A January 23rd article by Usha Lee McFarling in the LA Times, "Studies Support Emissions Plans" gives the lie to the notion that mitigation of greenhouse gases will be bad for the economy. This is an extremely important issue. One study produced by the Center for Clean Air Policy says, "Based on our independent analysis of greenhouse gas mitigation (GHG) options for the State of California, we conclude that Governor Schwarzenegger's goal of reducing GHG emissions to 2000 levels by 2010 can be met at no net cost to California consumers."
Another study performed by the California Climate Center at Berkeley found that climate protection measures proposed for the state would boost economic activities, creating 20,000 new jobs and increasing gross state product by $60 billion by the end of the state's mitigation date of 2020. The executive summary for their 10-chapter report says, "Preliminary modeling indicates that just eight policies that were analyzed in detail can achieve almost half of the Governor’s 2020..."
While the Center for Clean Air Policy study only analyzed development up through 2010, the Climate Center's model attempted to extrapolate out to 2050. The report's authors wrote, "...technology innovation, spurred by a combination of regulations and incentives, will be needed to shift the economy over the long term away from carbon-based fuels and meet the 2050 targets. By acting now, California can gain a competitive advantage by becoming a leader in the new technologies and industries that will come into existence worldwide due to the common goal of reducing GHG emissions."
Why is this important? Because the prevailing "wisdom" in Washington and state houses throughout the country is a reflexive belief that attacking the greenhouse gas problem wholeheartedly through a combination of incentives for business and consumers and direct regulatory standards for emissions--along with carbon emissions trading programs--will inevitably be bad for the economy. During the early days of U.S. consideration of the Kyoto Protocol (under William Jefferson Clinton) a number of studies were published claiming that costs to American households (since all regulatory costs eventually wind their way down to consumer prices) would range anywhere from $150 a year to nearly $3,000 or more a year.
A good source on how people were thinking about these issues back there in the day is a summary Heritage Foundation did in 1998 called, "The Department of Energy's Report On the Impact of Kyoto: More Bad News For Americans". Yes, it's a bit partisan, but this was standard logic for that time period. They note that were the U.S. to implement the goals of the Kyoto Protocol gasoline prices would increase by 66 cents "from an anticipated baseline price of $1.25 without the Protocol's restrictions to $1.91 a gallon..."
As always, the Congressional Research Service provides an awesome array of references from that time period. Their Global Climate Change Briefing Book is a phenomenal portal into the last days of the 20th century.
The mother of all these studies was performed by the economic research group WEFA for the American Petroleum Institute and published in 1998. Global Warming: the cost of the Kyoto Protocol is a marvelously data-rich analysis on what the nominal goals of Kyoto would mean to the American economy. So profoundly thorough is this study that WEFA has been able to break down these economic impacts by state. They show, for instance that unemployment would increase from 3.8% in Michigan to 5.54% (nationally, the average shift would be from 5.43% to 6.45%). As of December 2005 Michigan's unemployment rate was 6.7% and this was before Ford and GM announced all their lay-offs--lay-offs due to the fact that these companies were so busy selling SUVs that they didn't realize that energy efficiency might be an important thing to invest in (the media doesn't talk about this, but the only way these companies have even been able to make any showing in the hybrid marketplace is by licensing the technologies owned by Toyota and Honda).
It should be noted that any study performed before 2005 probably means very little in today's world. Natural gas, oil, gasoline, and electricity prices have all sky-rocketed within the past several years. The premise of most of the models being deployed was based on energy cost comparisons between "conventional technologies" and new or best available technologies. Obviously, alternative energy sources and conservation are far more economical today than they were in the late 1990s and early years of the new millenium. It should be noted as well that technologies and other energy innovations have come a very long distance in the past three years: hybrid cars, wind energy, photovoltaics, cheaper compact fluorescents, energy efficient appliances, state-of-the-art home building techniques...you name it, we're moving forward fast these days.
In addition, any study that does not take into the account the costs of notaddressing global warming--ie, not factoring in catastrophic damage from hurricanes, flooding, heat deaths, and droughts (all recently occurring due in part to climate change) is now virtually meaningless. If you're having trouble still with this reality, ask the world's top insurance companies what they think of the implications and risks associated with global warming.
So, it's a new world, isn't it? I'd like to see the WEFA study revisited. I believe Mark Zandi, one of WEFA's principals, wouldn't do a stilted analysis. We know a great deal more than we did in 1998. We've grown up, haven't we?
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