This is a world where social and economic priorities overwhelm environmental ones, at least temporarily. Over the course of the 1990s, a new social consensus emerges in the United States that acknowledge that the widening gap in incomes and advancement opportunities is not sustainable. In part, this consensus is driven by a growing lower-middle class, which increasingly crosses racial and gender distinctions, as well as by a restructuring economy which disenfranchises traditional workers--the heart of middle America--who face fewer and lower paying jobs. The groundwork for this scenario was laid in the 1970s, when the average American made limited economic progress, real income growth slowed, and many began sliding backwards. As the trend continued into the 1990s, concerns about social justice came into the forefront--a concern that already motivated many environmentally concerned citizens. The Inclusive Development scenario presents the story of a new political bargain that delays the timing of environmental progress.
Industrial restructuring was another critical factor. For years, the U.S. economy had been moving away from manufacturing towards services and information-based jobs. The problem: transitions took time, often with significant costs. Many experienced job and income losses in the 1980s and early 1990s as firms downsized, jobs went abroad, and benefits were cut. Behind these changes was the battle over a share of the economic benefits between workers, capital (both equity and debt), and consumer value. The interests of workers were on the losing end as the dream of ever-increasing standards of living was effectively shattered, and leaner companies battled global competition with fewer workers.
As the 20th century ended, growing international market competition and persistent regional conflicts buffeted clear policy choices. While trade conflicts between the United States and Japan continued, the Asian "tigers" continued to worsen and interest rates slowly climbed to keep a hold on inflation (yet at a price: slower growth). For the average worker, frustration with jobs translated into dismay at foreign policies and the appropriate U.S. role, as in Rwanda and Haiti, even Cuba. Immigration slowed as officials tightened entry policies. But historical isolationist--and protectionist--tensions grew as the U.S. economy sputtered with GDP growth stuck in the low two percent range.
The decline of inner cities in the 1960s-1980s spread outward to many inner suburban areas in the late 1990s as more households fell out of the middle class due to the loss of higher wage manufacturing jobs and replacement by lower wage service employment. New housing and job growth was concentrated in a new third ring of automobile-dependent edge cities and suburbs, which stimulated a continued rise in vehicle miles of travel, vehicle trips per capita and suburban traffic congestion. Transportation investment continued to fall short of the growth in demand while federal tax policies and local zoning regulations continued to encourage low density development. The share of jobs accessible to public transportation continued to fall through the 1990s, excluding many urban workers from employment opportunities and leading to a shortage of labor for lower pay service work in many affluent outer suburban areas, where affordable housing was often excluded by local policies.
By 2000, the growing number of disenfranchised reached a political crescendo. Rallies and picket lines protesting worsening inequities, combined with widespread frustration over environmental problems that disproportionately affected the poor spurred a nationwide campaign to address the social and economic issues effectively. In 2000 the social justice agenda was echoed in multi-candidate election campaigns in nearly every state, in the mass media, and by a growing percentage of the public (especially those with new, lower paying jobs). National political parties fractured to include and redress these issues. Environmentalists often found their agenda blocked by those who would bear the costs most heavily. Economic and social concerns about such issues as education, crime, drugs, and unemployment pushed aside most environmental issues, though battle scars of long time advocates were long and deep. By 2002, the fading memory of the near victorious anti-NAFTA coalition between environmentalists and labor led advocates on both sides to propose a new social compact: poverty first, then the environment. Businesses adjusted to this new compact by giving more in wages and benefits to workers, raising prices, on many items and delaying costly efforts to protect the environment.
The strong trend toward deregulation and free market solutions to economic issues slowed dramatically, as regulators were forced to consider job impacts. Evidence became clear as the movement toward retail wheeling in electricity markets was slowed dramatically and only a piecemeal program of wholesale electric wheeling was allowed. In the transportation sector, job creating highway and urban mass transit systems were broadly supported at state and local levels.
By late 2002, a series of gradual reconciliations to unfold as specific policy steps. The Administration was confronted with a clear consensus to improve economic growth--even at the expense of environmental issues; to ameliorate the pain of economic restructuring and facilitate necessary labor force transitions; to shift the tax burden toward the better-off, and finally, to seriously address chronic social concerns. Although most of these issues had been part of the broader agenda of the early 1990s, the political will, backed by clear popular support, had been lacking at that time.
