The last few weeks in the United States have seen an unprecedented number of consecutive natural disasters—including both hurricanes and wildfires—exacerbated by our changing climate. In fact, a September poll shows that a majority of Americans assess that it is likely that climate change indeed worsened the impact of these events.
In this context of heightened public awareness and increased devastation due to climate change, EPA Administrator Scott Pruitt signed a rule last week that will begin to roll back the Clean Power Plan (CPP). The Administrator made an economic argument in support of the repeal, claiming that regulations “ought to work with folks all over the country and say, 'how do we achieve better incomes by working with industry, not against industry'.”
However, all evidence points to the fact that climate action is good for the economy. That’s why many companies in the private sector have supported the CPP, arguing that it is good for business.
The state of California, which has the sixth-largest economy in the world, is in many ways a poster child for this argument: In 2015, California simultaneously reduced its greenhouse gas emissions and achieved its strongest economic growth since 2005. The state has some of the most ambitious climate targets in the United States, and in 2016, it created more jobs than any other state for the third year in a row.
California isn’t unique. The renewable energy industry overall is creating jobs at a rate of 12 times the rest of the U.S. economy. One recent study found that putting cities on a climate-friendly growth trajectory could save as much as US$22 billion by 2050 and avoid carbon emissions equal to India’s entire annual footprint.
The private sector sees this. When the CPP was instated in 2015, 365 companies and investors, including General Mills, Mars Inc., Nestle, Staples, Unilever, and VF Corporation, wrote a letter in support of the plan. In it, they stated that their “support [was] firmly grounded in economic reality … Clean energy solutions are cost effective and innovative ways to drive investment and reduce greenhouse gas emissions. Increasingly, businesses rely on renewable energy and energy efficiency solutions to cut costs and improve corporation performance.”
Since then, four of America’s largest companies—Amazon, Apple, Google, and Microsoft—filed amicus briefs in support of the CPP. As large consumers of electricity, these businesses sought to limit their environmental impacts in response to concerns about climate change. While they have developed their own renewable energy facilities to meet their sustainability goals, they argued that the Clean Power Plan would provide them with more and more cost-effective options.
Even in the traditional energy industry, which arguably is more vested in a coal-friendly future than business writ large, not all companies have the same perspective on the CPP. While Peabody, America’s biggest coal miner (which came back from bankruptcy under the new U.S. presidency), welcomed the repeal, utilities have not been as vocally opposed. In fact, Reuters found that of 32 utilities in the 26 states that filed lawsuits over the CPP, “the bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal.”
Business action in favor of climate-compatible solutions gained momentum leading up to the Paris Agreement in 2015, and it has continued since. For example, 619 companies are taking bold climate action through the We Mean Business coalition, which represents a market capitalization of US$15.5 trillion, including 32 companies with individual market capitalizations of more than US$100 billion. These companies emit a total of 2.31 gigatons of in their direct operations and purchased electricity, which is equivalent to the annual emissions of the Russian Federation. Moreover, more than 100 of these influential companies are committed to sourcing 100 percent renewable power globally, working to massively increase demand for—and delivery of—renewable energy.
Not only do the economic claims of the current EPA seem unlikely, but there is increasing evidence that the agency’s policies may harm the economy. Companies recognize this, which is why we’ve seen so much business support for the CPP. It’s also why business will continue to lead on climate action more broadly, even if it must do so without the policy frameworks that support U.S. leadership on this issue. Indeed, other countries around the world, including China, increasingly recognize that climate leadership translates to economic leadership—a perspective that they are likely to be rewarded for in the long run.