The Beacon Hill Institute, the economics pros at Suffolk University in Boston (Go Sawx!), have hit Waxman-Markey (and the like) hard here late in the game. First on “green” jobs, in which they critique three studies that trumpet those beneficial byproducts of global warming reduction initiatives:
“Contrary to the claims made in these studies, we found that the green job initiatives reviewed in each actually causes greater harm than good to the American economy and will cause growth to slow,” reported Paul Bachman, Director of Research at the Beacon Hill Institute, one of the report’s authors….
The authors of the BHI critique identified a fundamental error in each of these studies, specifically “counting the creation of a green job as a benefit and rationale for its proposed program in and of itself.”
The BHI study also stresses that “Jobs — green or otherwise — are not benefits but are instead costs. If the green job is a net benefit it has to be because the value the job produces for consumers is greater than the cost of performing the job. This argument is never made in any of these three green jobs studies.”
And today comes their look at Waxman-Markey:
Cutting CO2 emissions by 83% over four decades – as proposed in the Waxman-Markey Discussion draft – might appear to be an easy goal, but the results indicate otherwise. The first point to note is that such cutbacks, whether done by the U.S. alone or in concert with others, would all be more expensive than doing nothing at all.
If the United States were to cut emissions alone, with no cutbacks (relative to trend) by other countries, it would bear the full cost of abatement (PV = $3.85 trillion) while reaping only about $0.27 trillion in benefits. This represents a net cost, relative to doing nothing, of $3.42 trillion. It would cost the United States $154 billion by 2020 and $1.318 trillion by 2050.
By 2045, the tax on carbon would need to rise to $714 per metric ton of carbon (equivalent to $195 per metric ton of CO2) to induce consumers to make the necessary cutbacks; from Table 1 we see that this would add $1.73/gallon to the cost of gasoline (in 2005 dollars) and 6.7 to 14.9 cents to a kWh of electricity – essential doubling the retail price of electricity.
The benefits are modest because by 2050 the U.S. would account for less than a sixth of world emissions of CO2; reducing U.S. emissions by 83% (relative to the 2005 level) by then would cut global emissions by just 11%, which would have a modest effect on climate, moderating the increase in global temperature by 2100 from 3.30ºC (the baseline no-controls case) to 3.12º.
As I’ve said over and over again: all cost, no benefit. All but a few House members have probably made up their minds on this already, but the Senate still has to address it.