Economist Sees Hope for Climate Change Fight In Green New Deal

If greenhouse gas emissions continue at the current rate, the Earth’s atmosphere will warm up by as much as 2.7 degrees Fahrenheit by 2040, leading to flooded coastlines, intensifying droughts, and human suffering and poverty.

This was the stark conclusion of a landmark report issued in October by the United Nations’ Intergovernmental Panel on Climate Change. To avoid such dire consequences, activists have proposed that the United States embark on what they’re calling a Green New Deal. Most recently, New York Congresswoman Alexandria Ocasio-Cortez and Massachusetts Senator Edward Markey introduced congressional resolutions calling for the implementation of one.To make sense of it all, we recently sat down with Assistant Professor of Economics Marc N. Conte, Ph.D., whose expertise includes the economics of climate change.

Complete transcription below:

Marc Conte: This is a daunting challenge that will require a substantial modification of the way we conduct our everyday lives. And I think this first step in setting out such an aggressive target could be a useful negotiating strategy.

Patrick Verel: If greenhouse gas emissions continue at the current rate, the earth’s atmosphere will warm up by as much as 2.7 degrees Fahrenheit by 2040 leading to flooded coastlines, intensifying droughts and increased human suffering and poverty. This was the stark conclusion of a landmark report issued in October by the United Nations’ intergovernmental panel on climate change. To avoid such dire circumstances, activists have proposed that the United States embark on what they’re calling a Green New Deal.

And most recently New York congresswoman Alexandria Ocasio-Cortez and Massachusetts Senator Edward Markey introduced a congressional resolution calling for the implementation of one. To make sense of all this, we recently sat down with Marc N. Conte who studies the economics of climate change. I’m Patrick Verel and this is Fordham News.

Why was the United Nations’ October reports so significant?

MC: One of the aspects of climate change that makes it so difficult for policymakers to successfully address is the fact that responding to this threat involves engaging in costly behavioral change today with the probable expectation of incurring benefits in the distant future. What the report showed was that the future in which this climate change, this catastrophic climate change might occur is actually much closer than we had previously thought. So it brought a sense of urgency to the problem, which makes it more difficult, but also by understanding that these changes and the implications of these changes will occur in our lifetimes, we now avoid the ethical hurdle of making policy decisions without a key constituency, future generations having a voice.

PV: Wow. So in a weird way, it sort of does us a favor because we’re not having to imagine this is something we have to do for people we were never going to meet. This is something that we are going to deal with ourselves.

MC: Yeah, that’s a positive spin on the news. The negative spin would be, well the report could be interpreted as making catastrophic climate change and inevitability, which would then remove all incentives from trying to prevent it. And so this is the challenge that climate scientists and activists and policymakers need to balance.

PV: How does this Green New deal address the concerns on the report?

MC: The resolution provides a sweeping vision of relatively substantial changes to the way Americans would live our lives in order to address this challenge of climate change, but also to try to address several other issues relating to inequality in the country. So there are several provisions in the resolution that are related to this challenge, one of which is for the US to be targeted to be carbon, a net zero nation, so zero emissions by 2030 which is a very ambitious goal.

They also in the resolution try to address the issue of wage inequality, income inequality, and just a lack of opportunity, economic opportunity for many portions of our population by proposing a sweeping investment in infrastructure which will be necessary to achieve the ambitious carbon zero goal by 2030.

PV: American businesses are going to need to be a big part of this effort. What do you think is going to be the biggest challenge to getting them on board?

MC: What we’ve seen in the failed history of climate change policy in the United States is the intensity with which members of the fossil fuel industry, comprising the coal industry, natural gas industry, and petroleum industries, defend the profitability of their corporations by resisting regulations that increase their costs and support transition away from their goods and services. So the challenge becomes, in this case, can we get enough businesses to realize that their incentives align with the broader social incentives?

We’ve seen an uptake of language and some action from companies across an array of industries such as Starbucks and Nestle getting involved in climate change mitigation because their products, cacao trees, and coffee trees, are at dire risk of extinction from catastrophic climate change. So I think there are certain industries that will be supportive of this idea.

We put a lot of attention in the media on the impacts of the clean power plan and other government initiatives on the coal industry, but the coal industry only employs 50,000 people in the United States. And those people could easily be retrained to have gainful employment in industries that have fewer external costs associated with them.

