By proposing a $100 billion "green stimulus" package to create jobs and cut carbon emissions, President-elect Obama has wisely decided not to let the economic crisis get in the way of addressing climate change. He may even see the crisis as a way of tackling climate change faster. In September his campaign's energy adviser, Jason Grumet, told a Harvard crowd that the conversation about climate change would be transformed when legislation addressing it is seen as "the next big American stimulus package."
That's good news. But so far Obama has stuck to the well-worn path of top-down subsidies for wind and solar energy, infrastructure investment and a modest revival of a home weatherization program for the poor. The problem with this plan is that it turns energy consumers as well as power producers into supplicants. Energy-industry subsidies are notoriously poor public investments--yielding few jobs or jobs of short duration because the government money can make the industry too dependent to be sustainable. Subsidies for specific technologies often benefit the well heeled--as with California's Million Solar Roofs initiative. Green is a luxury, out of reach for many Americans struggling with rising energy bills. Energy consumers get the message that they're victims of high prices rather than actors who could play a powerful role in moderating energy demand.
But with a bolder plan to make working families the agents of change, Obama can take a historic opportunity to remodel the way we generate, transmit and use energy, stimulating the economy in the short term and building a broad green constituency of workers and industry in the long term.
For a green stimulus plan to achieve its goals, Obama needs to popularize environmentalism and empower Americans to control their energy use. Instead of a million solar roofs and hundreds of thousands of pricey Priuses, we need 30 million well-insulated ceilings and 15 million Chevy Cobalts (or similar cars that get thirty mpg or more) for the majority of American households that make less than $60,000 a year. A populist energy-efficiency stimulus plan will create jobs as it reduces energy use and costs, eliminates emissions and puts families in charge of their energy consumption. The stimulus package also needs to address the inadequacies and inequities of our system of generating, transmitting and consuming electricity so that the greatest burden does not fall disproportionately on working families. An ambitious overhaul of America's power grid would have short-term stimulus benefits while kicking off a long period of technological and commercial innovation.
At the heart of this green stimulus opportunity is recognizing that rising energy prices have been particularly unfair to low- and moderate-income Americans, draining their finances and putting them at the mercy of fluctuating global energy markets. While the average family spent about 4 percent of its income on gasoline in 2006, those making $15,000 to $40,000 spent 9 percent, and by this past summer they were spending 10 to 14 percent of their income on gas. Better-off families were able to change jobs or houses or buy a more efficient car, but those with lower incomes had few options. In a cruel trick of the market, rising gas prices made the least efficient gas guzzlers the cheapest cars available. Chained to high energy expenditures, low-income families saw their credit and standard of living erode so that by last summer 70 percent of them told the National Energy Assistance Directors Association that rising energy prices had changed their food-buying habits. Many said they skipped payments on credit cards, utilities, mortgages and auto loans to pay for gas, which meant that rising energy costs had spilled over into already shaky mortgage and credit markets. In 2008 utilities cut off 8 percent of accounts for nonpayment.
What recourse do strapped households have? Since the 1970s Washington has offered partial help paying utility bills to very low-income families through the chronically underfunded Low Income Home Energy Assistance Program. However, neither direct payments nor proposals such as $1,000 stimulus checks or a gas tax holiday will reduce the underlying hemorrhage of fuel, money and greenhouse gas emissions from leaky homes. Crucially, direct payments perpetuate a cycle of dependence and wasted energy without giving households the power or access to capital to manage their energy use.
Helping poor and moderate-income families invest in energy efficiency will not only strengthen their finances; it will benefit the economy as a whole. The Energy Department estimates that 15 million homes owned by poorer Americans could be weatherproofed for less than $3,000 each, cutting their energy use by 20 percent--in effect creating an annually recurring stimulus payment of about $400. This weatherization opportunity should be extended to moderate-income families making up to $75,000 a year, allowing them to install energy-saving technologies like programmable thermostats and energy-efficient refrigerators. And weatherization creates jobs--fifty-two direct jobs and twenty-three indirect jobs for every $1 million invested, according to the Energy Department. Vouchers and low-interest loans to drive this investment would help correct working families' disproportionate share of the energy burden. Low-interest loans for energy efficiency--which have a history of reliably increasing homeowners' ability to make payments--should be part of the mortgage bailout plan as well.
Another way to make moderate-income families agents of change can be found in their cars. While the price of gas has fallen from its heights, wildly fluctuating energy prices are clearly part of the future. Giving low- and moderate-income households access to very low-interest loans for cars that get thirty mpg or more, sweetened with vouchers and incentives to scrap old gas guzzlers, would reduce the strain of commuting while cutting pollution and carbon emissions. Such subsidies should be a part of any bailout of the auto industry. They may seem extreme, but in the past they were made available to the well-off in the form of the $3,150 tax credit offered to Prius buyers.
While Obama's plan includes money for mass-transit projects, we might move more people to work by encouraging flexible transit--vanpools, paid carpool services or other programs to serve far-flung exurbs. Americans who take mass transit to work are outnumbered three to one by those who carpool, bike or walk. More may be persuaded to leave their cars at home if their schedules and routes are accommodated, and if they are rewarded with a green voucher. Businesses whose transit choices reduce traffic congestion and emissions would also benefit from reduced expenses, good PR and on-time employees. Wal-Mart, which has more than a million workers, might be enticed to provide vanpools for its employees, which would benefit workers, the company and the surrounding community.
While insulation, compact cars and vanpools may not supply the sort of whiz-bang jobs associated with the fantasy of a green economy, they have the advantage of being quick to implement and relatively inexpensive.