Global Warming vs. Unemployment

Congress is gearing up for another run at a cap-and-trade law and opponents say it will cost too many jobs. Are they right?

NEW YORK ( -- Get ready for fireworks. As congressional Democrats begin drafting another bill regulating greenhouse gases, opponents are already saying it would cost millions of jobs amid the worst recession in decades.

To be sure, estimates on how many jobs may be lost and when those loses would come vary widely depending on who's counting.

The most middle-of-the-road analysis seems to come from the government's Energy Information Administration. EIA said last year's failed Lieberman-Warner greenhouse gas bill would result in about 100,000 fewer jobs per year.

But the EIA's estimate is taking fire from all sides. Opponents of the bill say it is far too low, while supporters say it is far too high.

The opposition

A cap-and-trade is "code for increasing taxes, killing American jobs and raising energy costs for consumers," House Republican leader John Boehner said last week, after it emerged that President Obama had included funding from a cap-and-trade plan in his budget proposal.

Under a cap-and-trade, the government would auction permits each year to emit carbon dioxide. Industry could then trade those permits among themselves, or pay to invest in cleaner technology. Each year the number of permits auctioned declines, resulting in cleaner air and more expensive permits, giving companies the financial incentive to invest in cleaner technology.

One industry study said a cap-and-trade bill could cost nearly two million jobs in the first two years after it's enacted.

"With the economy what it is, raising energy prices is the wrong thing to do right now," said Margo Thorning, chief economist at the American Council for Capital Formation, which issued the study along with the National Association of Manufacturers.

Energy intensive industries like chemicals, autos, steel making and electronics would be particularly hard hit, said Thorning. As the costs to pollute increase, she expects they would shift operations overseas to countries with lower energy prices.

Favoring cap-and-trade

Supporters of the bill see this argument as a ruse, designed by an industry that doesn't want to change its habits.

They say the long-term job costs of reducing greenhouse gases are minimal, and in the short run could even create jobs.

A study by the Natural Resources Defense Council said up to 2 million jobs would be created in the first few years as companies and individuals scrambled to make their buildings more energy efficient.

In the long run, they say any loss in manufacturing jobs from higher electricity prices should be more than offset by new jobs created building and maintaining domestic, renewable energy sources.

As for manufacturers moving overseas, they say Europe has had restrictions on carbon for a decade and very few industries have left.

"Most of the industrial base that could leave has already left," said Rick Duke, director of NRDC's Center for Market Innovation.

Loaded with speculation

Predictions for how a cap-and-trade bill would play out are largely speculative, and vary depending on what is put into them. As one expert put it, "they are assumptions based on assumptions, fed into models."

Those seeing a big loss in jobs generally assume that growth in renewable energy will remain similar to what it is now, only a handful of new nuclear plants will be built, techniques for capturing carbon from coal plants will prove difficult and expensive, and the law would give industries few other options for offsetting their carbon output - by doing things like planting trees.

Proponents of a cap-and-trade envision a bigger jump in renewable energy and more widespread use of conservation measures.

EIA, the middle ground in this debate, predicts only moderate growth in renewables but a big increase in nuclear power and technology to capture carbon from coal plants.

The other main difference between the two camps is the urgency in which they view the global warming problem.

Opponents of cap-and-trade don't want to kill the earth. They generally agree humans are causing global warming and that we should reduce greenhouse gasses.

But they say it's not happening as fast and won't come with the possible dire consequences predicted by some, including most scientists.

"I know people like Al Gore say the science is settled, but that's just sheer non-sense," said William O'Keefe, chief executive of the George C. Marshell Institute, a think tank partially funded by industry.

So they say we should continue with the voluntary efforts to reduce greenhouse gasses and wait for mandatory efforts when we have better technology and it won't be so costly.

Supporters of a cap-and-trade - which include most of the world's developed countries - point out that most scientists say global warming may produce very adverse conditions on earth and that humans should limit greenhouse gasses immediately.

The warnings from the scientific community have in fact intensified recently. Most climate scientists now say the earth is warming even faster than was thought when the United Nations released its climate report two years ago.

While cap-and-trade supporters concede it's not certain if the worst-case scenarios will come to pass - massive floods, droughts, the death of millions - they say the mere possibility should push us into strong action now.

"Climate change is real and the effects could be dire if we don't act quickly," said Mindy Lubber, president of Ceres, a coalition of corporations and environmental groups calling for cap-and-trade law. "The country can't afford to wait."


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