This shift in values toward broader public concerns was not unprecedented in U.S. history. Arthur Schlesinger Jr., in his book The Cycles of American History, suggested how the pendulum swung between private and collective phases. After decades of focusing on private lives, social costs accumulate and create pressure for a renewed focus on the public realms, and vice-versa. The two decades of the 1970s and 1980s, he argued, were characterized by personal and private concerns which led to a "swing" back as America entered the 1990s.
The first hurdle was Congress. There was strong resistance to the Administration's proposals. The "no more taxes" and anti-income redistribution sentiments were still very much alive. Many believed that social problems should be solved at the local level; that individuals should be responsible for their fate in life; and that there was no role for the federal government. The Administration proposals could not get past the filibuster.
By 2004, a new Congress emerged, heavy with representatives of the emerging social consensus. The decimal census of the year 2000 and resulting redistricting brought a sufficient majority to pass Administration proposals. As new policies and resources started to flow to local communities, the sense of hopelessness started to lift for many.
Technology, education and training, and reforms in governance all played a key role in bringing about this new social agenda. New public transit technologies became a vehicle for both job creation and improved living conditions for those with limited transit options. The information superhighway played a key role in providing an easier way for the formerly disenfranchised to be heard, as voting by phone and other communication techniques were used to access voters. A re-emphasis on quality education penetrated even tough urban communities, which, along with targeted investment programs, began to turn the tide against crime and to improve the quality of lives. As the sophisticated service economy developed more stable, high value-added jobs, wages began a virtuous circle upward. More often than note, reduced environmental impacts were a side benefit.
Limited innovation or change was evident in energy sectors. Oil was relatively cheap (in the $19-25 range), while oil imports to the United States remained high. More efficient energy and transport changes were hampered as a result of reduced research and development funding and capital investments, resulting from shifting funds in the federal budget towards social programs. Utility deregulation was limited, as public utility commissions were increasingly concerned with access, service, and cost considerations. Natural gas shares in power generation continued to slowly increase, primarily for peak load generation. The price of alternative energy continued to decrease, but slowly, and their share of generation (as well as vehicle fleet penetration) grew slowly. Limited technological progress and efficiency gains were achieved by 2010.
By the later years of the first decade of the 21st century, a new social compact was clearly in place. A combination of public policy, individual responsibility, and economic evolution was producing strong economic growth, renewing the sense of community, and accelerating the creation of good jobs. For example, the rebuilding of urban infrastructure provided many jobs. The gap between the top and bottom income brackets had narrowed, not by lowering the top but by bringing up the bottom. Somewhat more restrictive immigration policies led to the stabilization of U.S. population. This helped, in part, to focus public and private resources. Now that a solid economic and social foundation had been reestablished and standards of living improved, a broader agenda, including the environment, began to unfold.
Internationally, the U.S. lead in addressing equity concerns was not mirrored by most developing countries, as the high returns needed to attract risk capital for economic development dominated their agendas. By 2010, however, growing social problems and resource conflicts throughout the globe convinced many leaders to reconsider domestic priorities.
Following a decade of further debate, research, and innovation, another stage of social-environmental consensus emerged around 2015, accelerating environmental progress. New economic indicators measured, among other things, industrial throughput (e.g.,new measures of efficiency and waste), natural capital use, and quality of life. Moreover, the "greening" of America, was mirrored overseas. Europe had struggled with the same question as the United States and had followed a similar path. By 2025, many industrialized nations were stronger economically, more equitable, and living in greater harmony with nature, although few developing countries had achieved similar stability and balance. But a question lingered in the minds of many policy makers. Did this same social and economic development logic apply to the richer old millions of the industrialized world and the poor young billions of the developing world?
On October 17, 2001, Hurricane Daniel slammed into North and South Carolina, with insured losses totalling more than $30 billion, almost twice those from Andrew in 1992. The following year Hurricane Barbara struck the Gulf Coast, with losses of "just" $10 billion, but the major story was the typhoon and tsunami that hit Japan causing damaged well beyond $300 billion. When combined with an increased frequency of droughts and heat waves in the Midwest, scientific and public concern about climate variability was heightened further. During the late 1990s, for the first time in recent history, severe crop losses and rising agricultural prices had surprised the nation. As the nation reeled and the insurance industry pushed for more federal insurance coverage for natural events, Hurricane Chelsea smashed into the mid-Atlantic in 2003, causing 1500 deaths and $50 billion in estimated damages as far inland as Philadelphia and Washington. This series of events, along with similar weather volatility in other parts of the world, produced turmoil in major global capitals as political leaders struggled with appropriate responses. But far from a "surprise" attack, scientists and meteorologists showed that the stage had been set for some time.
