Economic recovery versus climate action: A false choice

Let’s set the record straight: As Congress debates the best policy plan to rescue and ultimately recover the U.S. economy from the ravages of the pandemic, we don’t have to choose between economic recovery and climate resiliency. We must and can do both through sweeping policy action and smart government investment.  

The claim that climate policy requires economic sacrifice, perpetuated by embattled Republicans, ignores both reality and experience. Economists have studied this and demonstrated that climate policies actually go hand-in-hand with the key qualities of effective stimulus policy: fast implementation and creating an economic multiplier effect, meaning that for every dollar invested there should be an increase in national income and spending.  

We also have to face the reality that the economy and pandemic cannot be decoupled. America’s economic recovery is directly tied to getting the pandemic under control, a truth the Trump administration has flagrantly ignored, as evidenced by the exploding number of coronavirus cases in the U.S.  

Though we’re facing unprecedented health challenges, the U.S. has first-hand experience recovering from a severe economic downturn like this. We would be wise to draw on these lessons. After the financial crisis of 2008, two major stimulus packages, the Troubled Asset Relief Program (TARP) and the American Reinvestment and Recovery Act (ARRA), injected billions of dollars in aid to hard-hit American industries, like insurance companies and automakers. Like a venture capital investor, the U.S. government smartly conditioned its investment on critical terms. The “Big Three” automakers that collectively received loans, Chrysler, GM and Ford, had to innovate by making cars with better fuel economy and efficiency standards.

In the end, these companies didn’t just survive, they thrived by restructuring and returning to profitability. They were able to save hundreds of thousands of jobs and make more competitive vehicles. Customers continue to benefit from these more fuel-efficient cars by paying less at the pump. By June 2009, TARP and ARRA were credited with ending the Great Recession. They also helped America start its transition to a lower-carbon economy. And these policies paid off: The government recovered TARP funds and earned a $15.3 billion profit on its investment.  

The airlines are not in a dissimilar position to that of automakers in 2008. What if our policymakers reimagined what the U.S. aviation sector could look like by increasing fuel efficiency, boosting innovation in sustainable aviation fuels, safeguarding jobs and lowering carbon emissions? The $2 trillion CARES Act and its $50 billion bailout to airlines was a missed opportunity to do this. Not only did the policy not tie airline aid to restructuring and innovation, it irrationally stipulated that airlines had to maintain a minimum level of service to receive funding. This has been costly and wasteful for airlines, especially this spring when passenger air travel was down 96 percent compared to pre-COVID-19 levels. 

Since airlines had already started to take initiative to curb their emissions before the pandemic, this could be furthered through smart, forward-looking policy, unlike the proposal the Environmental Protection Agency’s (EPA) announced last week. Delta made a major announcement in February 2020, pledging to focus on jet fuel efficiency, improve flight operations, further weight reduction and develop and use sustainable aviation fuels. Similarly, United has been working to deploy biofuels, which could potentially reduce carbon emissions from aviation. But, airlines’ track record of stock buybacks, amounting to $45 billion in the last five years, does not prove promising for what companies may do with the $50 billion in CARES Act aid, with several major airlines already announcing plans to furlough thousands of employees when the Paycheck Protection Program (PPP) ends.

Fortunately, Democrats are building support for effective economic recovery plans. Presumptive Democratic nominee Joe Biden’s Build Back Better plan focuses on climate action and sustainable infrastructure development as key solutions. So does the House Democrats’ “Moving Forward Act,” a $1.5 trillion infrastructure bill, and Speaker Nancy Pelosi (D-Calif.) and Rep. Kathy Castor’s (D-Fla.) ambitious climate package. These plans pledge to get Americans back to work, while also averting climate disaster. 

Coronavirus has taught us profound lessons, both about human resiliency and bravery of those on the frontlines, but also about health and economic devastation in the absence of effective or rational leadership. We must draw on the success of TARP and ARRA to respond to our changing world and challenge policy fallacies that pit the economy against our environment. Climate action is, in fact, imperative to our country’s economic recovery, and as we’ve seen before, it can pay off big in the long, and short term. 

Tina Brown, M.P.P.A., is a fellow at the Clean Energy Leadership Institute (CELI), a 501(c)(3) nonprofit dedicated to developing the next generation of clean energy leaders.