A nationwide emissions trading scheme in the United States would have no serious detrimental impact on the economy and add less than one cent in the dollar to US households bills, according to analysis released by the Environmental Defense Fund (EDF).
The EDF study analyses the results of five other studies on the impact of emissions trading on the US economy conducted by Energy Information Agency, Harvard University, Massachusetts Institute of Technology (MIT), the Research Triangle Institute and Pacific Northwest National Laboratories.
EDF concluded that reducing greenhouse gas emissions by at least 60 per cent by 2050 would only slow US economic growth by 0.03 per cent a year and maintain an average long term growth rate of 3 per cent. This represents the median impact distilled from the five studies and shows a carbon trading regime would not put big emitters out of business or cost jobs, EDF says.
“Put another way, our gross domestic product is projected to reach $26 trillion in January 2030. If we capped greenhouse gases, according to these studies, the economy would hit that same mark by April,” said report author Nathaniel Keohane, director of economic policy and analysis at EDF.
“If we put a cap-and-trade policy in place soon, we can achieve substantial cuts in greenhouse gas emissions without significant adverse consequences to the economy,” the report says. This echoes the findings of international reports such as the IPCC fourth assessment and the UK Stern Report which drew similar conclusions. Like those reports, EDF warns that the economic cost of doing nothing about climate change will be a lot greater in the long run than the cost of putting a price on carbon emissions.
US President George W Bush continues to reject the idea of a cap and trade scheme and hard emissions reduction targets. He announced last week a goal to stop the growth in emissions by 2025.
The EDF findings are also at directly odds with other US studies including one released in March by the National Association of Manufacturers and American Council for Capital Formation that a cap and trade scheme of the sort being proposed in the Senate in the Leiberman-Warner Bill would result in the loss of up to 1.8 million jobs by 2020 and 4 million by 2030.
EDF’s Peter Goldmark accused some corporate interests of “deliberately trying to scare the American public” over emissions trading in the lead up to the Senate debate over the bill scheduled to begin in June.
A key rider on EDF’s conclusions is that carbon import tariffs may have to be levied on goods coming into the US “to ensure a level playing field”. There is growing support in industrialised nations for such trade support to protect the competitiveness of their import-competing industries by imposing duties on goods coming from developing nations without similar emissions restraints.