Statement on NAM-ACCF Analysis of Lieberman-Warner Climate Security Act

March 13, 2008

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


(Washington – March 13, 2008) An analysis released today by the National Association of Manufacturers and the American Council on Capital Formation dramatically overstates the potential cost of reducing global warming pollution under the Lieberman-Warner Climate Security Act and ignores the severe economic impact of inaction.


 “Unfortunately, we’ve seen this sort of scare tactic every time Congress takes up a major environmental law. The fact is, the dire predictions never come true,” said Steve Cochran, director of the National Climate Campaign at Environmental Defense Fund. “Instead of rehashing wrong assumptions about climate policy, it would be much more productive for NAM and ACCF to take a hard look at what it will cost if we do nothing at all.”
The analysis of S. 2191 released today is based on the National Energy Modeling System (NEMS) model, which is used by the Energy Information Administration. However, the “input assumptions” used by NAM and ACCF produce dramatically different results from other estimates – including previous EIA modeling of similar legislation and work done by the Massachusetts Institute of Technology.
The misguided assumptions used by NAM and ACCF include:
  • No use of market tools to manage costs. This is directly counter to the provisions of the Climate Security Act, which provides for banking and borrowing of emissions allowances to keep costs down.
  • Artificially limited use of offsets. The analysis caps offset use at 20 percent. This also is counter to the provisions of S. 2191, which allows 30 percent of reductions from offsets.
  • Very limited carbon capture and storage (CCS). The modeling appears to assume that there will be few if any coal plants built with CCS, causing prices to go through the roof.
  • Very limited use of renewable energy. In fact, the “low-cost” assumption about wind power (less than 5 gigawatts per year) is lower than the actual amount of wind power deployed in 2007 (5.244 gigawatts).
  • Unreasonably high oil prices and no price response as a result of climate policy. MIT on the contrary predicts producer prices falling as a result of curtailed demand.
Most importantly, the analysis only looks at one side of the ledger. NAM and ACCF consider the costs of reducing emissions, but not the costs of inaction. 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.
About Environmental Defense Fund
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