Politics & Government

Study: Costs of cutting greenhouse gases are actually small

WASHINGTON — Americans won't pay huge new electricity and heating bills, unemployment won't skyrocket and the U.S. economy won't be damaged in the decades ahead if Congress passes legislation to reduce greenhouse gas emissions, according to a study released Monday.

The Environmental Defense Fund, an advocacy group that supports a mandatory cap and a substantial reduction of emissions, conducted the study by examining a range of peer-reviewed economic models from five academic and government groups. The models looked at the costs of emissions-slashing proposals that are at least as tough as the one the Senate will debate in June.

That measure, sponsored by Sens. Joseph Lieberman, an independent Democrat from Connecticut, and John Warner, a Virginia Republican, would cut greenhouse gas emissions by about 60 percent below 2005 levels by 2050. It sets up a "cap and trade" plan in which the government would give or sell allowances to pollute, reducing the overall amount each year. Companies could buy or sell the allowances, or they could save them to use in later years.

There have been wildly different estimates of the cost of the legislation. Studies that hide their assumptions or make assumptions that skew the results are "a dime a dozen," said Peter Goldmark, director of the Environmental Defense Fund's climate program.

Now that they've lost the debate on the science of global warming, opponents of a cap on greenhouse gases have shifted gears and are spending millions to try to "scare the public into thinking this will put scads of people out of work and damage the economy," he said.

Goldmark and economist Nathaniel Keohane, the director of the group's economic policy analysis section, examined models produced by the Energy Information Agency, the Research Triangle Institute, Harvard University, the Massachusetts Institute of Technology and Pacific Northwest National Laboratories.

The bottom line, they found, is that the United States could continue its economic growth over the next decades while making "ambitious reductions" in greenhouse gas emissions.

"If we put a cap-and-trade policy in place soon, we can achieve substantial cuts in greenhouse gas emissions without significant adverse consequences to the economy. And in the long run, the coming low-carbon economy can provide the foundation for sustained American economic growth and prosperity," the report said.

Only the EIA model made job projections. It found that a cap on greenhouse gases would essentially have no effect on jobs.

For the average family, capping carbon is expected to raise the prices of goods and services slightly due to higher energy prices. The report estimated a reduction in household consumption of less than a penny for every dollar of household income.

The authors calculated that from 2010 to 2030 the median increase in a home electricity budget would be $3.30 a month, or about 3.5 percent.

The report also estimated that higher prices would lead to lower demands for heating fuels, resulting in increases of an estimated 5 percent on monthly oil bills and 14 percent for natural gas bills in 2030.

The U.S. economy has been growing nearly 3 percent per year and is projected to continue at that pace. The EIA analysis foresees a business-as-usual annual growth rate of 2.86 percent from 2010 to 2030, compared with a 2.84 percent growth rate with an emissions cap. The most pessimistic model projected a reduction of annual growth rates of 0.15 percentage points.


The report is available online at www.edf.org/climatecosts

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