Industryweek 34961 Green New Deal

The Green New Deal Has Value—and Needs Manufacturing to Work

May 22, 2019
Manufacturers should not shy away from the debate, but actively engage.

What is the Green New Deal? Republicans call it “an economic sledgehammer to America’s middle class.” Democrats say it is the only plan to address climate change on the scale of the crisis. Both Democrats and Republicans see it as a defining issue for the 2020 election. But few realize that a growing manufacturing sector is necessary for its implementation.

In a nutshell, the Green New Deal (GND) is a proposal to address the issues of climate change and wealth inequality through a stimulus package akin to the 1930s New Deal, which was designed to end the Great Depression. Embraced strongly by the left wing of the Democratic Party, the GND aims to mobilize political support by linking two social issues under an ambitious plan of government intervention.

In February, a non-binding congressional resolution in favor of the GND was introduced in both the House of Representatives and the Senate. According to the resolution, the goals of the GND include achieving net-zero greenhouse gas emissions; creating millions of high-wage jobs; and investing in infrastructure and industry to meet the challenges of the 21st century. These goals are to be accomplished through a 10-year national mobilization effort, including spurring “massive growth” in “clean manufacturing.” The 10-year mobilization effort will require “guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security”; “strengthening and protecting the right of all workers to organize, unionize, and collectively bargain;” and “enforcing trade rules . . . to stop the transfer of jobs and pollution overseas and to grow the domestic manufacturing in the United States.”

On March 26th, the Senate resolution was defeated on a procedural vote, 0 – 57. Many Democrats effectively refused to vote (by voting “present”), in part because the Republican leadership would not allow for hearings or floor time to debate the measure.  

Thus far, the GND has not garnered bipartisan traction. A March poll of likely 2020 voters (conducted by Change Research and commissioned by the Green Advocacy Project) indicates that Republican voters hate the GND more intensely (80% strongly oppose) than Democratic voters love it (46% strongly support).

Perhaps this is expected—the right-wing media gives the GND more coverage than the left-wing media, according to a recent analysis by Media Matters. Among those whose primary news outlet is Fox News, 81% have heard about it. Among those whose primary news source is MSNBC, 32% have heard about it. Fox News covered the GND more than MSNBC and CNN combined.

The Senate vote reflected the partisan divide. Only three Democrats and one Independent—each from red states—joined Republicans in opposition.

And yet—the underlying issues are not likely to go away. The concentration of greenhouse gas (GHG) emissions continues to rise and impact global temperatures. Income inequality in America (and other developed countries) has been growing for decades. According to recent polling from Yale University and George Mason University, a majority of Americans believe climate change needs to be addressed. Sometime in the future, a political imperative for action may arise (e.g., after an election or after a galvanizing news event). If and when that time comes, manufacturers should not shy away from the debate, but actively engage. And here’s why:

First, supporters of the GND support a growing manufacturing sector. Concerns about the impact on manufacturing can be seen in the resolution, which calls for expanding domestic manufacturing and avoiding “carbon leakage”—the shifting of industrial activity, including GHG emissions and jobs, from the US to other countries. Manufacturing is seen as a key player.

Second and more importantly, a vibrant manufacturing sector is needed to address both climate change and wealth inequality. Manufacturing is a major source of innovation (2/3 of all private sector spending on R&D comes from manufacturing), which drives productivity and higher living standards. Such innovation is necessary to reduce emissions and create good jobs. Republicans understand this. One of the few GOP proposals to address climate change, by Tennessee Senator Lamar Alexander, aims to do so by spurring private sector innovation.

So what exactly can manufacturers do?

With respect to climate change, manufacturers can use data on their own GHG emissions to develop a strategy that makes sense for them. GHG emissions can be classified as direct (scope 1), indirect (through purchased electricity—scope 2), and supply chain (scope 3). Developing an appropriate strategy depends on how emissions are classified.

To address scope 1 emissions, industrial energy efficiency often represents a cost-effective approach. To reduce scope 2 emissions, manufacturers can commit to 100% renewable electricity on their own timeframe by joining RE100. Among its members are 3M, Akzo Nobel, Procter & Gamble, and General Motors.   

For manufacturers as a group, scope 3 emissions are by far the largest category, and it’s also the fastest growing segment of GHG emissions globally (particularly in developing countries), according to a 2018 paper in Environmental Research Letters. To reduce scope 3 emissions, manufacturers can leverage their power as a customer (to reduce upstream emissions) and/or as an innovator (to reduce downstream emissions).

With respect to wealth inequality, manufacturers can do what they have long done—provide opportunities for those without a traditional, four-year college degree. Compared to other sectors of the US economy, manufacturing jobs are higher paying (average total compensation of $84,000 compared to $66,000 elsewhere) and more likely to offer good benefits (92% of manufacturing employees have employer provided health care compared to 79% for all firms). This is because higher productivity creates better-paying jobs. Furthermore, the dense supply chains associated with manufacturing allow it to pack an economic punch well above its weight; a dollar invested in manufacturing triggers a larger investment due to its relatively high economic multiplier.

To sum up, an innovative and productive manufacturing sector is necessary to achieve the goals of the GND, which, at its core, is about enabling future generations to achieve the American Dream. Manufacturers need not avoid nor evade these issues—they should be prepared to engage constructively. And when they do, policy makers will listen.

Keith B. Belton is Director of the Manufacturing Policy Initiative in the O’Neill School of Public and Environmental Affairs at Indiana University in Bloomington, Indiana.     

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