Climate bill critics battle over costs

Climate bill critics battle over costs

Democratic supporters of climate legislation on Tuesday battled critics who argue cutting carbon emissions will hurt the economy and cost jobs.

The setting was a Senate Finance Committee hearing on climate change and job creation that served as another reminder of how the debate over carbon has as much to do with the economy as with the environment, especially as unemployment  levels rise.

Backers say the legislation will create new jobs and give the United States a leg up in a new green, global economy. Opponents argue it will raise energy prices by forcing greater reliance on renewable energy and other climate-friendly sources of power that cost more than coal and will be an overall drag on the economy.

Much of the focus on Tuesday centered on a study paid for by the American Council for Capital Formation (ACCF) and the National Association of Manufacturers (NAM), both critics of climate bills in Congress.

It projected a significantly higher cost to the overall economy from climate legislation than have studies done by the Energy Information Administration (EIA), Environmental Protection Agency (EPA) and Congressional Budget Office (CBO).

Margo Thorning, an economist at ACCF, said climate legislation could cost between 1.7 million and 2.4 million jobs by 2030 as companies shift overseas to cut their energy costs. Households could have $1,200 less to spend annually.

But if the United States acted alone, the overall global emissions reductions would be negligible, she said.

“It’s clear that the costs outweigh the benefits,” Thorning said.

Senate Finance Committee Chairman Max BaucusMax Sieben Baucus2020 Dems pose a big dilemma for Schumer Steady American leadership is key to success with China and Korea Orrin Hatch, ‘a tough old bird,’ got a lot done in the Senate MORE (D-Mont.), whose support is thought to be critical to the ultimate success of climate legislation in the Senate, referred to the ACCF/NAM study as an “outlier,” noting other government studies suggested more modest costs.

EPA, for example, has said the costs to households could be as low as $80 a year.

Thorning defended her study and said others make overly optimistic assumptions about the availability of technologies, like carbon capture and sequestration at coal plants, that will reduce emissions.

An EPA analysis, for example, projects more than 150 new nuclear plants will be built by 2050; there are only 100 plants in operation in the United States currently.

“We think that may be unrealistic,” she said.

Kenneth Green, a scholar at the American Enterprise Institute, also criticized the cap-and-trade approach that the climate legislation in Congress relies upon.

“The tighter the emissions controls, the tighter the economic straitjacket,” Green said.

The ACCF/NAM study has its own critics, who argue it undersells provisions in climate legislation intended to keep costs in check. For instance, it estimates that only half of the offsets the House climate bill allows companies to use to meet emissions reductions targets will actually be available. Offsets are projects outside of the smokestack that remove carbon from the atmosphere or prevent its release. Companies can invest in offsets to help them meet their emission reduction targets.

Another criticism of the ACCF/NAM study is that it projects modest growth in renewable energy development.

Sen. John KerryJohn Forbes KerryOvernight Cybersecurity: Tillerson proposes new cyber bureau at State | Senate bill would clarify cross-border data rules | Uber exec says 'no justification' for covering up breach GOP probes put new focus on State Will FISA secrecy doom democracy? MORE (D-Mass.), a Finance Committee member and lead author of the Senate climate bill, said the ACCF/NAM study was not credible.

He also noted that none of the studies weigh the costs that global warming may have on the economy, from lower crop yields to greater damage from more intense storms to higher insurance premiums.

Kerry noted a new International Energy Agency estimate that notes for each year the world delays addressing climate change there will be an added $500 billion to the costs of reducing greenhouse gases.

“We have to employ the precautionary principle here,” Kerry said.