climate change - The New School SCEPA

This year’s materials for the G20 Summit include a SCEPA research paper co-written by Willi Semmler, the Director of SCEPA’s Economics of Climate Change project. The paper investigates how to recover the European Union (EU)’s sense of common aims after the Covid-19 crisis to address challenges such as long-term scarring of the labor market, Climate Change, European social and health care system and sustainability of sovereign debt. 

What climate policies must be part of the global Covid-19 recovery plans to ensure better pathways to a low carbon economy?

SCEPA Climate Economics Director Willi Semmler and co-authors Francesco Saraceno and Brigitte Young published a new article asking how the European Union (EU) can recover its sense of common purpose after the Covid-19 crisis exacerbated division between and among member countries. The authors recommend a shared policy agenda for recovery to ensure Europe’s resilience in the face of future crises.

The economic and political consequences of the union’s divergence between core and periphery, including the dangerous surge in populist movements in almost every EU country, is the result of “a lethal mix of inadequate institutions and political choices dictated by flawed economic thinking.” The EU’s cohesion -- key to its economic and political viability -- cannot be trusted to blind faith in “efficient” markets, as some have claimed. This orientation has allowed the EU to become a club in which each member cares only about its own costs and benefits, Semmler and his co-authors explain.

Instead, the authors emphasize the importance of reforming institutions for macroeconomic governance (most notably fiscal policy) and prioritizing strong social welfare policy to ensure cohesion and the future of the union. This entails tackling European economic, fiscal, and social policy in tandem to create a sustainable EU recovery from the pandemic-driven downturn. The key for the EU, they argue, is to enact fiscal policies that protect against macroeconomic shocks and distributional problems while also creating and strengthening public goods such as a shared health care policy, a better Social Security system, and a coordinated transition to climate-neutral energy and transportation. These public goods are essential to reverse the harmful divergence trend in the EU and to build a more cohesive Europe that can more effectively take on a range of economic and political challenges.

As the impacts of climate change – from wildfires to flooding – become impossible to ignore, calls to adapt our economy are joined by calls to remove and store existing carbon dioxide, a process known as carbon drawdown. In response, market actors have launched profitable ventures in mechanical-chemical carbon dioxide removal (CDR) and sought government support. But just how effective and sustainable are these ventures?

In a recently published paper, New School for Social Research PhD candidate Andreas Lichtenberger and co-author June Sekera, Director of the Public Economy Project at the New School’s Heilbroner Center for Capitalism, review the literature on carbon dioxide removal and find that the use of public funds to subsidize commercial CDR is often counterproductive. They argue that governments should instead approach carbon reduction as a public service.

The paper focuses on the two CDR options which have gained the most legislative traction: point-source capture and direct air capture, which together the authors term “industrial carbon removal” (ICR). The authors review and discuss the effectiveness of each ICR method, asking whether it removes more CO2 than it emits, determining its resource usage at scale as well as its biophysical impacts.


Fig. 1 Full life cycle. Pathways associated with industrial carbon removal (ICR). (Image elaborated from Wikipedia entry on carbon capture and utilization and from Stewart and Haszeldine 2014.) 

The paper reveals that commercial ICR methods incentivized by governments emit more CO2 than they remove and thus do not meet the needs of atmospheric CO2 reduction. Some studies have found ICR methods (both point-source capture and direct air capture) to be net CO2 reductive through methodological choices by ignoring aspects of the process (like the fact that captured CO2 is primarily used for oil production) or assuming low-or zero-carbon power. The authors also find inadequate literature examining the resource usage and biophysical impacts of ICR methods at a significant scale.

The review shows that scientific literature does not support the use of public funds to subsidize commercial development and deployment of ICR, and that policy decisions have thus far been finance-driven, not science-driven. Instead, the authors recommend that governments approach atmospheric carbon reduction as a public service, like water treatment or waste disposal, because storage – not sale – of captured CO2 is the only way to achieve a true reduction of the gas.

Research from SCEPA economists studying the economic impacts of climate change and mitigation policies show green bonds have great potential to help countries across the world increase environmental investments and reach emission targets.

Willi Semmler, NSSR’s Arnhold Professor of International Cooperation and Development, says his students reflect the spirit of the time and can play an active role in shaping the world of the future.

Germany’s Die Zeit, one of Germany’s most influential newspapers, featured the work of Economist Willi Semmler, director of SCEPA’s Economics of Climate Change project, on climate policy and strategy.

Adding green bonds to current carbon taxes is the most effective strategy to achieve global environmental goals, according to research by SCEPA economist Willi Semmler and economists at the Economics Research Institute in Berlin (DIW).

SCEPA economists worked with the IMF’s Independent Evaluation Office (IEO) on their June 2019 evaluation of the IMF’s advice on unconventional monetary policies.  

Economist Willi Semmler, director of SCEPA’s Economics of Climate Change project, co-authored an IMF Working Paper modeling how climate disasters affect population segments, infrastructure, housing, and private capital, possibly leading to poverty traps.

The increasing frequency and severity of climate disasters around the globe is a great challenge for society, academics, and policy makers. To mitigate climate change, members of Congress have proposed a Green New Deal -- a host of economic policies aimed at tackling climate change from the creation of sustainable jobs to pollution reduction. 

 

Tackling climate change requires transitioning to a green, sustainable economy. But will green transformations that lesson our negative environmental impacts also create high-quality jobs? In a new report from the UN, economist Willi Semmler, director of SCEPA’s Economics of Climate Change project, and his co-authors demonstrate it is possible, but only if policymakers rise to the challenge.

While it’s difficult to quantify overall employment impact, available data shows increased environmental spending can create jobs. In the United States, estimates show that a 10-year green recovery program investing $100 billion in areas like mass transit and solar power would create millions of jobs. Results are also promising for other high-income countries. While data for developing countries is less clear, jobs in green sectors, like energy construction and waste management, are growing. Countries like Brazil, Lebanon, Morocco, and South Africa, where an agreement was signed in 2011 with the aim of creating at least 300,000 green jobs, have seen positive employment effects.

But to ensure sustainable economic transformations enhance the job market, the quality of jobs needs to be considered, not just the quantity. Because technological shifts will change labor demand and skill requirements across most industries, industrial policies must support employers in creating training systems that empower workers as they take on new jobs or fulfill new assignments. Public employment services must help job seekers change sectors, while education reform is necessary to ensure young workers can enter the labor market.

The shift to a greener economy must also offer opportunities for small firms and startups to innovate and lead the way. Improving access to credit, for example, can promote self-employment and entrepreneurship. Introducing revenue-neutral green taxes can force a movement of labor to greener sectors and create jobs. Finally, an open dialogue and cooperation between governments and interested parties, such as trade unions, are essential to ensure these changes go smoothly.

While a greener economy can create high-quality jobs, it will not do so automatically, but must be supported by social and labor policies that reduce the burden of the transition to a low carbon economy, and promote efficiency and equity.

“Enhancing Job Creation Through Green Transformation” by Michela Esposito, Alexander Haider, Willi Semmler, and Daniel Samaan appears in Green Industrial Policy: Concept, Policies, Country Experiences, published by the Partnership for Action on Green Economy, a U.N. Environment Programme initiative, in partnership with the German Development Institute. Daniel Samaan is a New School PHD and a senior researcher at the U.N.'s International Labour Organization, and Alexander Haider is a current New School PHD student.

INET and SCEPA hosted a conference on Sustainable Growth at The New School in New York City on April 25-26, 2014.

Working Paper— This working paper sheds light on the various theories which attempt to explain the relationship between economic growth and climate change.