Decarbonizing the US Economy: Pathways Toward a Green New Deal

June 11, 2019

The greatest challenge of the 21st century—the climate crisis—is here: The global community has just 11 years to cut emissions by 45 percent and must achieve carbon neutrality by 2050 to prevent temperatures from rising more than 1.5oC, according to climate scientists.

In Decarbonizing the US Economy: Pathways Toward a Green New Deal, Roosevelt’s Mark Paul and J.W. Mason and assistant professor of economics at Colorado State University Anders Fremstad argue that a rapid decarbonization program is not only possible, but that it will create jobs, improve economic growth, and promote equity. Such an endeavor, however, necessitates immediate action and a broad range of policy tools. They outline the three pillars of such an approach: 1) carbon pricing that ensures that we meet our emissions goals in an equitable way; 2) comprehensive regulations to promote decarbonization across the board; and 3) large-scale public investments. The authors also explore how to pay for a Green New Deal, outlining the macroeconomic reasons why more public spending is a pro-growth proposal.

For nearly 50 years, flawed economic assumptions have guided American politics and policymaking, ultimately stunting action on this issue. Economists and policymakers argued that disrupting markets through environmental regulation or carbon taxes would cost too much in terms of economic growth; that government spending to decarbonize the economy would bankrupt our country; and that public investment would be ineffective and wasteful. Combatting climate change in the US and decarbonizing the economy will require a comprehensive social transformation, which includes dismantling the markets-first approach that has dominated policy decisions for nearly half of a century.

We believe that the public sector must play the leading role in directing decarbonization and in a broader Green New Deal movement. Though markets have many virtues, markets alone are not a suitable tool for the rapid, society-wide reorganization of production that this moment requires. The Green New Deal has initiated a critical discussion on mass mobilization that is capable of redefining and improving the planet, the economy, and people’s lives. And it offers the American people a chance to reclaim our collective power and reshape our society into one that is more just and equitable—one that is more focused on human flourishing and less on private profit. We should not let this chance go to waste.

Read more in our summary document, the “Realities of Climate Change” issue brief, “The Macroeconomic Case For the Green New Deal” brief, and our five policy briefs on eliminating fossil fuel subsidies, implementing a carbon cap-and-dividend program, directing credit to green businesses, building a high-capacity national grid, and paying farmers to capture carbon.