A majority of Americans support prioritizing the development of renewable energy sources. Two-thirds of U.S. adults say the country should prioritize developing renewable energy sources, such as wind and solar, over expanding the production of oil, coal and natural gas, according to a survey conducted in June 2023.[1] President Carter put solar panels on the roof of the Whitehouse in 1979. President Reagan removed them. While these panels were used to heat water, the US failed to pursue investment in solar and wind, ceding these technologies primarily to China which, seeing the future, provided ample funding for their industry to develop these technologies at scale. Labor, even in the US, only accounts for about 5-10% of the cost of producing solar panels, since, like the rest of manufacturing, it is largely automated. The US could pursue industrial policies to support US manufacturing of these products. The Chinese created demand for their own products: they have one third of the world’s installed solar capacity (albeit still a tiny fraction of their overall energy generation). Wind and solar power generation are now among the cheapest ways to produce power, even without considering climate change.

Climate change also calls for investments in other sources of greenhouse gas emissions as we discussed in Part 2. Electric vehicles, and heating homes using heat pumps are two of the biggest. These should be viewed as capital investments and as such are good candidates for long-term financing. Such investment will also generate huge numbers of jobs. Unfortunately, the ongoing tax cutting which does zilch for the poor who don’t pay income taxes, is already causing huge, and unsustainable, deficits to pay for basic budget items such as Social Security and Medicaid. We are shooting ourselves in the foot by not investing in these technologies. Technology change is inevitable but inevitably leads to changes in demand which in turn can hurt workers in the effected trades. Locating new industries in areas hurt by transitions can help.

Fortunately, climate change investment can be largely market driven. Maine homeowners are installing heat pumps at such a rate that half of households will use them by 2027[2]. In this case the operational savings are a major factor: most fossil fuel central furnaces in Maine use finicky oil heat which is expensive and has to be delivered. Subsidies for installation help with the upfront costs in Maine. 

In general, economists feel it is better to use the market rather than mandates to achieve greenhouse gas reductions. One suggestion is a carbon tax – an idea that appeals to economists because it operates via market mechanisms. The example of Maine we just mentioned shows how effective this can be: the high price of oil makes heat pumps more attractive, and people respond. A tax on carbon could be revenue neutral – the idea is not to increase taxes but to make fossil fuels comparatively more expensive and other sources of energy less so^[3]. Simple, market oriented, and effective. A carbon tax incentivizes the most cost-effective CO2 reductions whether by households or industry. Basically, it is not only possible for the US to get to net zero, but doing so would spur our economy and employment, move us out of archaic fossil fuel technology into the present, be good for business overall, and be fun as well. All it would take is a bit of enthusiasm and goodwill and savviness about the forces of disinformation. Think of it as a war effort where nobody gets killed, we build plowshares instead of swords, and we all end up richer in the end. Or wallow in expensive, unproductive, “climate mitigation” and wait for temperatures to rise to truly unsustainable levels. And what will our kids do then?

[1] Blazina, Carrie. 2023. “What the Data Says about Americans’ Views of Climate Change.” Pew Research Center. August 9, 2023. https://www.pewresearch.org/short-reads/2023/08/09/what-the-data-says-about-americans-views-of-climate-change/.

[2] https://www.nytimes.com/2024/03/02/climate/heat-pumps-maine-electrification.html?unlocked_article_code=1.q00.ZwuT.zEO4dfyc_4YD&smid=url-share. There are 580,000 households in Maine

^[3] Revenue neutral means the taxes collected on carbon would be returned in other ways, such as through a reduction in income taxes, the UBI, or subsidies for investment.