EPA Analysis Forecasts Robust Economic Growth With Climate Change Law

March 14, 2008
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Tony Kreindler, 202-572-3378 or 202-210-5791 (cell)

(Washington – March 14, 2008) A new Environmental Protection Agency analysis of leading climate change legislation shows that the U.S. economy can grow substantially with an ambitious cap on global warming pollution, given that the bill will continue to speed the development of advanced energy technologies.
 
“EPA’s results for the scenario that most resembles the bill confirm what we have seen in every reputable analysis. We can grow our economy and tackle global warming at the same time,” said Nathaniel Keohane, PhD, director of economic policy and analysis at Environmental Defense Fund. “The up-front costs EPA identifies are a sound investment for a strong economy down the road.  For clean air, less imported oil, and avoiding the damage of climate change, they are a bargain.” 
 
According to EPA’s analysis of the Lieberman-Warner Climate Security Act (S. 2191), economic modeling with confident high-technology assumptions shows the U.S. gross domestic product (GDP) growing 81 percent between 2010 and 2030 without a national emissions cap – and virtually the same amount, 80 percent, with the bill’s limit on greenhouse gases.
 
Other key findings of the EPA high-technology model run include:
 
  • Under the Climate Security Act, annual household consumption grows by 81 percent from 2010 to 2030 – just two percentage points less than what growth would be otherwise.
  • Emissions allowances would cost $22 - $35 per ton in 2015 and $28 - $46 in 2030 – significantly less than other model runs that do not account for current energy policy and market mechanisms to manage costs.
  • National electricity prices would never rise more than 20 percent over 2005 levels – and that change would happen slowly over decades.
“No single model run tells the full story, but we think the high-technology run in this case represents the best single set of assumptions. It underscores the need for continuing technological innovation, and the best way to drive that is by putting a cap and trade market in place,” Keohane said. “The high technology scenario is a map to the pot of gold, and frankly the most realistic path, but the Bush Administration and Senator Inhofe have forced EPA to run other scenarios that are extremely unlikely — just to frighten the public about doing what’s necessary.
 
“But one key question remains unanswered: what it will cost if we don’t act quickly to cap emissions. There are two sides to the ledger,” Keohane added.
 
According to recent studies by the University of Maryland and Tufts University, unchecked climate change will strain public budgets and impact jobs and competitiveness in every economic sector. According to the University of Maryland study, the most expensive climate policy for the U.S. is not having one.
 
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Environmental Defense Fund is at the forefront of an innovation revolution, developing new solutions that protect the natural world while growing the economy. Founded in 1967 and representing more than 500,000 members, the group creates powerful economic incentives by working with market leaders and relying on rigorous science. For more information, visit edf.org.