A Senate committee approved a broad bill on Wednesday night to address climate change, a major step toward passage of a measure that would for the first time slow and then reverse emissions of the gases that scientists blame for the warming of the planet.
The Environment and Public Works Committee split largely along party lines on the bill, which calls for a roughly 70 percent cut from 2005 levels by 2050 in the production of carbon dioxide and other climate-altering pollutants.
The legislation would limit emissions for virtually all sectors of the economy, but would allow swapping of pollution permits among carbon emitters.
Some of the permits would be granted free at the beginning of the program; others would be auctioned, with the money used to develop clean technologies and aid the poor in paying the higher energy bills such a system would be likely to entail.
The so-called cap-and-trade plan is modeled on a successful system for sulfur dioxide and mirrors some aspects of a carbon-trading program in Europe.
The primary indicator of whether the resulting climate change legislation is meaningful is its affect on energy prices. If energy prices ultimately (stay the same) rise then the legislation is (not) meaningful.
The bill’s chief critic on the committee, Senator James M. Inhofe, Republican of Oklahoma, said the measure would impose an unacceptable price on American industry, homeowners and consumers and cost up to 2.3 million jobs over the next decade.
2.3 million jobs over 10 years is 230,000 jobs per year. Putting this in context, according to the BLS, there are 7.2 million unemployed and 146 million employed people in the U.S. This gives an unemployed rate of 4.70%. Adding 230,000 unemployed and keeping all other numbers the same, the unemployment rate will rise to 4.85%. This isn't a recession-style unemployment rate.
Plus, it is not likely that energy sectors will lose jobs while nothing else changes. As carbon-intensive prices rise and jobs are lost in those sectors of the economy, demand for clean energy and other products will rise. As prices of other products rise labor demand for labor in those sectors will rise and some of those 230,000 per year will find other jobs. (Of course, maybe the 230,000 number is the result of a general equilibrium analysis. If so, please ignore this paragraph.)
Opponents of most all environmental regulation have used the "lost jobs" argument against regulation. And here we are at full employment 27 years after the Clean Air Act and 25 years after (what became known as) the Clean Water Act. Environmental regulation that pays attention to regulatory costs has little effect on macroeconomic performance.