CEPR - Center for Economic and Policy Research


En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press It's Cheapest to Push Clean Energy in a Downturn

It's Cheapest to Push Clean Energy in a Downturn

Wednesday, 16 June 2010 04:29

In his speech on the BP oil spill President Obama discussed his clean energy agenda. At one point he said: "There are costs associated with this transition, and some believe we can't afford those costs right now."

It would have been worth pointing out that the opposite is true. Measures to shift to alternative forms of energy require increased resources. At present, with the economy operating well below full employment it has a vast amount of unemployed labor and idle capacity. In principle, some of these idle resources can be used to promote the switch to alternative energy or for measures that promote conservation.

We would have less money for this transition if the economy were near full employment and there was little idle capacity. In that situation, the only way to get resources for the transition would be by pulling them away from their current uses. This would mean effectively some types of tax on current consumption patterns. At the moment, any taxes on can be fully rebated to consumers with little cost to the economy.

Reporters who cover this issue should be aware of these facts. It would have been appropriate to correct President Obama on this statement.

Comments (3)Add Comment
Right on....
written by AndrewDover, June 16, 2010 7:37
Yes, absolutely.

Now is the time to build long lasting infrastructure. Every commuter rail line should be extended, every house and apartment insulated. Defense electronics scientists need to diverted to energy research so we can deploy the new nuclear and solar technologies in the next 10 years.
written by izzatzo, June 16, 2010 7:51
We would have less money for this transition if the economy were near full employment and there was little idle capacity.

So when we're on the production possibilities curve (PP) we have less money and when we're below it we have more money?

No, wait ... we have less money in general but more money for making major changes, so like, you know, the time to provide aircraft maintenance is when airplanes are on the ground, not when they're flying and making money, because it cost a lot more to keep mechanics from falling off the plane while repairing them in the air, also known as the mechanics tax.

That's not it either ... it must be start-up shut-down costs, all those things that use oil have high shut-down cost of switching to alternatives which have high start-up costs, but once accomplished, the lower running costs over time make it worth it. For example, hiring fishermen and oil rig workers to install solar collectors and windmills at oil refineries in Louisiana cost a lot less right now, same as clean-up workers, so this is time to do it.

Doesn't sound right either ... this must be it ... say there's a bunch of oil lobbyists sitting around discussing the opportunity cost of alternative energy during a deep recession. Their recommendation to Obama is look, we're all headed to hell in a handbasket, trapped in a runaway train going down the mountain with abolutely no options but to hang on for dear life, and this is no time to be thinking about alternative anything. The opportunity cost of changing anything right now is extremely dangerous, so stay the course if you want to get out of this mess alive.

Stupid liberals.
written by diesel, June 16, 2010 2:19
And this quote from the WaPo article, "congressional Republican leaders warned him (Obama) not to use what he described as the worst environmental disaster America has ever faced" to further his political agenda." should read "Congressional Republican leaders, dismayed at the prospect of their own political agenda going up in smoke, warned him etc.

And if he were to use this opportune moment, what is the "or else" that follows their warning?

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.


Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.