So says Obama. From Real Time Economics:
Senior Obama administration officials say the nation’s economic recovery could stall if Congress doesn’t pass a climate bill this year.
The officials warn that investors are so uncertain about the future cost of emitting greenhouse gases that they are sitting on capital rather than pouring it into “clean” technology, new power plants or energy-intensive manufacturing.
The administration has for months been moving away from advocating climate legislation primarily as an environmental issue and toward a jobs-creation argument. But the comments are a marked shift to a stronger rhetoric: fears of prolonging the recession. The White House says spurring “clean,” or low-greenhouse-gas-emitting energy, can help lay the foundation for the 21st-century U.S. economy.
“Right now there’s a lot of money on the sidelines,” said Energy Secretary Steven Chu. “Capital on hold means investments not being made, investments not being made means jobs not being created,” he said at an Export-Import Bank conference last week.
Companies that could capitalize on a carbon-constrained economy, such as General Electric Co., Alstom SA, Areva, Babcock & Wilcox, a unit of McDermott International, Siemens AG, Chesapeake Energy Corp. and First Solar Inc., say policy clarity will focus investment. So do emitting businesses that will need to adapt, such as American Electric Power Co. and BP PLC.
Ambiguity, however, breeds risk, which begets financiers’ reluctance.
It is an interesting argument. Financial decisions makers will always delay their decisions until some certainty can be had. But, I don’t think indecision is hampering recovery. I think it is only limiting the potential for growth in clean energy. Nothing should change the outlook for conventional energy because climate change legislation’s aim is to not reduce the amount of conventional energy but reduce carbon. Financial decision makers regarding conventional energy should be much savvier when facing this uncertainty because the room for change is available post investment. Unless congress is going to enact climate legislation that will completely cripple the conventional energy industry, (it won’t) carbon
will be priced should be priced where alternative energy will become competitive. There is no metric for pricing carbon at it’s value. (Pigovian tax) Politics determines it. Cap and trade is the best mechanism for private investment to determine the actual cost of carbon.
What the issue here is, investors wishing to take advantage of more growth in clean energy are waiting on congress to make clean energy more competitive. So, while indecision is not hampering recovery, it certainly is hampering growth. And given this comment:
“People need to realize this is a global market for our capital,” GE’s Walsh said. “Our money is going to go where we see long-term certainty … and if Europe has a better framework, that’s where our money’s going to go,” he said.
I would have to say that a climate bill is not an issue of environmentalism anymore. Its about helping new industries compete with a global mindset that may have more forward thinking politicians than America does. So maybe I should retract my comment: Indecision with climate change legislation isn’t hampering our recovery; its hampering our competitiveness with the rest of the world in clean energy.