Shaping the base of a renewable economy

The transition to a post-carbon energy economy will require extraction. As the sun set on the Bernie Sanders campaign, and with it the prominence of the Green New Deal in the contest for the presidency, the Trump administration issued an executive order encouraging private US exploitation of mineral resources in space. Whatever the shape of the coming transition away from fossil fuels, the need to understand the social and distributional costs of a changing energy infrastructure has never been greater. In a new report, I survey the state of mining, near-future ploys for extra-terrestrial extraction, and the persistent externalities of extraction.

Recent years have seen growing attention to the material requirements of information technologies, and especially to the social and environmental harms of sourcing rare earths and cobalt. Researchers highlight, for example, the dependence of electric vehicles and wind power infrastructure on rare earths, or batteries on lithium. But these discussions have tended to omit emphasis on necessity of extraction, relying instead on a more familiar idiom of consumer and corporate responsibility. Both the Trump administration's vision of celestial expansion and some visions of a post-carbon future depend, stated or not, upon a continuing regime of mineral extraction and outsourced harm.

STRANGE PUSH

A retrospective look at cap & trade

Of the various issues mired in severe and ongoing party polarization, climate crisis is among the most puzzling. Despite longstanding discussions of bipartisan market-based policy proposals like carbon taxes and cap and trade, large-scale government and industry action remains elusive.

In a masterful 2013 book-length report, Harvard political scientist THEDA SKOCPOL offers an autopsy of the 2009-10 push for cap and trade legislation. The detail-rich account illuminates not just the legislation's failure, and its leaders in the U.S. Climate Action Partnership (USCAP), but the innumerable complexities of the broader Washington policymaking apparatus.

(h/t to climate economist Gernot Wagner, associate professor at NYU and founder of Harvard's Solar Geoengineering Lab, for bringing this piece back up in a recent newsletter and column.)

"If environmental politics in America was ever a matter of working out shared bipartisan solutions to expert-assessed problems, it is now far from that—but in what ways and why? And what is to be done? My report ponders these matters.

The corporations that participated in USCAP could double their bottom-line bets—by participating in the "strange-bedfellows" effort to hammer out draft climate legislation that was as favorable as possible to their industry or their firms. But heads of the leading environmental organizations in USCAP had to stick by whatever commitments they made in the internal coalitional process, or else it would fall apart.

The USCAP campaign was designed and conducted in an insider-grand-bargaining political style that, unbeknownst to its sponsors, was unlikely to succeed given fast-changing realities in U.S. partisan politics and governing institutions."

Link to the full report.

• In the footnotes: Eric Pooley's 2010 book The Climate War, which provides an in-depth account of the activities of USCAP. Link to an excerpt from the book, link to the publisher page.
• A 2011 paper by Michele Betsill and Matthew Hoffman examines the "contours" of cap and trade, through an analysis of 33 distinct policy venues. Link. And a 2015 paper tracks climate adaptation planning across 156 U.S. municipalities. Link.
• A previous newsletter highlighted Skocpol's essential work on US welfare history. Link to the archived letter. And link to a recent blog post featuring climate academic Leah Stokes's recommended readings on climate-related research.

What rural electrification can teach us about a just transition

This year, we once again shattered the record for atmospheric carbon concentration, and witnessed a series of devastating setbacks in US climate policy—from attempts to waive state protections against pipelines to wholesale attacks on climate science. Against this discouraging backdrop, one idea has inspired hope: the “Green New Deal,” a bold vision for addressing both the climate crisis and the crushing inequalities of our economy by transitioning onto renewable energy and generating up to 10 million well paid jobs in the process. It’s an exciting notion, and it’s gaining traction—top Democratic presidential candidates have all revealed plans for climate action that engage directly with the Green New Deal. According to the Yale Project on Climate Communications, as of May 2019, the Green New Deal had the support of 96% of liberal democrats, 88% of moderate democrats, 64% of moderate republicans, and 32% of conservative republicans. In order to succeed, however, a Green New Deal must prioritize projects that are owned and controlled by frontline communities.

Whose power lines? Our power lines!

