NCPA - National Center for Policy Analysis

STUDY SHOWS CAP AND TRADE LEGISLATION COULD COST 3 MILLION JOBS

May 1, 2009

A new study by the Charles River Associates exposes the negative economic consequences of the proposed cap and trade legislation being considered in Congress.  The study predicts broad increases in energy costs that will result in the loss of more than 3 million jobs by 2030 and a cost of more than $2,100 per household if this legislation is passed.

Researchers found that the climate provisions of the Administration's proposed FY 2010 budget would be expected to have significant economic and energy market impacts.  The model results indicate that market shares would shift within the energy sector:

  • Natural gas is projected to expand its market share, particularly for power generation.
  • Increased imports of natural gas are estimated to supply most of the increased domestic demand for natural gas, whereas domestic natural gas production is projected to increase only slightly.
  • Both oil and coal are estimated to decline in market share; these measures would tend to lower rates of return on investments in the production of domestic oil, and petroleum products.
  • With lower rates of return, domestic investment levels would be expected to fall; domestic crude oil and refined products production are projected to decline.
  • The share of renewable energy is estimated to rise and total energy consumption in the U.S. economy is estimated to contract.

The model results also indicate that business users and consumers would face higher energy costs. The resulting higher energy production and transportation costs in-turn would lead to increased costs of other goods and services throughout the economy.  As the costs of goods and services rise, household disposable income and household consumption would fall.

Overall, the economy would be expected to grow more slowly, leading to substantial differences in disposable income and personal consumption, say researchers.

Source: Charles River Associates International, "Impact on the Economy of the Climate Provision in the Obama Administration's FY 2010 Budget Proposal," CRA International, April 2009.

For text:

http://www.naw.org/files/Study.pdf

 

Browse more articles on Environment Issues