New Economic Impact Report on Lieberman-Warner Fails to Settle Debate

Posted on April 30, 2008 by Dennis Pfaff

A new federal economic analysis of the Lieberman-Warner Climate Security Act shows that the measure wouldn't impede strong growth in the United States; whereas a new federal study of the bill forecasts a gloomy future of  higher energy prices and problems for industry.

It's the same document. Just depends on who's looking at it.

Produced by the Department of Energy's statistical arm, the Energy Information Administration, the new report seems to have done little to foster agreement between the warring sides in the battle over the greenhouse gas reduction bill. The Senate is poised to take up the bill, sponsored by Sens. Joe Lieberman, I-Conn., and John Warner, R-Va., in June.

Like a previous government analysis of the bill, which would cap emissions and establish a trading program, the new report shows some economic impacts but it also predicts by mid-century the legislation would produce better than 50 percent cuts in the production of heat-trapping gases (see text of report here). 

According to the new study, the drag on the gross domestic product between 2009 to 2030 would be between 0.2 percent and 0.6 percent. The bill's impacts would fall more heavily on industry than on other parts of the economy, the report predicted. While comparing the two analyses is difficult because of differences between them, the overall economic effects forecast by the new document appear to be generally smaller than those found by the U.S. Environmental Protection Agency in its  analysis put forward earlier this year (see Climate Law Update story here).  

Perhaps not surprisingly, supporters and opponents of congressional action to address climate change saw the energy department report dramatically differently. Oklahoma Sen. James Inhofe, a leading Republican global warming skeptic (pictured), said the analysis showed the bill "is wrong for America." Environmental groups and congressional supporters of the legislation saw it as confirming the bill as economically benign.

    

"Two separate government analyses have now come to the same conclusion," Lieberman said in a statement (see text here).  "Our bill curbs global warming without harming the U.S. economy."

Lieberman said the new study predicted impacts "below even the modest figures" cited by the EPA He said the energy department also found that the bill would benefit wind and solar, as well as carbon capture and storage technology.       

The Environmental Defense Fund, which supports using markets to tackled climate change, also lauded the study's conclusions, as did the Natural Resources Defense Council (see press statements here and here). Environmental Defense recently released its own analysis of Lieberman-Warner, concluding that economic models showed cap-and-trade "consistent with long-term economic growth (see Climate Law Update story here).”

Both environmental groups characterized the economic pull of the legislation as virtually unnoticeable.

"It's like two cars driving different routes from New York to L.A. and predicting one will get there at noon and the other will arrive at 12:45," said Environmental Defense's climate campaign director Steve Cochran in the group's statement. NRDC said bill's impact would be equivalent to a two-month delay in growth.

Environmental Defense also again noted, as it has in the past with other studies, that the document didn't look at the price of doing nothing, including higher insurance costs, damage from droughts and more intense storms.

But not so fast. Inhofe, the ranking minority member of the Senate Environment and Public Works Committee, had his own take on the study, which also foresaw potentially higher prices for coal and natural gas. Inhofe focused the study's predictions of higher energy costs for households, and the consequences for industry. He also said the energy department analysts also based some assumptions on a "massive and unrealistic" boom in the construction of new nuclear plants (see statement here). Said Inhofe:

"Only in Washington could higher energy prices be characterized as not negatively impacting the U.S. economy. If Democrats have their way, Americans will pay significantly more at the pump, in their homes and in many cases, with their jobs, all to accomplish an undetectable impact on the climate."

The EDF's Cochran might have had Inhofe in mind when he declared the debate over:

“Anyone claiming the Lieberman-Warner bill will bring economic doom can now go sit with those still saying climate change is a hoax. It’s time for the Can’t-Do crowd to retire the scare tactics.”

But there's little evidence the two sides will see eye-to-eye anytime soon.

(Photo: Sen. James Inhofe's office)

  
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Bush Weighs in on Greenhouse Gas Reductions, Critics Rip Effort

Posted on April 16, 2008 by Dennis Pfaff

President Bush Wednesday set a goal of halting the increase in the nation’s greenhouse gas emissions by 2025, a significantly less ambitious objective than that established by some of the states, including California.

But in a speech in the White House Rose Garden, Bush also opened the door to a binding international agreement on cutting emissions.

In his speech, the president warned against raising taxes or imposing mandates or demands for “sudden and drastic emissions cuts that have no chance of being realized and every chance of hurting our economy.” He also argued in favor of promoting “emission-free nuclear power” and encouraging investments needed to produce electricity from coal without releasing carbon (see full text of statement here; see White House fact sheet here).

Bush called the new goal to stop the growth of U.S. greenhouse emissions by 2025 “a major step forward in America’s efforts to address climate change.” Yet he outlined few specific steps, beyond some already taken such as requiring better automobile fuel efficiency, to achieve the target. Among his goals, he said, was to create a new incentive to make the development, commercialization and use of new lower-emission technologies more competitive.

By contrast, California’s anti-global warming law, AB 32, requires the state to roll back its emissions of heat-trapping gases to 1990 levels by 2020, an estimated 25 percent reduction. Even further cuts would be required later under an order issued by Gov. Arnold Schwarzenegger (see text here). Additionally, all three major presidential candidates have endorsed emissions limits and trading programs.