Efforts to electrify the rural South during the New Deal present a useful case study for understanding the impact of ownership models on policy success. Up until the mid-1930s, 9 out of 10 Southern households had no access to electricity, and local economies remained largely agricultural. Southern communities were characterized by low literacy rates and a weak relationship to the cash nexus, distancing them from the federal government both culturally and materially. They were also economically destitute—a series of droughts throughout the 20s led to the proliferation of foreclosures and tenant farming. With the initial purpose of promoting employment in the area, the Roosevelt administration launched the Rural Electrification Administration in 1935. The Rural Electrification Act of 1936 sought to extend electrical distribution, first by establishing low-interest loans to fund private utility companies. The utility companies turned them down: private shareholders had little reason to invest in sparsely populated and impoverished counties, whose residents could not be assured to pay for services; private investors lacked the incentive to fund electrification for the communities who needed it most.

Editor's Note: This is the first post in a new series, Phenomenal Works, in which we invite our favorite researchers to share notable readings with us. We'll be publishing new editions every two weeks, around our regular output of interviews and analysis. Sign up for our newsletter to stay up to date with every post.

Leah Stokes is an Assistant Professor in the Department of Political Science at the University of Santa Barbara. Her research spans representation and public opinion, voting behavior, and environmental and energy politics. Her forthcoming book is titled Short Circuiting Policy and examines the role of interest groups in weakening environmental protection policy across the United States. Her academic work has been published widely in top journals, her journalism and opinion writing has been published widely including in the New York Times and The Washington Post, and she is frequently cited in news media of all kinds. You can follow her on Twitter here.

Stokes's work is indispensable for anyone who wants to understand the politics of energy policy—and think through possible ways forward in the climate crisis. Below, her selection of must-read research.

INTEMPERATE OBJECTIVITY

On the pressures of policy-relevant climate science

Without any “evidence of fraud, malfeasance or deliberate deception or manipulation,” or any promotion of inaccurate views, how can bias enter a scientific assessment? In their new book, Discerning Experts, Michael Oppenheimer, Naomi Oreskes, Dale Jamieson, et al explore the pattern of underestimation of the true consequences of climate change.

Climate change's impacts are uncertain; predictions about climate change are difficult to make. Taking an ethnographic approach, Discerning Experts shows how those difficulties, coupled with the nature of the public discourse, and the pressures that come when research is going to be discussed and used in policy, have tilted climate assessment optimistic and cautious.

In a summary of their book, Oreskes et al explain three reasons for the tilt:

“The combination of … three factors—the push for univocality, the belief that conservatism is socially and politically protective, and the reluctance to make estimates at all when the available data are contradictory—can lead to ‘least common denominator' results—minimalist conclusions that are weak or incomplete.”

These tendencies, according to the authors, pertain to the applied research context. The academic context is different: “The reward structure of academic life leans toward criticism and dissent; the demands of assessment push toward agreement.” Link to a summary essay in Scientific American. Link to the book.

• In an interview, Michael Oppenheimer elaborates on other elements that skew the assessments: the selection of authors, the presentation of the resulting information, and others. Link.
• In a review of the book, Gary Yohe reflects on his own experience working on major climate assessments, such the IPCC’s. Link.
• A David Roberts post from 2018 finds another case of overly cautious climate science: models of the economic effects of climate change may be much more moderate than models of the physical effects. To remedy this, “We need models that negatively weigh uncertainty, properly account for tipping points, incorporate more robust and current technology cost data, better differentiate sectors outside electricity, rigorously price energy efficiency, and include the social and health benefits of decarbonization.” Link.
• Tangentially related: carbon tax or green investment? It’s worth considering not just all possible policy options but also their optimal interactions. A paper by Julie Rozenberg, Adrien Vogt-Schilb, and Stephane Hallegatte concludes, “Optimal carbon price minimizes the discounted social cost of the transition to clean capital, but imposes immediate private costs that disproportionately affect the current owners of polluting capital, in particular in the form of stranded assets.” Link to a summary which contains a link to the unpaywalled paper.

DETERMINED MOVEMENT

Energy production and political institutions

The role of labor (with some notable exceptions) has been relatively marginal in debates over how to decarbonize the economy. But given the growing number of clean energy jobs (and some recent labor news), it is reasonable to predict that any large-scale shifts in the nature of energy production will be accompanied by large-scale shifts in the nature of energy work and the labor relations that define it.