Scientific evidence, based on the latest "complexity" models of atmospheric change, showed that the increased climatic variability was indeed probably the result of greenhouse gas buildup in the atmosphere, principally the release of carbon dioxide (CO2) from fossil fuel combustion. But scientists remained incapable of making specific predictions about the rate and magnitude of global change, and how such changes might be distributed. For Congress and the Japanese Diet, however, the short-term economic consequences were pretty clear: a decimated insurance industry; major financial losses and weak stock markets; and a need to create large deficits. This combination put the world economy into a mini-tailspin, to say the least. In the U.S., environmental and technological progress slowed as government-led crisis management made things worse before any improvements could take hold. U.S. economic growth dropped to 1.5 percent for the rest of the decade and only slowly started creeping upward by 2020.
In this future, the onset of global climate change is characterized by increasing weather variability and turbulence, which quickly reaches crisis intensity by the year 2001. This phenomenon is not limited to the United States, as Asia (particularly Japan), Europe and other parts of the globe are hard hit. Following close behind are two nuclear accidents in Europe, which surprise and shock the world. The response in the international community is a realization that closer cooperation, not competition and further fragmentation, are the key to future survival and prosperity. A series of steps, which move beyond strictly environmental concerns to include trade and security, is taken to restructure and ensure a more harmonious relationship between the environment, industrialization, and economic development.
The response in the United States, quite apart from emergency actions, involved a series of measures in 2004 addressing climate change, including:
Just as parts of the U.S. economy were reviving in 2007 (cyclical versus longer term recovery due to recessionary impact of policy measures), two nuclear accidents effectively eliminated the nuclear option as a workable response to climate changes. In one accident, a severe cold spell in the depth of winter pushed electricity loads to record highs and a reactor vessel head failed in a generation station. These accidents, although shocking, had their greatest effect in convincing U.S. leaders that substituting nuclear power for fossil fuels was not viable.
In the aftermath of the climate and nuclear crises, extensive emergency and longer term policy measures were enacted in the United States, with similar measures being adopted in other countries. While a new global environment summit was being held in 2008 (which, among other things, strengthened the Framework Convention on Climate Change), a "Sustainability Act" was passed quickly by Congress with bipartisan support. Because this comprehensive bundle of sustainability policies was carefully researched during the 1990s as part of an ongoing debate about sustainability, it had the advantage of not being thrown together as a panic measure. The legislation included, among other things, carbon taxes, removal of subsidies for fossil fuels, transition "packages" to assist particular industries, subsidies for wind, solar, and battery storage energy systems, large investments in public transit, various taxes to discourage auto use, and measures to address social equity issues, such as sector job losses.
Various energy sectors were hard hit, with most in transition. Oil prices jumped quickly due to CO2 taxes, with oil imports declining as a result. Most nuclear power was phased out over a 10-15 year timeframe. Utility deregulation slowed, as government and transition programs took time and resources to implement. Natural gas at rising prices increasingly replaced a significant share of fossil and coal-fired power plant capacity, based primarily on the grounds of efficiency, but with only a relatively small reduction in carbon dioxide emissions. Renewables gained the most, with increased research and development and government support encouraging their growth. A major focus on new technology, research and development, and efficiency was evident throughout the industry, with many companies attempting to diversity assets and expertise.
Transportation and land use problems, however, continued to plague most cities. The sharp rise in fossil fuel costs, along with lower income growth, spurred many upper and middle class families toward pockets of gentrification with better public and private transportation systems, leaving many urban cores behind facing poverty and racial tensions. Income inequality had indeed grown sharper. The irony was that higher fuel costs also improved automobile technology and allowed more vehicle options. Small electric vehicles, though limited in power and range, became popular as short trip vehicles. Super lean burning hybrid vehicles also entered the market fueled partially by gasoline and electric/natural gas components. Motor vehicle use had continued to grow, despite the crises, but at a slower rate.
