Want to Really Boost the Economy? Stay in the Paris Agreement

trump pulls out of climate agreement
WASHINGTON, DC - JUNE 01: U.S. President Donald Trump concludes his announcement to withdraw the United States from the Paris climate agreement in the Rose Garden at the White House June 1, 2017 in Washington, DC. Trump pledged on the campaign trail to withdraw from the accord, which former President Barack Obama and the leaders of 194 other countries signed in 2015. The agreement is intended to encourage the reduction of greenhouse gas emissions in an effort to limit global warming to a manageable level. (Image credit: Win McNamee/Getty Images)

President Donald Trump yesterday justified pulling the United States out of the Paris climate accord largely, he said, because it would hurt the United States economy.

"As of today, the United States will cease all implementation of the nonbinding Paris accord and the draconian financial and economic burdens the agreement imposes on our country," Trump said at yesterday's (June 1) news conference.

But the idea that the Paris Agreement will harm the economy is nonsensical, said Jonathan Koomey, a lecturer in Earth Systems at the School of Earth, Energy & Environmental Sciences at Stanford University. For one, the agreed-upon emissions cuts are nonbinding; the only legal obligation is that the United States report its carbon emissions. So if the required cuts are too damaging to the economy, the United States is free to revise its emissions goals, he said.

"You can't have nonbinding standards that are draconian," Koomey told Live Science.

Beyond that, most economic analyses suggest that environmental regulations may actually boost the economy, both because they spur innovation and because they prevent harm, Koomey said. [Trump Pulls Out of the Paris Climate Deal: 5 Likely Effects]

Harm reduction

In his speech, Trump cited statistics from a coal-industry-funded think tank, called the National Economic Research Associates, which claimed that the burdens from the nonbinding climate agreement would cost about $2.7 million in total jobs lost by 2025. He claimed it would cut production in the paper industry by 12 percent, the cement industry by 23 percent, the iron and steel industry by 38 percent, and the coal industry by 86 percent. He also cited a $3 billion pledge the United States made to help developing countries reduce their carbon emissions. (The annual United States budget is $3.8 trillion, meaning the pledge amounts to less than 0.1 percent of yearly expenditures.)

The idea that environmental regulation hurts the economy is not a new one, Koomey said. With almost any new regulation, entrenched interests say the costs will harm the economy and eliminate jobs.

"In virtually every case that's been false," Koomey said.

The reason is simple: Environmental pollution costs money, reduces productivity and kills people, so reducing it typically has financial benefits for society. For instance, because carbon dioxide acts as a lung irritant,, fully implementing the Clean Power Plan set up by President Barack Obama would lead to about 3,500 fewer deaths by 2020, according to a 2015 study in the journal Nature Climate Change. A peer-reviewed study conducted by the Environmental Protection Agency in 2001 found that the Clean Air Act, which was passed in 1990, prevented 160,000 premature deaths in 1990, 130,000 heart attacks, 86,000 emergency-room visits and 13 million lost days of work due to the negative health consequences of air pollution. The benefit-to-cost ratio, according to the EPA, was 30 to 1. [5 Ways Climate Change Will Affect Your Health

"Environmental pollution costs society money and it kills people," Koomey said. "So if you fix that problem, then society is better off."

That's not even addressing the trillions of dollars that will be spent if climate change leads to some combination of coastal flooding, droughts, water shortages, heat waves, crop loss, famine and war, he added. According to a 2015 study by Citigroup, negative effects from climate change could total $44 trillion if the United States fails to shift to more renewable energy sources.

Innovation and wealth creation

However, environmental regulations and climate change goals don't just prevent harms and lead to job loss from more polluting endeavors, they also fuel innovation and new technologies, which directly grow the economy and produce new jobs, Koomey said.

As new regulations or incentives come on board, companies find ways to meet improved standards in the most cost-effective way possible. Thus, cleaner technologies get cheaper and become a bigger portion of the environment.

For instance, the cost of solar energy has plummeted 80 percent in the last five years, while wind technology has dropped in cost by two-thirds over the same period, and are now often cheaper than more-polluting energy sources, Koomey said. That is largely thanks to natural efficiencies that come with scaling up manufacturing levels. Technical innovations ― such as the use of carbon-fiber blades rather than metal blades in wind turbines, the elimination of extra gears, and computers that use sophisticated modeling to best harness and release energy from wind and solar power plants ― have also played a role, he said.

"We're substituting smarts for parts, we're substituting better materials and figuring out more clever ways to do the same tasks," Koomey said.

Improved energy storage has progressively increased the fraction of energy that can be reliably pulled from renewable sources such as wind and solar, without causing energy shortages and brownouts, he said. For instance, energy companies are now using old, abandoned coal mines to generate hydroelectric power during the day by pouring water deep into mines, then pumping it out at night, when the energy grid has much lower power demands, he said.

"People complained about wind and solar technology 30,40 years ago and said if you put even a few percent of that on our grid it will destabilize it, and that turned out to be nonsense," Koomey said.

Now, utility systems can easily use 30 to 40 percent renewable energy without causing any interruptions in power supplied. With regulations in place, that same cycle of innovation is likely to proceed for years.

OF course, a major source of carbon emissions comes from cars, and electric vehicles have not taken off in the same way as solar and wind power have. However, China has already mandated that a certain fraction of its cars must be electric by 2025, and because it's such a huge market, any major car companies will need to develop attractive electric vehicles for this market if they want to compete, Koomey said. By relaxing fuel-efficiency standards and removing momentum for producing electric cars, Trump's policies will only encourage U.S.-based car manufacturers to lag behind, he said.

All of these new technologies create jobs and products that grow the economy, Koomey said. A report by the Rocky Mountain Institute, a clean-energy think tank, estimates that "decarbonizing" the economy will add $5 trillion to the economy. A 2016 study, funded by former U.S. Treasury Secretary Henry Paulson, billionaire and former New York City Mayor Michael Bloomberg and hedge-fund manager Thomas Steyer, found that reducing carbon emissions by 80 percent by 2100 would actually save money, because the increased investment in renewable energy would be more than offset by reduced costs associated with fossil fuels.

People who oppose climate regulations "are looking at this exactly wrong. They think this is somehow this great burden." But entrepreneur Richard Branson "has called the climate problem the single greatest wealth creation opportunity in human history," Koomey said.

Originally published on Live Science.

Tia Ghose
Managing Editor

Tia is the managing editor and was previously a senior writer for Live Science. Her work has appeared in Scientific American, Wired.com and other outlets. She holds a master's degree in bioengineering from the University of Washington, a graduate certificate in science writing from UC Santa Cruz and a bachelor's degree in mechanical engineering from the University of Texas at Austin. Tia was part of a team at the Milwaukee Journal Sentinel that published the Empty Cradles series on preterm births, which won multiple awards, including the 2012 Casey Medal for Meritorious Journalism.