Environmental Economics: The Senate cap-and-trade bill (won't create jobs)

October 26, 2009

The Senate cap-and-trade bill (won't create jobs)

From the Sunday NYTimes comes the details (Senate Global Warming ...):

The Senate bill aimed at reducing global warming pollution will initially grant billions of dollars of free emissions permits to utilities and industry but will require the bulk of the money be returned to consumers and taxpayers, according to newly released details.
The bill will also provide a cushion to energy-intensive manufacturing companies to ease the transition to a lower-carbon economy and to help them compete internationally, although the subsidies will disappear over time. The measure also sets a floor and ceiling on the price of permits to emit carbon dioxide and other greenhouse gases.
With these and other changes considered, the Environmental Protection Agency estimates that overall cost of the bill at roughly $100 a year per household, similar to that of a House climate change and energy bill passed in June.
The Senate measure, sponsored by Senators John Kerry of Massachusetts and Barbara Boxer of California, both Democrats, aims to reduce greenhouse gas emissions under a cap-and-trade system that sets a nationwide limit on emissions but allows polluters to buy and sell permits to meet it.
The bill’s targets for overall emissions reductions are 20 percent below 2005 levels by 2020, 42 percent by 2030 and 83 percent by 2050. The House bill’s limits are similar, except the target for 2020 was set at 17 percent after negotiations with utilities and other major sources of emissions.
...
The latest version includes new financing for research on capturing and storing carbon dioxide emissions from power plants, more money for low-carbon transportation projects, additional assistance for rural communities and more favorable treatment for agriculture and forestry.
“We’ve reached another milestone as we move to a clean energy future,” Mrs. Boxer said in a statement, “creating millions of jobs and protecting our children from dangerous pollution.”

Cap-and-trade won't create millions of jobs in the way that a naive reader might perceive that statement. Jobs will be created in certain industries and we'll be able to point a finger at those and count them up. Jobs will also be lost elsewhere as a result of regulation and these will be more difficult to point out and count up. The net effect will be minor noise in the symphony of cyclical, structural and frictional job market. In other words, don't expect the unemployment rate to fall as a result of cap-and-trade.

Posted by John Whitehead on October 26, 2009 at 08:27 AM in Cap-and-Trade Watch, Climate Change | Permalink

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From the Sunday NYTimes comes the details (Senate Global Warming ...):

The Senate bill aimed at reducing global warming pollution will initially grant billions of dollars of free emissions permits to utilities and industry but will require the bulk of the money be returned to consumers and taxpayers, according to newly released details.
The bill will also provide a cushion to energy-intensive manufacturing companies to ease the transition to a lower-carbon economy and to help them compete internationally, although the subsidies will disappear over time. The measure also sets a floor and ceiling on the price of permits to emit carbon dioxide and other greenhouse gases.
With these and other changes considered, the Environmental Protection Agency estimates that overall cost of the bill at roughly $100 a year per household, similar to that of a House climate change and energy bill passed in June.
The Senate measure, sponsored by Senators John Kerry of Massachusetts and Barbara Boxer of California, both Democrats, aims to reduce greenhouse gas emissions under a cap-and-trade system that sets a nationwide limit on emissions but allows polluters to buy and sell permits to meet it.
The bill’s targets for overall emissions reductions are 20 percent below 2005 levels by 2020, 42 percent by 2030 and 83 percent by 2050. The House bill’s limits are similar, except the target for 2020 was set at 17 percent after negotiations with utilities and other major sources of emissions.
...
The latest version includes new financing for research on capturing and storing carbon dioxide emissions from power plants, more money for low-carbon transportation projects, additional assistance for rural communities and more favorable treatment for agriculture and forestry.
“We’ve reached another milestone as we move to a clean energy future,” Mrs. Boxer said in a statement, “creating millions of jobs and protecting our children from dangerous pollution.”

July 2020