This is a guest post from Jason Scott, Managing Partner and Co-Founder of EKO Asset Management Partners.
Thanks to Michael for the opportunity to guest post. I consistently enjoy his often contrarian analysis, but in this case – re the politics of green jobs – I think he’s wrong.
First of all, on the pure messaging front, we (the pro “price on carbon” crew) hardly even tried to share the jobs message broadly until the desperate last few weeks. We can argue back and forth on the strategy and tactical shifts but my evidence is this: the media narrative after the bill died was that “enviros” were disappointed. That’s just bunk - INVESTORS AND LARGE PARTS OF THE BUSINESS COMMUNITY RE DISAPPOINTED TOO. Large corporates holding up cap ex for regulatory certainty, sellers of equipment, private equity firms financing projects (think Blackstone not John Doerr) and small businesses starting nascent energy efficiency and manufacturing companies were all very disappointed. Not just greens. Their businesses might die and their access to capital and therefore ability to hire will go away. The fact that the media still thinks it was just “greens” are disappointed means we never broke through on the economic message to the media, much less the general public.
Second, putting aside the substance of whether or not one can "prove" the bill would have created jobs, lets talk about the politics of the typical left-right dynamics. Frankly, I’m a bit puzzled by the opposition to carbon pricing from some conservatives. Nothing is more conservative than a market-based solution. Pricing carbon as the economic externality makes sense - it is obstructionism and plain politics, not truly ideological. But most conservatives are painting a market-based solution as a liberal, big government tax on the economy. (Never mind that today’s seemingly “cheap” gasoline is heavily subsidized by dozens of hidden taxes on consumers from the cost of our military in the Middle East and providing security for oil tankers to the BP Gulf Coast disaster). If politicians are so concerned that putting a price on carbon will hurt taxpayers’ wallets, we have a simple solution: Return the money that the government collects through carbon pricing to taxpayers. Businesses will become more efficient, pollution will drop, and taxpayers – not government -- will get the revenues. What conservative could oppose that?
Now, can I talk about substance just a little bit? THIS REALLY REALLY IS ABOUT JOBS. Regulatory Certainty = Investment = Jobs. And before this November, had we passed a price on carbon, the jobs could have started. Surely by 2012, there will be REAL results from a price on carbon. If that’s dead, in the short term, if we don’t pass extensions of tax and grant programs for efficiency and renewables, the clean economy as we know it in America will die. Every dollar that would have been invested here will go to China, India or Europe and they will get the resulting jobs and we will never get them back. Capital flows like a river, looking for highest returns for a given risk. It doesn’t wait for the US Senate to decide what to do!!!
Finally, whether we like cap and trade or not, or the jobs argument or not, a price on carbon would create the revenue (“polluters pay”) to fund energy R&D, Carbon Capture and Storage and address regional disparities in any energy and climate legislation. Plus carbon offsets lower compliance costs and create revenues in impacted sectors like agriculture. But many of the "good guys" thought we could pass an energy bill with a renewable energy standard if we just gave up on the price on carbon. Looks like they were wrong. A price on carbon creates the revenues to pass a real energy climate bill. Dozens of well meaning pieces of legislation that look easy to pass, aren’t. Putting a cap on some carbon emissions is the best chance we have to pass meaningful climate and energy legislation. Messaging snafus be damned!