The effect on the world economy was sobering well into the second decade of the new century, as industrial transitions occurred over time. The world economic growth rate was stuck between 1.5 and 2 percent during the crises, although there was widespread cooperation and consensus on economic stability measures. Population growth, both in the United States and internationally, had slowed. Following the crises, industrialized countries led the way with new measures of growth and prosperity that were less throughput dependent. Most developing countries, however, were stuck in traditional growth paradigms and stubbornly resisted further cooperation; a major difficulty was enforcement and compliance in environmental stabilization programs. This political dilemma between industrialized and poorer countries perplexed leaders and paralyzed closer global economic ties and new institutional arrangements. More regional conflicts, particularly eco-wars, emerged by 2014 as acute environmental degradation ignited resource conflicts. Industrialized countries, including the United States, were not only frustrated but the effects were felt economically with slow growth rates. What was heralded as a new era of economic and environmental harmony at the global summit in 2008 was caught in international bickering and endless talks. A level playing field, let alone full global cooperation and enforcement, did not emerge by 2025.
In late 1997, two major studies emerged linking birth defects and children's health problems with environmental causes. The initial reaction in the United States was shock, then outrage, especially among young families (particularly baby boomers). State and federal government agencies were deluged with questions and requests for more information, and elected officials were put on notice to act. Far from being a surprise, evidence had been building for some time. In the previous two years, for example, more research had started to emerge concerning health-related links to the environment. In one study, U.S. cancer rates were shown to increase for each generation; in another study, in Norway, birth defects were shown to have tentative links to environmental factors. Both of these studies cited exposure to toxins, pesticides, even diet, as possible key determinants. These and other studies, increasingly popularized in the media, had raised public concern. While the birth defect link was only one more example of environmental degradation, somehow it was the final straw for many Americans. A grounswell of talk and latent concern about the environment turned into more conscious action and behavioral changes. Consumer reaction, for example, was surprising: demand for green products and services grew by 24 percent in the first quarter of 1998. Government and business leaders scrambled at first--wondering whether this was just a short-term phenomenon--but additional evidence linking lifestyles, health, and the environment continued to emerge over the next couple of years.
The timing, in retrospect, was fortuitous, as the U.S. economy was poised for significant growth from restructuring. Productivity, technological innovation, and the development of new services from information technology fueled the restructuring. Strong growth in late 1994 set the stage, with traditional exports like manufactured goods growing and the trade balance improving. But by mid 1996, the statistics told a more interesting story: services were exploding and without any regard to familiar trade patterns. Financial, information technology, and education-entertainment services led the charge around the globe. Statistical indicators of a new post-industrial revolution showed sustained growth in overall U.S. productivity by 1997--and clearly highlighted the long hoped for services productivity boost. Other advanced industrial nations tried to follow the U.S. lead, with trade discussions more likely to focus on new technological alliances rather than heated agricultural bashing. By 2004, under the new World Trade Organization, 120 nations signed an international agreement for broad protection of intellectual property rights and information services.
This is a world of increasing environmental awareness linked with a strong U.S. (and global) economy, technological developments, and governmental initiatives to create cooperative "win-win" solutions. Many of the pieces were already in place by the 1990s but much like the advent of personal computers and their promise of increased productivity, the network linkages and timing are key. Other developed countries follow the U.S. lead, but equity disparities slow the rest of the world. Unlike the previous scenarios, this world is driven by the values of the baby boomers, who occupy top management and policy positions and favor market and incentive-based approaches. But as this scenario plays out, not everyone in society benefits from these technological changes, and economic and environmental improvements.
Similar shifts were evident in employment statistics as service jobs continued their historic climb. The big difference, however, was that salaries were also rising. The supply of trained workers simply could not keep up with rising service demand, which heightened upward wage pressure (population, including immigration, was still growing in the United States,but this did not translate immediately into more skilled workers). By 2000, the Commerce Department revamped its statistical system, not only to report services trade but also to integrate more environmental full-cost accounting (including natural capital depletion) into national accounts.
Technological innovation, and informational technology in particular, were critical components of this shift. Information technology effectively reframed the utility industry, for example, with California's restructuring of retail electricity markets leading the country, and spot and future price markets for electricity emerging nationwide by 2004. Improved electricity efficiency reduced costs, expanded uses, and provided more customer choice. The information superhighway made a larger difference than most imagined by 2010, as education "tele-links" and corporate telecommuting networks spanned the nation. Information technology also had a significant impact on transportation; by the year 2000, automated traffic management schemes, such as the intelligent vehicle highway systems, were operating experimentally in Chicago and other major cities, not only to manage congestion but to reduce vehicle emissions. National labs refocused on accelerated research and development programs for environmentally appropriate technologies.