Bush also expressed concern over efforts to employ existing laws, such as the Endangered Species Act and the Clean Air Act to tackle the problem. Environmentalists have been trying to prod action with the species law (see Climate Law Update stories here and here). California, and by extension other states, want to use the air law to control climate-changing emissions from cars but they have been thwarted by Bush administration officials (see Climate Law Update story here). In addition, the U.S. Supreme Court has required the U.S. Environmental Protection Agency to consider whether to regulate greenhouse gases as air pollutants under the law (see Climate Law Update stories here and here).

Bush, in his speech Wednesday, predicted the application of those laws could have widespread intrusive effects, forcing the federal government to "act like a local planning and zoning board, [having] crippling effects on our entire economy." 

The president, who has opposed such international treaties as the Kyoto Protocol, said that "all major economies" must take action to make a dent in the problem. He then suggested the United States would be willing to enter a new pact:

"Like many other countries, America's national plan will be a comprehensive blend of market incentives and regulations to reduce emissions by encouraging clean and efficient energy technologies. We're willing to include this plan in a binding international agreement, so long as our fellow major economies are prepared to include their plans in such an agreement."   

Congressional critics of Bush also quickly ripped the president’s stance. U.S. Sen. Barbara Boxer, the California Democrat who chairs the Senate Committee on Environment and Public Works, issued a statement (see text here) saying Bush’s “plan to have America stand by while greenhouse gases reach dangerous levels and threaten America and the world is worse than doing nothing – it is the height of irresponsibility.” Although greenhouse gas emissions have shown some decreases lately in the United States (see Climate Law Update story here), officials estimate they have grown nearly 15 percent since 1990 (access latest inventory here).   

Others, meanwhile, reacted more cautiously. Sens. Joseph Lieberman, I-Conn., co-sponsor of legislation that would limit greenhouse emissions and set up a trading program to help control them, said he shared the president’s preference for a market-based approach over the imposition of new carbon taxes. Lieberman said he did not believe Bush’s statement would hamper the chances of the bill he and Sen. John Warner, R-Va., are sponsoring. The measure is expected to come before the Senate in June (see text of legislation here), .

Warner, in the same statement, said the president’s support for “measures to reduce greenhouse gas emissions in the U.S. is welcome news as the Senate prepares to consider climate change legislation this summer.” Warner also praised Bush's call for an international approach to the issue (see full text of statement here).

(Photo credit: White House)
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Some Companies Push for American Action On Global Warming

Posted on March 18, 2008 by Dennis Pfaff

Even during a period of scary economic headlines, some experts see efforts to control climate change through market mechanisms as a green light at the end of a dark tunnel.

The green lobbying group Environmental Defense Action Fund has enlisted top officials from manufacturing companies Deere & Co. and Eaton Corp. to appear in commercials touting the benefits of a national limit on emissions, as Congress nears a debate on the Lieberman-Warner bill that would establish a cap and trade system.

In a separate development, executives of Lehman Brothers, a major Wall Street firm, suggested that moves underway in the United States and elsewhere are likely to boost the carbon market, according to a Reuters report.

According to Reuters, Theodore Roosevelt, Lehman's council on climate change chairman, told reporters at a news conference in Tokyo that he was “fairly confident” the United States would pass “substantial climate change legislation” no later than 2010. The country’s involvement would then open “the possibility of a serious dialogue” with Asian countries on how to approach the problem. Another Lehman official quoted by the news service noted exchanges in Asia have recently indicated they want to get into carbon trading.

The report came on the same day Lehman found itself embroiled in the continuing Wall Street jitters over the stability of financial firms. The New York Times reported the firm’s stock fell 20 percent by the end of the day Monday. On Tuesday, the company reported a first-quarter net income of $489 million, a 57 percent drop compared to last year's first quarter.

Announcement of the new environmentalist-industrialist ad campaign comes as discussion over the economic impact of addressing climate change heats up in advance of the anticipated June debate in the Senate over the Lieberman-Warner Climate Security Act. Last week, the National Association of Manufacturers and the Environmental Protection Agency released separate reports assessing the economic price tag from the legislation, sparking a spirited debate (see previous story). The legislation is named for its primary sponsors, Sens. Joseph Lieberman, an independent of Connecticut, and John Warner, a Virginia Republican.

In a statement, the Environmental Defense Action Fund, which is the non-tax-exempt lobbying arm of the Environmental Defense Fund, said that the industrial executives believe that “solving climate change is an opportunity to jumpstart the U.S. economy" and that quick action by Congress means "America can own the energy technologies that will power" the century.

"Amid a heated national debate over job losses, the business leaders point to the job-creating power of a national cap on global warming pollution,” the statement said.

The ads feature Chief Executive Officer Robert Lane of Deere, which is a major manufacturer of farming equipment and fellow CEO Alexander Cutler of Eaton, a company that produces devices that can improve the energy efficiency of buildings.

(Photograph of Sen. Joseph Lieberman via Wikipedia)

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