It’s become a predictable dance. A business faces a public backlash over its air and water pollution. Government regulators step in to reduce the emissions. And industry lobbyists contend that the ensuing “onerous regulations” will force layoffs or relocation to a less environmentally friendly jurisdiction or country.
But new research from UC Berkeley professors Joseph Shapiro and Reed Walker provides comprehensive data to call out many businesses on these bluffs. The study shows how businesses in fact respond to environmental regulation with innovation and cleaner production practices — as well as increased productivity. They found that between 1990 and 2008, pollution from U.S. manufacturing fell a remarkable 60 percent, while at the same time manufacturing output actually increased.
Furthermore, the environmental regulations involved were strong. During the time period in the study, the regulatory stringency on manufacturing firms nearly doubled in intensity. Yet rather than shutting manufacturing down or out, the regulations spurred businesses to adopt cleaner production methods. In turn, the public benefited from significant decreases in emissions of deadly pollutants such as nitrogen oxides, sulfur dioxide and carbon monoxide — a major win for public health.
The lessons from Shapiro and Walker’s study are clear. First, we should not sacrifice public health and environmental gains simply based on rhetorical threats from polluting businesses. Second, we should have confidence that business leaders can respond effectively to smart regulations with innovation. To be sure, we don’t want environmental standards to put our domestic industries at a competitive disadvantage with dirtier firms in less environmentally stringent jurisdictions. But we can achieve higher economic output and a cleaner environment by giving industry a clear regulatory target with sufficient time to allow innovation to flourish.
The study also presents an important lesson in the fight against climate change, the great environmental challenge of our time. Reducing the greenhouse gas emissions that cause climate change requires transitioning to a low-carbon economy as quickly and cost-efficiently as possible. This solution is by definition pro-business and pro-jobs. But it will only happen with clear, strong environmental targets that give industry both regulatory certainty and time to achieve them. And in the meantime, regulators shouldn’t be cowed by fearmongering from the dirtiest industries.
Environmental policymakers should set strong targets for greenhouse-gas-emitting industries. Examples include:
- Requiring utilities to generate a high percentage of their electricity from clean, renewable sources such as solar panels and wind turbines, along with targets for energy storage technologies such as batteries to capture surplus renewable power for later dispatch;
- Instituting mandates on automakers to institute fuel economy improvements for internal combustion engines, along with requirements for producing zero-emission vehicles such as battery- or electric-powered cars and trucks; and
- Setting targets for fossil fuel providers to blend in low-carbon fuels such as biofuels as much as possible.
All of these policies are central to efforts in places such as California to reduce reliance on carbon-based fuels, although they are under assault by the Trump administration and its supporters in the fossil fuel industries. But we need more states and countries around the world to adopt them.
The good news is that, just as Shapiro and Walker found, industry in California has responded effectively to these mandates. Since the early 1990s, the state’s economy has grown to become the fifth-largest in the world while its carbon emissions have decreased — a decoupling that should only improve over time. In fact, California met its 2020 greenhouse gas emission goal of returning to 1990 levels of emissions a full four years early, putting the state in prime position to make further reductions to 40 percent below this level by 2030.
This environmental progress has an additional economic upside: California is now busy incubating the industries and technology that will one day power a clean global economy. Examples include new software to make electricity grids more efficient; additional manufacturing capability to produce clean technology such as solar panels and batteries; and continued research in advanced fuels and low-carbon agriculture, among others. All of these investments are exportable and will generate jobs and economic activity.
So, at a time when polluting businesses have compliant allies in federal government, environmental policymakers here in California and beyond should heed the lessons from our past successes and maintain strong environmental and public health protections. Our economy — and quality of life — will be much better for it in the long run.
Ethan N. Elkind is the director of the climate program at the Center for Law, Energy and the Environment (CLEE) at UC Berkeley School of Law. More information on his work can be found at climatepolicysolutions.org.