The House climate change bill (HR 2454) would reduce gross domestic product (GDP) below what it would otherwise have been by as much as 0.75% in 2020 and by as much as 3.5% in 2050, according to a new Congressional Budget Office (CBO) study.
The CBO sees the future changes to the GDP as “comparatively modest.” But the American Petroleum Institute (API), which represents major oil and natural gas producers, called an anticipated 3.5% drop in the GDP significant. “An economic drop of this magnitude could lead to the loss of millions of American jobs and would have a huge impact on many American businesses. The Senate should carefully assess the [economic] impact on ordinary Americans when it debates its own climate bill,” said API President Jack Gerard. A Senate climate change bill may be released as early as this week by the Senate Environment and Public Works Committee (see NGI, Sept. 7).
The House climate bill, which seeks to cut greenhouse gas (GHG) emissions by 83% in 2050, would take a toll on oil and gas producers, the CBO study said. “The industries that produce carbon-based energy — coal mining, oil and gas extraction and petroleum refining — would probably suffer significant employment losses over time,” the study said.
“Reductions also would be likely to occur in industries that use those forms of energy intensively or purchase emissions-intensive inputs to their production process from other industries, including chemicals, primary metals, mineral mining, nonmetaallic mineral producers, transportation and construction. Among those industries, employment losses in chemicals and transportation services could be relatively large,” it noted.
A separate study by Congressional Research Service (CRS) dismissed many of the cost studies for the House cap-and-trade bill. “Long-term cost projections are at best speculative, and should be viewed with attentive skepticism. The finer and more detailed the estimate presented, the greater the skepticism should be,” the report said.
The CRS said it didn’t expect projections for capping GHG emissions to be any more accurate than they were for capping sulfur dioxide (SO2) emissions. The Environmental Protection Agency and ICF Resources Inc. projected that the costs of regulating SO2 emissions would be $2.7-3.6 billion in 2000, and $3.4-8 billion in 2010. The Edison Electric Institute and Temple, Barker & Sloane Inc. forecast $7.1-8.7 billion in 2000, and $7.9-11.2 billion in 2010. But the estimated actual costs came in at $1.9 billion in 2000 and are expected to be $2.2 billion in 2010, according to CBO.
“There is no reason to believe that cost estimates for greenhouse gas reductions will be any more accurate than the 1990 SO2 estimates; indeed, they are likely to be less reliable. This is not to say that they will be too high; they may be too low,” the report said.
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