In his 2011 book Carbon Democracy, Columbia University professor TIMOTHY MITCHELL explores the political history of energy production. The wide-ranging study spans history from the industrial revolution to the Arab Spring, and charts the relationship between carbon-based energy production and various forms of governance. Among the arguments at the core of the book is Mitchell's identification of the emergence of democratic labor institutions within the structure and position of coal mines during industrialization—a position that was weakened in the transition to oil.

From the book:

"Between 1881 and 1905, coal miners in the United States went on strike at a rate of about three times the average for workers in all major industries, and at double the rate of the next-highest industry. The rise of mass democracy is often attributed to the emergence of new forms of political consciousness, and the autonomy enjoyed by coal miners lends itself to this kind of explanation. There is no need, however, to detour into questions of a shared culture or collective consciousness to understand the new forms of agency that miners helped assemble. Strikes became effective, not because of mining's isolation, but because of the flows of carbon that connected chambers beneath the ground to every factory, office, home, or means of transportation that depended on steam or electric power.

Changes in the way forms of fossil energy were extracted, transported and used made energy networks less vulnerable to the political claims of those whose labor kept them running. Unlike the movement of coal, the flow of oil could not readily enable large numbers of people to exercise novel forms of political power."

Link to the book preview, link to a 2009 article that preceded its publication.

• For more on labor dynamics in industrial Britain, see Robert Steinfeld's 2010 book Coercion, Contract, and Free Labor in the Nineteenth Century, and Suresh Naidu and Noah Yuchtman's 2012 paper on coercive contract enforcement in coal and other industries. Link to the first, link to the second.
• A 2012 review of Mitchell's book by Matt Stoller: "Globally, the switch from coal to oil was a fight about labor. You can’t understand modern democratic or third world political structures without understanding energy, and particularly, coal and oil." Link.
• A book on the role of Mexico's oil fields in labor disputes during the Mexican revolution, by Myrna I. Santiago. Link.
• A Next System report by Johanna Bozuwa imagines a network of democratically-run energy projects as the core of a "just transition." Link.

PROGRESS UNCOUPLE

Debating growth and the Green New Deal

In past newsletters, we have highlighted research and policy proposals relating to the Green New Deal and the literature surrounding "degrowth"—the idea that the growth imperative is at odds with human flourishing. In a recent exchange, economist Robert Pollin debates sociologists Juliet Schor and Andrew Jorgenson on the relative merits of "decoupling" and "degrowth." The former asserts that "economies can continue to grow while advancing a viable climate-stabilization project, as long as the growth process is decoupled from fossil-fuel consumption." The latter holds that public discussions over combating climate change must turn "from growthcentricity to needs- and people-centered policies."

The authors share a commitment to increased public investment, and both sides emphasize the distributional consequences of decarbonization. Their debate turns on, and illuminates larger conversations regarding the discursive frameworks and metrics we use to understand economic life. Schor and Jorgenson see reducing GDP in the global north as one element of a program to radically restructure the principles of society; Pollin understands these efforts to muddy the mandate for immediate climate action.

From Pollin:

"Let’s assume that global GDP contracts by 10 percent over the next two decades, following a degrowth scenario. That would entail a reduction of global GDP four times larger than what we experienced over the 2007–2009 financial crisis and Great Recession. In terms of CO2 emissions, the net effect of this 10 percent GDP contraction, considered on its own, would be to push emissions down by precisely 10 percent—that is, from 32 billion tons to 29 billion. So, the global economy would still not come close to bringing emissions down to 20 billion tons by 2040.

The overwhelming factor pushing emissions down will not be a contraction of overall GDP but massive growth in energy efficiency and clean renewable energy investments (which, for accounting purposes, will contribute toward increasing GDP) along with similarly dramatic cuts in fossil-fuel production and consumption (which will register as reducing GDP). In my view, addressing these matters in terms of their specifics is much more constructive than presenting broad generalities about the nature of economic growth, positive or negative."

Link to Pollin's initial paper, link to Schor and Jorgenson.

