent

around 98 percent of the global emissions have already embarked on implementing their pledges

that they made in the popular France conference. These countries have shown greater adoption of

policies that will minimize energy consumption while at the same time encouraging the use of

energy-efficient products such as LED bulbs and solar technology.

The countries are beginning to give rebates to companies that foster “green” innovations

and this include tax holidays, scrapping of import duty for “green” manufacturers, scraping duty

on renewable energy products such as solar, and even providing seed capital to entrepreneurs.

Conclusion

Globally, it has been clearly illustrated that a combination of proper policies and

technological innovation is likely to minimize carbon pollution while at the same time enhancing

economic growth. As decision makers and the academic community are debating on new

initiatives geared towards reducing carbon pollution, while considering the potential of economic

impacts from these efforts, these experts should also remain aware of the immense economic

impact of failing to address the climate concern now.

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There are already several initiative underway which appears to be promising. There are

also regional schemes which have proved to be efficient, flexible, and modern. When the picture

is viewed from a long-term perspective, it looks gloomy, and unless we cut the rate we are

emitting greenhouse gasses, in future the global society is likely to incur huge losses from

climate change. Governments worldwide have to seek ways of minimizing carbon emission, and

one of the initiatives that can be applied is introducing carbon pricing schemes to reduce fossil

fuel use.

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Works Cited

Corsi, Sandra. Soil Organic Carbon Accumulation and Greenhouse Gas Emission Reductions

from Conservation Agriculture: A Literature Review. Rome: Plant Production and

Protection Division, Food and Agriculture Organization of the United Nations, 2012.

Print.

Wang, Lina. "Carbon Emission Trading and Technology Innovation for Low-carbon Emission."

2011 International Conference on Electrical and Control Engineering (2011): n. pag.

Web. 25 Apr. 2016.

Zhang, Shanming, and Liyan Wang. "Relationship between Carbon Emission Reduction and

Carbon Finance—a Study on Promoting Carbon Emission Reduction through Carbon

Financing." Manufacture Engineering and Environment Engineering (2013): n. pag.

Web.