CBO Director: Cap-and-Trade Impact on Employment 'Small'
The director of the CBO switches from healthcare to climate change
Douglas Elmendorf, the director of the nonpartisan Congressional Budget Office, might be the busiest man in Washington. And the most blunt.
A day after the Senate Finance Committee approved Sen. Max Baucus's $829 billion healthcare bill, thanks in part to CBO analyses showing that it would insure millions of people without raising the deficit, Elmendorf was back in the Senate this morning, testifying about climate change.
On Tuesday, hours before the Finance Committee's vote, Elmendorf had frankly told the committee that he did not know whether the bill before it would successfully curb "national healthcare expenditures." This morning, speaking to a different set of senators, he sounded a similar note of uncertainty about the economic impacts of cap-and-trade legislation.
"Senator, I am overwhelmed by the uncertainty of all the things we are trying do to," he told Washington Sen. Maria Cantwell, a Democrat, responding to her friendly question about whether climate change was easier to analyze than healthcare.
Testifying before the Senate Energy and Natural Resources Committee, Elmendorf told Congress that it is very hard for CBO to predict how quickly the United States will be able to switch to an economy that doesn't rely so heavily on fossil fuels—and what the cost of the transition will be.
"One of the great uncertainties of the cost of reducing carbon emissions is how readily the economy can move," he said, noting that the CBO is to a large degree "guessing the rate." Elmendorf added, "I used the word guess deliberately."
Elmendorf did have estimates about the impact of cap-and-trade legislation on jobs. The effect on total employment, he said, will most likely be "small." But he added that an emissions cap would significantly affect jobs in particular industries and regions.
"Jobs will emerge in industries that develop" clean energy and become more energy efficient, Elmendorf said, but that "does not mean there are not substantial costs borne by affected industries and affected areas."
In his submitted testimony, Elmendorf wrote that "industries that produce carbon-based energy—coal mining, oil and gas extraction, and petroleum refining—would probably suffer significant employment losses over time." He also said that job losses would trickle into energy-intensive industries like "chemicals, primary metals, minerals mining, nonmetallic mineral products, transportation, and construction."
Still, the impact on overall employment, he estimated, would be "small."
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Reader Comments
Consumer Cost of Cap and Trade
It seems the focus of the cost of cap and trade is on the cost of residential energy and the impact on the household monthly power bill but that is only the tip of the iceberg. Look around and everything you see including the food on the table will cost more. Everything you consume will be costing more. Your property taxes will be impacted as the county's cost of roads and all the infrastructure will cost more and will be passed with an increase in ad valorem taxes. It takes energy to extract, transport, and refine crude oil which will translate into higher gas prices at the pump. It takes energy to produce food crops and today this nation enjoys food prices the envy the world over but not tomorrow. Brazil, Russia, China, and India have declared they will not impose this burden on their citizenry and will continue with their expanding economic growth. China continues to build coal-fired electric generating facilities at an unprecedented rate. Why is this Congress and this Administration going to impose this burden on its citizenry when unemployment is approaching 10%, when home foreclosures are at record highs, when the increase in our national debt is beyond comprehension, and when the future of our children and grandchildren is being squandered.
Support for cap-and-trade has evaporated
Daily I read editorials, comments and letters-to-the-editor from all over the nation. When the House passed the cap-and-trade bill it was maybe 2-to-1 against cap-and-trade, opinion now is off the charts against it. This agrees with what I've read in the polls: 'attempting' to slow climate change is a low priority among Americans.
Frankly, I don't see Americans supporting cap-and-trade or any CO2 regulation until we have our own 'Climate Truth Commission.' ...and no longer rely upon the climate opinions of the United Nations. The UN is a biased political organization whose climate forecasts haven't proven prescient. The United States needs our own objective, transparent climate commission to think-through global warming.
-- Robert Moen, www.energyplanUSA
Cap and Trade Impact
It all depends on what the final bill requires. Obama proposes a 14% reduction from 2005 CO2 output levels by 2020. The house proposes 17%. The senate bill proposes 20%.
The per capita reductions are 8-10% higher than those numbers due to population growth and energy consumption growth since 2005.
Taking the extreme case of the senate bill, how do we get to a 28% per capita reduction in CO2 output in the next ten years?
Nuclear power plants take 10 years to permit and build, so they won't have any impact by 2020. CO2 capture technology from coal fired power plants has yet to be tested even on a small scale, so the impact of that technology will not be much in the next ten years.
Energy efficient cars, trucks, buses, trains and airplanes would have to be readily available in the market place today to impact the overall fleet of those modes of transportation in ten years due to the normal turnover of the fleet. Their availability is limited at this point in time.
Wind and solar power can be added in the next ten years, but the nation's distribution grid must be expanded to get the power to where the users are. I am not aware of any current plans to do this other than in the state of Texas (spending 6 billion dollars to get power from west texas to the east).
So the reductions must come from everyone using less energy. Be prepared to drive less, set your thermoststs higher in the summer and lower in the winter, and consume fewer goods that are transported long distances.
If we don't control our energy consumption, cap and trade will drive energy prices so high that we are forced to control consumption. We will fondly remember the days when gasoline and heating oil were "only" 4 dollars per gallon.
I wish the politicians who are developing these bills would publish a timeline of what is required and when it will be available to achieve the desired goals. I see progress that has the potential to prevent growth in CO2 output over the next ten years. I see nothing in the works that will reduce CO2 output in that time span. I don't mean to be so negative, but I can't see where the reductions in CO2 output will come from over then next ten years.
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