A Climate Change Industrial Policy

The U.S. military devotes prodigious time and resources to analyzing future threats and trying to prepare for them. Since the end of the Cold War it has been going through a painful, two-steps-forward-one-and-a-half-steps backward process of reorienting a force structure organized around fighting conventional wars against peer adversaries like the Soviet Union to one better suited to facing “asymmetric” threats: guerrilla forces, insurgents, non-state actors in general. Here’s a quick indicator in the budget for new weapons purchases of how entrenched the old mindset still is. Most of this budget is still devoted to spending ever higher amounts on such items as new “stealth” fighters, high-tech destroyers, and a new fleet of submarines that are irrelevant to fighting terrorism.

Another looming threat has also caught the military’s attention, namely the security implications of climate change. As early as 1997, the CIA set up an Environmental Center that examined the degradation of land and water as a major source of armed conflict around the world. Such niche efforts within the U.S. security establishment have now gone mainstream. Last year the Pentagon commissioned a group of high-level retired officers, including Marine General Anthony Zinni, former head of U.S. Central Command, to study the issue. Its report, published by the CNA Corporation, a Pentagon-funded think tank, called climate change a dangerous “threat multiplier” producing resource wars and failed states.

Most recently the royal United Services Institute, a leading UK defense think tank, released a report underscoring these concerns. It called the world’s response to date “slow and inadequate” and added that “climate impacts will force us into a radical rethink of how we identify and secure our national interests.”

On a conventional battlefield, when generals perceive a new threat emerging on, say, their right flank, they will naturally pivot their forces to confront it. Tackling the security threat of climate change will require immediate and drastic reductions of our greenhouse emissions. This will take, among other things, a lot of money. If the security threat is as great as the military now says it is, it will be necessary to pivot substantial resources to address it.

The military has so far not followed the logic of its threat analysis to this conclusion.

Current Misallocations

While the federal budget assigns military spending its first and most prominent spot, it has no category for spending on climate. In 2005 a congressional committee required the administration to begin providing an annual report detailing this spending. Foreign Policy In Focus has compared the FY 2008 budgets for our military forces and for stabilizing the climate. The overall toplines: our military forces were budgeted $647.51 billion (including supplemental spending on the wars we are actually fighting) while resources to slow climate change were budgeted at $7.37 billion. In other words, we are spending $88 on our military forces for every $1 we are devoting to averting climate catastrophe.

The imbalance is likewise severe, if somewhat less extreme, in the budgets for technology development and international assistance. We are spending $20 to develop new weapons systems for every $1 we are spending on new clean energy and energy-saving technologies. And we are spending $50 to sell and give away U.S.-made weapons around the world, mostly to undemocratic regimes, for every $1 we are spending to help the rest of the world reduce emissions and deal with the current effects of climate change.

In his 2007 Nobel Peace Prize acceptance speech, Al Gore called on the world’s nations to mobilize to avert climate disaster “with a sense of urgency and shared resolve that has previously been seen only when nations have mobilized for war.” That will entail committing to a climate change industrial policy.

New Industrial Policy

The term industrial policy has been taboo within the leadership of both major parties for many decades, carrying the taint of planned-economy socialism. All the while, of course, we have had a robust defense industrial policy.

As we now know, an unplanned economy of unchecked greenhouse gas emissions is no longer possible, and must be planned and executed out of existence. The main event will be setting increasingly strict ceilings on emissions. Federal spending to prod and assist in the transition to clean energy and energy efficiency also has a major role to play.

What should the federal spending portfolio of a climate change industrial policy look like? Let’s begin with the (extremely poor) baseline of our current climate change budget. As described by the Bush administration’s Office of Management and Budget, it has four parts:

  • Technology Program: $3.9 billion
  • Science Program: $1.8 billion
  • Energy Tax Provisions: $1.4 billion
  • International Assistance: $188 million

The necessary changes to this budget, in broad outline, are no brainers. First of all, this funding needs to be drastically expanded. The possible exception may be climate science. We may be spending about the right amount to study the problem, as opposed to solving it. The relative proportions among the elements of this budget also need to be changed. If we are going to avert climate disaster, we’ll need technological breakthroughs – for better battery storage, for example, and more efficient, cost-effective solar, wind, and geothermal energy generation and transmission. Between FY 2007 and FY 2008, the Bush administration actually cut $175 million, or about 12%, out of its core budget for research and development of new energy efficiency and renewable energy technologies. But waiting for breakthroughs “just around the corner” cannot be an excuse for failing to move forward with the technology we have.

Tax incentives for efficiency and renewables need to be a much higher priority. Among current federal expenditures, the most direct means of reducing emissions is by changing the incentive structure for private investment, through tax changes. The administration has actually proposed cutting the modest collection of credits encouraging, for example, businesses to install fuel cell power plants, contractors to construct energy-efficient homes, and homeowners to improve the efficiency of the homes they own and the appliances they buy.

What’s Missing

Here are a few missing pieces from a new climate change industrial policy. The federal retraining system must prioritize “green job” retraining. The United States also needs to invest into major, new clean infrastructure. This involves not just developing new transportation technologies but spending federal dollars to upgrade and subsidize mass transit to reduce emissions. Federal purchasing can help catalyze markets. States have been way out front of the federal government in scaling up the market for electric vehicles, for example, by buying these vehicles for their own transportation fleets.

The United States also needs an expanded network of Manufacturing Extension service providers to provide technical assistance to reduce emissions. This national network of centers, analogous to the Agricultural Extension network, has been ramped down during the Bush years. Now it needs to be ramped back up, with a strengthened emphasis on assistance for retooling for clean manufacturing and energy conservation, and connected to a state network of green job retraining programs.

All of the elements of this new industrial policy will need to be coordinated by a climate change czar in the White House. That person’s job will be to make sure the pieces fit together. The climate change czar would link public investment to job retraining to technical assistance to new sources of finance for enterprise development, and pull together the various state initiatives into a coherent framework.

And where’s the money going to come from? In pivoting their forces to meet the new threat on their flank, the generals have to also release funds for this fight against climate change. New submarines can’t be used to fight terrorism – or climate change. It’s time to change our budget priorities accordingly, and create a new climate industrial complex.

Miriam Pemberton is a research fellow at the Institute for Policy Studies, writing and speaking on demilitarization issues for its Foreign Policy In Focus project.