By Alli Gold Roberts
The public health toll and economic ramifications of the COVID-19 pandemic are staggering. As we work to manage the crisis and recover, there are lessons to be learned about the importance of early, collective action and taking preventive measures in the face of systemic risks. We can apply these lessons to avoid the worst impacts of other major global threats such as the ongoing climate crisis to our health and economic well-being.
There is no question that burning fossil fuels contributes to our rapidly warming planet. An over-dependence on fossil fuels is therefore an urgent systemic risk that needs to be addressed.
Today, the Pennsylvania Department of Environmental Protection is diligently working to ensure Pennsylvania is well positioned to mitigate this risk. DEP staff are preparing for the Commonwealth to join the Regional Greenhouse Gas Initiative (RGGI), a multi-state effort in the Northeast and Mid-Atlantic to cap and reduce carbon pollution from the power sector.
We urge them to join RGGI in order to help Pennsylvania transition to a low-carbon future while also strengthening the state’s economy as a whole. Developing such resilience is vital as we look for ways to “build back better” from the immediate crisis and protect against future economic shocks.
For many years, influential investors and companies have recognized the need to decarbonize our economy. Climate change, like today’s pandemic, poses a significant risk to large and small businesses and local economies. Increased instances of floods, droughts and erratic temperatures are hurting farmers and threatening the availability and affordability of key commodities such as cocoa, coffee, corn, wheat and soy.
Extreme weather events disrupt or stop business operations and break agricultural and other supply chains—and science tells us these impacts will only worsen if we do not act now to reduce carbon emissions.
Earlier this year, BlackRock CEO Larry Fink penned a letter stating that climate risk is “compelling investors to reassess core assumptions about modern finance.” With this in mind, BlackRock, the world’s largest asset manager, will exit investments that have a “high sustainability-related risk” and launch new investment products that screen-out investments in fossil fuels.
BlackRock is just one of the many investors moving in this direction: they are among more than 450 investors engaging the world’s largest corporate emitters to take necessary action on climate change through Climate Action 100+.
U.S. companies, meanwhile, are working to decarbonize their operations and invest in clean energy. In Pennsylvania, more than 70 companies are committed to science-based carbon reductions, while 61 are committed to powering their operations with 100 percent renewable energy. For example, 70 percent of the U.S. steel industry alone has either set or agreed to set emissions reduction targets in the last year.
However, as we have seen with the current pandemic, the private sector cannot tackle the impacts of climate change on its own. Smart policies and state government leadership also have important roles to play. Eighteen major Pennsylvania companies and universities agree: American Eagle, Mars Inc., Nestle, Saint-Gobain and others sent a letter to state lawmakers in 2019 calling on them to support policies to accelerate the transition to a low-carbon economy.
“Pennsylvania has been an energy leader for centuries, but the current energy system is at a turning point. In order to maintain our energy leadership, the Commonwealth should embrace clean energy and foster the rapid transition to a thriving, low-carbon economy,” the signatories wrote.
By joining RGGI, Pennsylvania would be taking steps to heed this call and ensure Pennsylvanians reap the benefits of a clean economy.
RGGI is already helping states across the region reduce emissions, create jobs and strengthen the economy. Since 2009, RGGI states have helped to slash electricity sector emissions in half. At the same time, economic growth in those states outpaced the rest of the country while electricity prices decreased, despite price increases in other states.
A 2018 study found that RGGI brought 14,500 new jobs to the Mid-Atlantic and Northeast region from 2015 to 2017, as states used proceeds raised from RGGI’s carbon allowance auctions to support growth in the clean energy sector. Smart investment of RGGI proceeds will be especially important as Pennsylvania works to recover from the economic collapse brought on by COVID-19.
Moreover, RGGI’s market-based approach is the most efficient, economically friendly way to reduce carbon emissions. In fact, hundreds of major investors and companies—including BP, Danone, Equinor and PepsiCo—support a market-based approach to reduce carbon emissions and prefer to leverage the power of competitive markets to adjust behavior and foster innovation.
RGGI is the right move for Pennsylvania’s economy and for the health and well-being of its people. As state leaders turn their focus to recovery,they should move ahead with efforts to join RGGI to mitigate the worsening impacts of climate change. Tackling carbon emissions is still as important as ever in shielding its economy from another future shock.
Alli Gold Roberts is originally from Harleysville, Pa., is and the director of state policy at Ceres, a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy.