Solving the financial crisis by averting the climate crisis

Polar ice caps are melting, but Wall Street is melting down. The ongoing financial crisis means that the next president will have to postpone or dramatically scale back plans to address the twin problems of climate change and energy security. We just don't have the money for ambitious new spending programs right now.

That's the conventional wisdom, anyway. Like so much conventional wisdom, however, it is dead wrong. What's more, it demonstrates that we have not yet absorbed the central lesson of the financial crisis: You can't build a healthy economy on illusions. Not forever anyway. Reality bats last.

U.S. home values were one such illusion, now being violently wrenched back to Earth. Another, of older vintage and even firmer hold, is the illusion of cheap, endless energy. For more than a century of dizzying growth we've mined and burned fossil fuels while hiding the true costs with accounting tricks. Cleanup of polluted land and water, treatment of respiratory ailments and cancers, enormous and growing trade debt, distorted foreign policy, and most of all, the accelerating effects of climate chaos — they were all kept off-books.

The tricks worked for a while (that's what they said at Lehman Brothers!), but now the subprime loans that funded our fossil-fueled growth are coming due. Demand is escalating inexorably in the developing world, and global supply can't keep pace, so energy prices are rising and volatile. Our relationships with countries in the Middle East, Asia and South America are compromised and distorted. Storms, droughts and wildfires rage more destructively across our planet every year.

How long can we delay balancing the books? Between us, your authors have three children under the age of 5, and another on the way. Will we dump this mess in their laps?

The stakes could not be higher: If we mismanage this risk as badly as we mismanaged mortgage risks, if we allow climate change to reach irreversible velocity, there can be no bailout.

Fortunately, we now have a unique and extraordinary opportunity to change course. If we play our cards right, we can solve the financial crisis by averting the climate crisis.

What the economy needs now is twofold: short-term stimulus spending to rev the engine and stable new sources of long-term growth. The next president can help meet both needs with an ambitious four-step program of green regulations and investments.

• Step one is to invest heavily in green infrastructure, where it can immediately put people to work while laying the foundation for sustainable long-term growth. The top three priorities: a smart, truly integrated national electrical grid; expanded urban and long-distance public transit; and block grants to states to kick-start development projects already in the pipeline.

• Step two is an aggressive nationwide effort to retrofit U.S. homes and buildings, which currently represent almost half of total U.S. energy consumption and the largest source of U.S. greenhouse-gas emissions. Weatherizing and solarizing the built sector not only increases energy efficiency and reduces emissions, it's a form of insurance, sheltering every property owner from the impact of rising energy prices. This will require a thoughtful mix of performance standards, market organization and public-private financing mechanisms, but it can be done, and quickly.

• Step three is turbocharging research, development and deployment of carbon-free energy sources like solar, wind, geothermal and cellulosic ethanol, while ramping down subsidies to dirty energy.

• Finally, step four is to put a price on carbon pollution through a cap-and-trade system or carbon tax, creating a market-based incentive for innovations in clean energy and energy efficiency.

Will such initiatives be expensive, further increasing the deficit in the short-term? Absolutely. But they will lead us out of this financial crisis and into long-term economic growth.

The next president will enter office facing a headwind of hot air from pundits urging him to trim his sails. This counsel is penny-wise and pound-foolish, and he should reject it. With smart green regulations and investments, the next administration could provide immediate economic stimulus, generate millions of good jobs, boost U.S. competitiveness in the most important industries of the century, and tackle the looming problems of climate change and energy security.

One day soon our kids are going to ask us what we did about climate change. If we give them nothing but excuses, we're pretty sure they're going to think we're, like, lame. The financial crisis is not a reason to put off rebuilding and repowering America. It's just the kick in the pants we need to finally get started.

Chip Giller is the founder and CEO of the environmental news Web site Grist.org. David Roberts is a staff writer for Grist.