PV: Now any plan that mitigates climate change is going to have to tackle carbon emission. And I know that carbon taxes are one of the ideas being floated. Can you explain how they might work and what the biggest criticism of them is?

MC: Right now America receives 37% of its energy from carbon-neutral sources and so we have a big shift. We need to get rid of that other 63% that’s generated by coal and natural gas. There are several different types of mechanisms we could put in place. We could cap emissions with an emissions quota or we could try to have companies who are responsible for these emissions incorporate the damages caused by those emissions into their profit-making decisions. And the way we would do that would be with something called a carbon tax.

The idea there is that we understand the damages caused by the emissions of these greenhouse gases. We’re able to fully audit and calculate those, categorize those, and then value them to come up with a dollar value per unit, per ton of carbon dioxide equivalent emitted. And recently there was a coalition of very prominent economists who suggested that we use the revenues generated by the carbon tax to give back in lump sum transfers to households.

The pros are that it’s not a prescriptive policy. We’re not telling firms how to run their business. What we’re doing is including a price signal about the damages of these emissions, and then we’re allowing firms to adjust to that price. So they can decide, is the price high enough for them to change or is the cost of changing their production process so great that they’d rather just pay the tax? There’s a concern that we’re making our firms less competitive. So if we’re increasing the cost of doing business for firms located in the US, firms outside of the US will have an advantage. So to address this issue, you have to implement essentially import tariffs to make sure that regardless of where the goods are manufactured, every good has associated with it the price of its carbon impact.

The main concern about a carbon tax is that it’s going to be a regressive policy. When we think about the percentage of income that households spend on goods associated with the production of greenhouse gases, that percentage is greater for low-income houses, which is why in the proposal promoted by the prominent economists, they were calling for a carbon dividend. So we’d implement the tax, but then we’d give these lump-sum transfers to households so they’d be made better off.

The other concern is ideally we’d be setting the tax level with full understanding of the impacts of carbon dioxide emissions and the damages, the dollar value of those damages. In reality, we’re still learning about what these impacts may be and when we are uncertain about the damages about emissions and we don’t know exactly what the cost of reducing emissions or abating for firms is, the tax may not be the best approach. We might want to use an emissions cap.

PV: It’s funny, I’m trying to think of a good metaphor for this as you’re talking about it and it almost sounds like the metaphor would be as if you are trying to assemble an airplane in mid-flight while blind.

MC: In theory for an engineer, a physicist or an economist, it’s an easy problem to solve. But in practice, I think it is more complex because politically there are going to be winners and losers from this policy. That’s why if we look closely at the Green New Deal and the resolution, it might be a little underwhelming because it has these broad goals without many details. But if we think about the way policies are implemented, it’s not the first thing on the page that becomes law. This is a daunting challenge that will require a substantial modification of the way we conduct our everyday lives.

And I think this first step in setting out such an aggressive target could be a useful negotiating strategy in achieving something that will help us avoid the catastrophic damages that we were warned about.

PV: Now, according to activist groups like Climate Mobilization, the only precedent for the kind of plan needed to deal with climate change is the reorganization that the country underwent in preparation for World War II. But do you think it’s possible to rally Americans behind this cause the same way we came together to defeat the Nazis?

MC: Yeah, I think the challenge is we don’t have a mandatory draft to solve this problem. There is no uncertainty in the academic community over the fact that climate change is caused by human behavior. And yet when we talk about this issue, we see a split screen with one person arguing that point and another person arguing the point that this is all natural and part of larger systematic fluctuations.

I think we need to do a better job as researchers to identify what the implications of these changes will be and to address the uncertainty around those potential implications, which will then lead to communication with the media and policymakers to get us to hopefully become more willing to address these costs. And as you said, rally together.

We just saw, unfortunately, maybe a foreshadowing that this is going to be a more difficult chance with the protests in France. Macron was just about to implement an increase in the gasoline tax, which was quite a small increase. And as a result, there were violent protests around the country. And so we have to understand that given the economic inequality in lots of these nations, certain segments of the population will feel extremely put upon.

PV: For more interviews like this, check out or look for Fordham News wherever you find podcasts. I’m Patrick Verel; thanks for listening.


Photo by Patrick Verel:  Marc Conte