• Pollin elaborates on this point in his follow-up statement with a case study of Japan: "Despite the fact that Japan has been close to a no-growth economy for twenty years, its CO2 emissions remain among the highest in the world, at 9.5 tons per capita." Link. Another recent article reviews and recaps the decoupling vs. degrowth exchanges. Link.
• Schor and Jorgenson’s follow-up challenges Pollin's conviction that decoupling is either possible or efficient: "After decades of promises from advocates of green growth that absolute decoupling will happen, the record is dismal. The simple point about growth is therefore that it makes the nearly impossibly high mountain that we need to climb even steeper. Why rule out an important source of emissions reductions before we’ve even started?" Link.
• Another iteration of the debate in a compilation of INET papers: Schröder et al argue that "if past performance is relevant for future outcomes, our results should put to bed the possibility of 'green growth.'" Michael Grubb takes a different tack: "Before declaring that history has set limits on what is possible, we need to be extremely careful. The future has already started, though its beginnings may be modest." Link.
• From Autonomy, a proposal for a shortened work week—a key element of several green degrowth arguments. Link.
• Mark Paul, Anders Fremstad, and JW Mason offer a brand new paper on US decarbonization. "In an economy facing persistent demand constraints and weak labor markets, public spending on decarbonization will raise wages and living standards." Link.

GREEN PLAN(K)

Growing the Green New Deal in the US and Europe

Jay Inslee, the governor of Washington State and Democratic presidential candidate, has made climate policy the center of his longer-than-long-shot campaign. On May 3rd, he released 8 pages of goals, and on May 16th, he released the 35-page, 28-policy “Evergreen Economy Plan,” with several more similarly lengthy reports on the way. David Roberts, an energy commentator at Vox, had a representative reaction to Inslee’s policies: “Inslee’s campaign is systematically translating the Green New Deal’s lofty goals — to decarbonize the economy sector by sector, in a way that creates high-quality jobs and protects frontline communities — into policy proposals.”

The report includes policies on infrastructure, manufacturing, R&D, and policies for energy workers, including a “GI Bill” and 8 million new jobs over the next 10 years. But beyond its extremely detailed recommendations, a key point of interest is seeing how the GND’s idealistic goals are cashed out. The introduction emphasizes a restorative approach:

“Inherent throughout ... is the urgent need to support frontline, low-income, and Indigenous communities, and communities of color. These communities are being impacted first and worst by the accelerating damages of climate change, and have endured a legacy of air, water, toxics and climate pollution, along with a deficit of public investment and support. Through an assertive agenda of reinvestment that is guided by strong local input, Governor Inslee’s plan seizes the opportunity to build a clean energy economy that provides inclusive prosperity — upon a foundation of economic, environmental, racial and social justice.”

Link to the report.

• Leah Stokes, a climate and energy policy expert, contextualizes the expense on Twitter: “Spending $300 bn annually on climate is about 10% of the federal budget. Warren’s plan aggressively targets climate action by the military, which is about 20% of the federal budget. Hence, Inslee’s plan is about half the size of military spending. That’s BIG.” Link to the thread. - -
• Noah Smith also takes up the cost question: "It’s probably less than 20 percent of what Ocasio-Cortez’s plan would cost, and only a quarter of the total would be paid by the government, so new budget deficits or taxes would be relatively modest. And because Inslee’s plan is more narrowly focused on value-generating investments like infrastructure rather than new entitlement spending, a higher percentage of the cost would be recouped down the road." Link.
• As the GND gains momentum in the US, some in Europe are taking similar steps. DiEM25 (a pan-European organization co-founded in 2015 by Yanis Varoufakis) and the European Spring have released a report on a Green New Deal for Europe. Link. (Their candidates fell short in last week’s elections.)
• An article in the World Economic Forum on the Green New Deal for Europe explains some of the theoretical differences between the US and European plans. "Whereas the Americans are building on a century-old tradition of the original New Deal, we’re trying to marry that language with existing programs." Link.

MODELED WISDOM

Modeling policy levers for housing affordability in urban centers

In nearly every major urban center, housing affordability is in crisis. Since the 1960s, median home value has risen by 112% across the country, while median owner incomes rose just 50%. For renters, especially since 2008, the problem is increasingly acute:nearly half of renters (over 20 million people) pay over 30% of their income on rent.

