The adoption of proposed climate change legislation that would reduce 2005 greenhouse gas (GHG) emissions levels 42% by 2030 through the use of offsets and a cap-and-trade system would slow the growth of U.S. gross domestic product (GDP) by only about 1% over the same period, according to an economic analysis released last Wednesday by the United States Climate Action Partnership (USCAP).
"A well designed climate policy is compatible with robust economic growth of about 2.7% per year," according to USCAP. The analysis found that GDP would increase approximately 70-71% between 2010 and 2030 if the policy is adopted and approximately 71-72% if no climate change legislation is adopted.
In January USCAP, whose 32 members include BP America, Shell Oil Co., ConocoPhillips, FPL Group, Duke Energy, NRG Energy, PG&E Corp., PNM Resources and Exelon Corp., unveiled its policy recommendations in "A Blueprint for Legislative Action" (see NGI, Jan. 19). The blueprint, said the partnership, could be used to develop legislation to create "an environmentally effective and economically sustainable national climate protection program."
USCAP's plan, crafted over a two-year period by 26 corporations and five environmental organizations, included an aggressive emissions reduction schedule, detailed the scope of coverage for the cap-and-trade program and recommended how to include as much of the U.S. economy under the cap as administratively and politically feasible.
USCAP's economic analysis examined several scenarios, including two based on recommendations from the blueprint and others from the Waxman-Markey Bill, also known as the American Clean Energy and Security Act. All of the scenarios limited offset availability to a total of two billion tons at the start of the program.
The analysis concluded that total output of the U.S. economy would reach $22.3 trillion by 2030 if no climate change legislation is enacted, and would reach the same point two to four months later under the different scenarios.
"A comprehensive approach to addressing the climate challenge can deliver urgently needed reductions in greenhouse gases without interfering with economic growth now and in the future," said Janet Peace, Pew Center on Global Climate Change vice president of markets and business strategy, during a USCAP conference call Wednesday.
Climate change legislation cleared the Senate Environment and Public Works Committee in early November, while the House passed a climate change measure in late June (see NGI, Nov. 9, June 29). The Senate bill sets a 20% mid-term target for reducing GHG emissions, while the House measure calls for a 17% targeted reduction (see NGI, Oct. 1). Senate Majority Leader Harry Reid (D-NV) has said floor debate on energy and climate change legislation will begin in the Senate "sometime in the spring" (see NGI, Nov. 23).
Sen. Lisa Murkowski (R-AK), the ranking Republican on the Senate Energy and Natural Resources Committee, on Wednesday called for the Senate to reconsider the inclusion of cap-and-trade in climate change legislation and instead look at possibly implementing a carbon tax (see related story).
The USCAP analysis employed the ADAGE and NEMS-USCAP economic models, which USCAP said are similar to those being used by the Environmental Protection Agency and the Energy Information Administration in their analyses of proposed climate and energy legislation.
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