Government Report: Climate Bill Shaves $533 billion Off U.S. economy
A Senate bill to cut U.S. greenhouse gas emissions would raise energy prices and also reduce American economic output by more than half a trillion dollars over two decades, according to a government report released on Monday.
Congress is expected to consider climate legislation this fall that would fight global warming. Many businesses worry the U.S. economy would suffer under a measure to impose tough mandatory cuts in emissions.
One proposal, introduced by Sens. Joseph Lieberman and John McCain, would gradually reduce total U.S. emissions by the year 2050 to 60 percent below 1990 levels.
The bill would require companies to report their yearly greenhouse gas emissions and submit a matching number of government-issued allowances to equal the emissions spewed. Companies that emit more would have to buy allowances from cleaner companies that produce fewer emissions.
However, the proposal would cut into the U.S. economy and raise gasoline and other energy prices paid by consumers, according to an analysis of the legislation by the Energy Information Administration.
The legislation “increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services,” the EIA said.
With companies trying to meet the shrinking emissions levels, U.S. economic output would be $533 billion lower over the 2009 to 2030 time period, the agency said.
In the transportation sector, gasoline and other petroleum products would cost more as oil refiners buy allowances to cover the emissions spewed by their facilities.
“The cost of the allowances will be included in the prices of the fuels,” the EIA said.
Gasoline prices are forecast to be 23 cents a gallon higher in 2020 and 41 cents more in 2030 because of the required emission cuts, the agency said.
The EIA said the fuel price increases would not be large enough “to create dramatic shifts in consumer behavior,” but there would be more demand for fuel efficient vehicles.