In New York City, nearly two-thirds of all residents are renters (half of whom are rent-burdened), and the politics of housing policy remain correspondingly fraught. In a recent paper, researchers JACK FAVILUKIS, PIERRE MABILLE, and STIJN VAN NIEUWERBURGH at Columbia Business School develop a dynamic stochastic spatial equilibrium model to quantify the welfare implications of various policy tools. Calibrating the model to New York City, the authors examine the interactions between funding and affordability policies to chart a possible path forward. From the paper:

"Policy makers are under increasing pressure to improve affordability. They employ four broad categories of policy tools: rent control (RC), zoning policies, housing vouchers, and tax credits for developers. Each policy affects the quantity and price of owned and rented housing and its spatial distribution. It affects incentives to work, wages, commuting patterns, and ultimately output. Each policy affects wealth inequality in the city and in each of its neighborhoods.

While there is much work, both empirical and theoretical, on housing affordability, what is missing is a general equilibrium model that quantifies the impact of such policies on prices and quantities, on the spatial distribution of households, on income inequality within and across neighborhoods, and ultimately on individual and city-wide welfare. Consistent with conventional wisdom, increasing the housing stock in the urban core by relaxing zoning regulations is welfare improving. Contrary to conventional wisdom, increasing the generosity of the rent control or housing voucher systems is welfare increasing."

Link to the paper, and link to a press release from Columbia Business School.

• Data for Progress analyzed housing proposals from the leading 2020 candidates. Link to the reports, and link to an updated version of Senator Warren's proposal.
• A report from last spring by authors Peter Gowan and Ryan Cooper advocates for an across-the-board expansion of social housing in the United States. Link.
• Tangentially related, a JFI letter from last year highlighted thinking and proposals around the implementation of a land value tax. Link.

FISSURED CHURN

Reexamining claims about automation and labor displacement

Current UBI discussions emerged out of concerns over the role of human beings in a machine-dominated labor market. In 2013, a paper by Oxford University professors Carl Benedikt Frey and Michael Osborne claimed that 47% of US jobs were at risk of long term automation. The statistic circulated widely, prompting fears of widespread unemployment. The debate over these predictions is complex: those who deny any threat from automation often point to near-full employment, and risk overlooking the proliferation of low-paying and precarious jobs; while those who forecast mass unemployment risk assuming that technological development necessarily leads to labor displacement.

In a 2018 paper, legal scholar BRISHEN ROGERS argues that fears of a robot takeover misapprehend the real dynamics in the labor market:

"In a period of technological upswing, with companies rapidly installing robotics and other automation devices, we would also see significant increases in labor productivity. In fact, productivity growth has recently been the slowest as at any time since World War II. What’s more, productivity change in the manufacturing sector—where automation is easiest—has been especially tepid lately, at 0.7 percent over the last decade. On a related note, levels of 'occupational churn,' or the net creation of jobs in growing occupations and loss of jobs in declining occupations, are also at historic lows.

Even more striking, if firms expected artificial intelligence to be a major source of productivity in the near future, they would surely be investing in information technology and intellectual property. But they aren’t. Computers and software constituted 13.5 percent of the value of companies’ investments from 2000-2007, as the internet was coming into wide use. Over the last decade, that rate declined to 4.8 percent. These differences strongly suggest that there is nothing inevitable about precarious work or economic inequality. Hotel work, food services, janitorial work, and retail work have become precarious over the past twenty years because companies in those sectors forcibly de-unionized and/or 'fissured' away their workers to subcontractors or franchisors, thereby denying them effective access to many legal rights."

Link to the paper.

• An MIT Technology Review from 2018 surveyed the predictions of every paper published on job losses due to automation. The results: "There is really only one meaningful conclusion: we have no idea how many jobs will actually be lost to the march of technological progress." Link.
• "...even those occupations which are contracting due to technological change will continue to provide plenty of job openings over the next two decades. The challenge lies in improving the quality of these jobs going forward." Paul Osterman anticipates Rogers' arguments in a column from 2017. Link.
• Another recent paper by Brishen Rogers (to which we previously linked) continues the thread: "Based on a detailed review of the capacities of existing technologies, automation is not a major threat to workers today, and it will not likely be a major threat anytime soon." Link.
• Daron Acemoglu and Pascual Restrepo published two papers on automation and employment: the first uses industry level data to observe changes in the task content of production. The second argues that automation has been primarily concerned with reducing the need for labor, with insufficient attention being paid to socially productive investment. Link to the first, link to the second.
• Frank Levy on the relationship between automation-induced job losses and the rebirth of populist politics. Link.
• From EconFIP, a research brief on automation, AI, and the labor share. Link.