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New Analysis Heats Up Debate of the Climate Change Bill

March 24, 2008 - by Donny Shaw

The Bush administration last week put out an analysis of the economic and environmental effects of the leading climate change bill in Congress, the Lieberman-Warner Climate Security Act. The report (huge pdf), prepared by the Environmental Protection Agency is a mixed bag — no matter where you stand on the issue, there’s some good and some bad to be taken from it. But, since it’s an official and comprehensive report — it’s the first time the administration has attached economic numbers to the bill, and probably the only time it will before the Senate votes on it in June — people on every side are trying to make the findings work for them.

Here’s some initial analyses of the analysis that have been posted online (sort of a preview of the Senate debate):

In a joint press release, Lieberman (I-CT) and Warner (R-VA) tout the analysis as evidence that their bill would combine strong results with manageable costs:

>*The Climate Security Act’s cut in cumulative US greenhouse-gas emissions is deeper than one found earlier by EPA to be consistent with keeping global CO2 concentrations below 500 parts per million in 2100. The finding assumes that other developed countries reduce their emissions by less than the US, and that the developing countries do not start making similar reductions until 2025. According to the Intergovernmental Panel on Climate Change, keeping the global concentration below 500 ppm greatly decreases the risk of severe global warming impacts in the US and elsewhere.

  • Under the Climate Security Act, US gross domestic product grows by 80% from 2010 to 2030. That is just one percentage point less than the growth in the absence of the bill.
  • Under the Climate Security Act, average annual per-household consumption in the US grows by 81% from 2010 to 2030. That is just two percentage points less than the growth in the absence of the bill.

On the other hand, Sen. James Inhofe (R-OK), one of Congress’ most vocal critic of climate change legislation, sees nothing but negative economic effects in the EPA analysis:

>The Environmental Protection Agency’s recently released economic analysis of Lieberman-Warner is consistent with multiple studies that expose the bill for what it is: a job killer. If Democrats have their way, Americans will pay significantly more at the pump, in their homes, and in many cases, with their jobs. No matter how anyone attempts to spin the economic impacts, this bill is wrong for America. Even using optimistic assumptions of increased nuclear plant generation and deployment of carbon capture and storage, Lieberman-Warner would still cost up to $983 billion in 2030 with a 44% increase in electricity prices.

James Connaughton, the chairman of the White House Council on Environmental Quality, pointed out some of the study’s worst-case economic possibilities in a telephone interview with E&E News (linked here from Gristmill because the original source requires a $ubscription):

>Under any new climate law, EPA acknowledged that gross domestic product should double over the next several decades from its current $13.8 trillion, but the EPA results released Friday also show the Lieberman-Warner bill cutting into that GDP growth.
>EPA models also yielded projections with less of an economic sting, but Connaughton focused on the EPA findings’ high-end costs, which show GDP falling by as much as 3.8 percent, or $983 billion, in 2030 and by up to 6.9 percent, almost $2.9 trillion, in 2050.

The National Wildlife Federation calls the study a quiet acknowledgment by the administration that the bill is doable. They also reminds us of the economic benefits the bill could bring, which the EPA left outside the scope of their analysis:

>It’s important to note that even these modest results don’t tell the whole story. The analysis fails to measure the important economic boom expected from the bill’s aggressive investment in clean energy jobs. In 2006, the renewable energy and energy efficiency industries generated 8 million jobs in America and nearly one trillion dollars in revenue. That’s a good start, but it is time for America to unleash the full economic power of a clean energy future.

Finally, the Center for American Progress says that the study was incomplete, but still shows that the bill is affordable:

>The EPA study was tilted toward overestimating carbon dioxide pollution reductions costs, while ignoring other important elements. The study includes no modeling of economic benefits from carbon dioxide reductions, the cost of inaction, or the significant greenhouse gas reductions from the Energy Independence and Security Act, which became law on December 19, 2007.
>The EPA study also ignores S. 2191’s rebates and energy-efficiency assistance to low- and middle-income families. It does not attempt to estimate the tens of thousands of clean energy jobs from the additional 61 gigawatts of renewable energy—equal to 120 new 500 megawatt power plants—spurred by this bill. And it does not calculate the economic cost of inaction from prolonged drought, more severe storms, larger wild fires, and many other effects linked to global warming.
>Despite these shortcomings, the EPA study still indicates that the global warming reductions mandated by S. 2191 would have limited impact on overall economic growth, and lead to very small increases in electricity prices.

For more background on the Lieberman-Warner <a href=“>bill, see these posts ”“>here, ”">here and here, Congresspedia’s profile here, and, of course, the relevant news and blog coverage from OpenCongress.

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