CLIMATE:

U.S. carbon cap would cost 3.2M jobs by 2030 -- report

Capping U.S. greenhouse gas emissions would raise energy prices, shrink the economy and slash household buying power, warns a report released today by the U.S. Chamber of Commerce and other business groups.

By 2030, net U.S. job losses would hit 3.2 million, while household purchasing power would shrink by more than $2,100, says the report by the Boston-based consulting firm CRA International, which analyzed cap-and-trade targets in President Obama's budget proposal for fiscal 2010. The report was commissioned by the Coalition for Affordable American Energy, which was formed last summer by the National Association of Wholesaler-Distributors, the National Association of Manufacturers and other business groups.

"Cap and trade will impose new and higher costs on business users of energy and on consumers," R. Bruce Josten, the chamber's executive vice president for government affairs, told reporters today.

House and Senate negotiators reached agreement late yesterday on a $3.5 trillion budget for fiscal 2010, setting the stage for final floor votes this week. The spending plan does not include a cap-and-trade provision, however, leaving it up to lawmakers to broker a standalone climate bill.

In his initial budget request to Congress, Obama promised to work with lawmakers to craft cap-and-trade legislation to cut U.S. greenhouse gas emissions 14 percent below 2005 levels by 2020 and 83 percent below 2005 levels by 2050. Obama's budget assumed a 100 percent auction of emissions credits to polluters, generating proceeds of $15 billion annually, starting in fiscal 2012.

The balance of the money would be returned to taxpayers, especially "vulnerable families, communities and businesses" to help the transition to a "clean-energy economy," according to Obama's budget summary.

The transition, CRA analysts suggest, will include electric utilities and oil companies switching from fossil fuels to comparatively expensive alternatives and passing the costs to consumers. Overall electricity costs would rise 15 percent in 2015 and 51 percent in 2030 from today's baseline, the report says. Motor fuel costs would be 6 percent higher in 2015 and 20 percent higher in 2030.

The report's household purchasing power projections assume all revenue from emission allowance auctions would be "recycled" back to households, noted David Montgomery, a CRA vice president and the report's author.

"In the long run, this redirected investment is a drag on the economy, because it does not increase worker productivity or provide capacity to create more goods and services for consumers," Montgomery explained. "It simply facilitates a more costly method of producing energy that consumers have to pay for."

The report's job figures assume established sectors such as coal mining and oil refining would lose jobs while emerging sectors such as renewable energy engineering and biofuels producing would gain jobs, he noted. For example, the electricity generation sector -- which relies on coal for half of its feedstock -- would see its output drop by nearly 17 percent by 2025 from today's levels, according to the study.

"Electric generation would be directly impacted as the move to more expensive sources of electric power could result in higher electricity prices and lower demand," the report says.

'Scare tactic'

Josh Dorner, a spokesman for the Sierra Club, dismissed the report as an industry "scare tactic" to scuttle climate legislation.

The House Energy and Commerce Committee is considering draft cap-and-trade legislation that would reduce U.S. emissions 20 percent below 2005 levels by 2020 and 83 percent by midcentury. Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) is mulling her own climate bill, and Rep. Chris Van Hollen (D-Md.) has introduced a trio of bills that would cap U.S. emissions, fund home energy audits and improvements, and create a "green bank" to fund renewable energy projects.

Dorner pointed to a study that the Political Economy Research Institute at the University of Massachusetts, Amherst, produced last year with the Center for American Progress, a left-leaning think tank. A $100 billion investment in "green" technologies and services would create nearly four times more jobs than spending the same amount of money within the oil industry, the study contended.

Last week, U.S. EPA released an analysis of the climate legislation under consideration in the House Energy and Commerce Committee. The draft bill, co-sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), would cost the typical household $98 to $140 a year through 2050.

"There will be millions of clean-energy jobs created by cap and trade," Dorner said, describing such jobs as everything from truckers hauling wind turbines to construction workers retrofitting energy-inefficient buildings.

Scott Paul, executive director of the Alliance for American Manufacturing, which is spearheaded by the United Steelworkers union, was more cautious about making jobs projections.

"Since the legislative process is just beginning, it's hard to tell exactly what the economic impact of climate policy will be," he said.

Cap and trade or a carbon tax done the "right way," Paul said, will lower greenhouse gas emissions and preserve the nation's manufacturing base. That means including rebates for energy-intensive, import-sensitive industries and a border adjustment proposal "with teeth."

"But if carbon leakage is not addressed, the economic consequences could be disastrous," Paul cautioned.

The chamber's Josten concurred on the latter point. U.S. regulation of CO2 emissions should come in concert with reductions by China and other developing economies, he said.

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