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WASHINGTON, DC—The United States faces an economic imperative to develop reliable, affordable, clean sources of energy and use them more efficiently. In the face of deep economic challenges and a rising federal budget deficit, some may suggest that the United States should postpone its investments in a clean energy supply. But the opposite is true. Sustained budget deficits can be problematic, but there is widespread agreement that running a deficit to pay for an economic stimulus and recovery plan is necessary now. Investing in clean energy creates jobs in the short-run, helps combat global warming, spurs long-term growth, and ultimately helps restore fiscal balance by improving our economic circumstances.
Our dependence on oil leaves us vulnerable to higher and higher prices in the coming decades, continued price volatility and shocks, and the demands of hostile and unstable countries. Oil prices jumped from roughly $70 a barrel in July 2007 to more than $140 a barrel in July 2008, before swiftly dropping back to between $50 and $60 a barrel in November 2008. According to the International Energy Agency, “pronounced short-term swings in prices are likely to remain the norm” in the coming decades, and price shocks will be even more painful as average oil prices are projected to steadily rise.
Climate change caused by reliance on fossil fuels is already underway. If left unchecked, this will lead to stronger hurricanes and other storms, floods caused by rising sea levels and massive precipitation, droughts, and heat waves that will ultimately cost trillions of dollars a year.
These are the reasons why we need action on clean energy, and it should proceed in two stages. First, we should act immediately to invest in a green stimulus and recovery plan, creating desperately needed jobs and beginning the transition to a clean and more efficient energy future. Second, in 2009 we must begin putting in place an economy-wide greenhouse gas cap-and-trade program—the best long-term solution to catastrophic climate change—as a central component of a comprehensive clean energy strategy.
Our nation faces great economic challenges. Immediate government investments will help put us on a path to recovery while also speeding the arrival of an economy powered with clean, sustainable, and secure sources of energy. We cannot be confident of sustainable economic growth in the future unless we also move ahead with the important structural transformation to a low-carbon economy.
Read the full memo (pdf)