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Climate Change Policy as an Economic Redevelopment Opportunity: The Role of Productive Investments in Mitigating Greenhouse Gas Emissions


October 1, 2009

Research Report E098

Authors:

John A. "Skip" Laitner

Description:

This report is designed to set the record straight about the long-term economic impacts of cap-and-trade legislation. Many economic assessments of climate change policies completed to date, especially from opponents of the Waxman-Markey bill (H.R. 2454), make a flawed argument that meeting greenhouse gas emissions goals will result in job losses and economic costs to American families and businesses. Those projections are largely the result of a faulty assumption that that all mandated carbon emissions reduction policies must be inherently costly regulations, rather than potential opportunities and incentives for productive investments with positive economic payoffs.

As this report shows, however, the more cap-and-trade legislation is crafted to spur investments in energy-efficient devices, materials, and designs (such as energy-saving home appliances, better-insulated buildings, and more efficient industrial equipment and vehicles), the more it will lead to increases, not decreases, in the number of jobs in the U.S. economy. Furthermore, it will lead to reductions, not rises, in our energy bills, with negligible impact on the size of the economy.

In this report, ACEEE used its state-of-the-art "DEEPER" energy policy model to examine the economic impacts of three cap-and-trade policy scenarios designed to meet goals for reducing carbon emissions. The model specifically takes into consideration the potential economic benefits of energy efficiency investments. Depending on the level of efficiency investments within each scenario, the net savings in the nation’s energy bill ranges from $350 to $450 billion by 2030. This grows to as much as $720 billion by 2050. At the same time, the nation benefits from higher levels of employment. The net job benefits range from over 400,000 to one million new jobs by 2030, growing as high as 2.5 million by 2050.