Comment

December 2009

Economists question global warming legislation

Economists told a U.S. Senate panel last month that legislation to combat global warming could kill jobs in refining, manufacturing, and other industries, even as union and energy company leaders hailed the promise of a new “green” workforce trained in renewable power .

The Houston Chronicle reported the comments came in testimony before the Senate Finance Committee, which was examining how proposed caps on greenhouse gas emissions blamed for global warming could bring major changes to the U.S. energy workforce by shifting jobs away from dirtier oil and natural gas toward wind, solar, and nuclear power.

Senator Max Baucus, D-Mont., chair of the Finance Committee, said he was “committed to passing meaningful, balanced climate change legislation,” but added Congress must “work to minimize any job losses.”

The finance panel—a committee filled with members from the Midwest, Rust Belt, and coal-reliant regions who have been critical of the leading climate change legislation—will play a key role in shaping the pending legislation.

Under the House-passed bill and a similar Senate measure by Senators John Kerry, D-Mass., and Barbara Boxer, D-Calif., companies could stay within steadily tightening caps on emissions by buying and trading allowances to release carbon dioxide and other greenhouse gases.

The Senate and House cap-and-trade plans would distribute 30% of the allowances for free to state-regulated local electric distributors in the hopes they would prevent price spikes for consumers. Half of the free allowances for electricity distributors would be handed out based on sales, with the other half being allocated based on historic emissions—a formula that has angered Midwestern senators from states that are reliant on coal-fired power. They argue the formula would give coastal customers more of the credits and are pushing for the allowances to be mostly distributed based on previous emissions.

Under the Kerry-Boxer bill, emissions allowances also would be given to refiners, manufacturers, and other trade-sensitive industries during the initial years of the carbon dioxide cap.

Even so, manufacturing would sustain heavy job losses under the climate change proposal, predicted Margo Thorning, chief economist for the American Council on Capital Formation, a conservative think tank. Thorning estimated even with new jobs created in “green industries,” there would be a net loss of 80,000 jobs in 2020, with more than half of them from the manufacturing sector.

Kenneth Green, a resident scholar with the American Enterprise Institute, another conservative think tank, said the proposed cap-and-trade program “will cause significant economic harm and will kill and export jobs, for little or no environmental benefit.”

Kerry took issue with those forecasts and said they did not include the cost of inaction—that global warming could increase prices in the form of crops that are more expensive to produce and “rivers that are more polluted that we have to clean up.”

Abraham Breehey, the legislative affairs director for the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, said global warming legislation would spur new “demand for climate solutions (that) will create job opportunities across the economy.”

Kerry said U.S. caps on carbon could encourage investments in clean energy technology. However, he said, “if we just sit here … and don’t do this, China, India and a host of other countries are going to clean our clock economically. … Other countries are going to beat us to the technologies, and we’re going to be sitting there sucking wind.”

Separately, Jack Gerard, president of the American Petroleum Institute, said in a statement that the Finance Committee was involved in a “false” choice in “choosing between jobs in the traditional energy sectors, like the oil and natural gas industry, and new green jobs.”

Major oil and gas developers already are “creating new green jobs through (their) investments in zero- and low-carbon technologies,” Gerard said.