Growing traffic congestion, local government fiscal problems, and continuing air pollution gave many communities incentives to make use of new technologies and various demand-side reforms to improve local transport and land use patterns. Various states were experimenting with replacing property, event income taxes with alternative taxes on gasoline, energy and automobile use. urban redevelopment efforts were trying even more pilot projects, particularly to link transportation, jobs, and housing in various incentive schemes.
Government by the late 1990s was playing a major role as a catalyst and consensus builder. In response to growing environmental awareness, the government restructured its approach to industry and provided new programs and incentives. The emphasis shifted from detailed regulation to sector-by-sector agreements and market-based legislation, including clear targets for pollution reduction. The organizing principle became "level playing fields," which ensured that companies received improved price signals and that they could profit from eco-efficient innovations. Federal technology partnerships, such as the Partnership for a New Generation of Vehicles, with the "big three" auto makers, proved to be a successful model. By 2004, a new era of government and business relations was well under way, which recognized the compatibility of pursuing economic and environmental objectives together. Indeed, these objectives reinforced each other and generated even stronger economic performance in future years.
Improved international relations played a small but important role as the United Nations emerged more fully as an international arbiter and security guarantor. Instead of a world policeman, the U.S. was able to shift into a multilateral partner role in regional conflicts. Many conflicts continued to flare, but a growing world economy defused most with new assistance programs. The largest stumbling block, however, was continued environmental degradation in many parts of the world, such as continuing rainforest lost in the Amazon and widespread desertification in Africa. New international incentives and "carrots" were proposed, but compliance was simply lacking in many regions.
Energy and transportation reflected the changing paradigm of a technologically driven economy, which by being more productive and efficient, was alsoless dirty. Oil prices remained relatively low (in the $20-23 per barrel range, due to low demand), while government and market incentives pushed natural gas growth, renewables, and other alternatives. A new national gas grid network emerged in the late 1990s, which allowed Compressed Natural Gas-hybrid vehicles to penetrate the vehicle market beyond the use in commercial and government fleets. Electric vehicles were also a growing segment, with California mandates spreading across the country. Competition forced major reconfiguration of the utility industry as independent power producers, relying primarily on natural gas and co-generation, increasingly dominated electric power generation. Coal was still used for most base generation (using clean, gasification systems), while nuclear was increasingly phased out as a result of high costs and large centralized characteristics. Worsening suburban and urban gridlock in the late 1990s spurred adoption of congestion pricing on existing and new roads, smart express high occupancy vehicle energy and more widespread telecommuting. New car designs dramatically reduced vehicle energy consumption after 2000. Car design moved quickly to incorporate elements of the "supercar:" hybrid mechatronic drive trains powered by electricity; "clean" oil-based fuels or hydrogen; and life-cycle production and recycling. New "leapfrog" supercar manufacturers emerged with short product cycles and low overhead to serve consumers who were willing to pay more for new, greener innovations.
By 2010, the American economic-environmental boom had increased the standard of living for most citizens, although many inequities still remained. Instead of using income and wealth as the traditional measures of well being, the new economy was distinguished by knowledge, information, and environmental quality of life, such as clean air and water. Real wages were increasing for most workers. Total unemployment continued to fall as the number of entrepreneurs and new businesses grew, often out of homes with high-tech linkages. Urban cores and rural areas, however, continued to lag as new "knowledge" skills left many behind. High-tech redefined crime, shifting much of its focus to digital networks, where boundary-less worlds were difficult, if not impossible, to police. In general, the quality of education improved through computer access and worker retraining programs. With universal health care insurance in place by the late 1990s, most Americans were able to increase their "green" spending and regarded concern for the planet as an investment in their children's future.
Energy and Transportation Task Force Report
Chapter 1: Findings
Chapter 2: Task Force Goals & Indicators
Chapter 3: Policy Recommendations
Appendix A Scenario Narrratives
Appendix B Other Policy Options Considered
Appendix C Endnotes
Appendix D List of Figures
Appendix E List of Tables
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