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Cap and Trade Legislation Could Cost 3 Million Jobs

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A new study by the Charles River Associates exposes the negative
economic consequences of the proposed cap and trade legislation being
considered in Congress.

The study predicts broad increases in energy
costs that will result in the loss of more than 3 million jobs by 2030
and a cost of more than $2,100 per household if this legislation is

Researchers found that the climate provisions of the
Administration's proposed FY 2010 budget would be expected to have
significant economic and energy market impacts.

The model results
indicate that market shares would shift within the energy sector:

  • Natural gas is projected to expand its market share, particularly for power generation.
  • Increased
    imports of natural gas are estimated to supply most of the increased
    domestic demand for natural gas, whereas domestic natural gas
    production is projected to increase only slightly.
  • Both oil
    and coal are estimated to decline in market share; these measures would
    tend to lower rates of return on investments in the production of
    domestic oil, and petroleum products.
  • With lower rates of
    return, domestic investment levels would be expected to fall; domestic
    crude oil and refined products production are projected to decline.
  • The share of renewable energy is estimated to rise and total energy consumption in the U.S. economy is estimated to contract.

model results also indicate that business users and consumers would
face higher energy costs. The resulting higher energy production and
transportation costs in-turn would lead to increased costs of other
goods and services throughout the economy. As the costs of goods and
services rise, household disposable income and household consumption
would fall.

Overall, the economy would be expected to grow more
slowly, leading to substantial differences in disposable income and
personal consumption, say researchers.

Source: Charles River
Associates International, "Impact on the Economy of the Climate
Provision in the Obama Administration's FY 2010 Budget Proposal," CRA
International, April 2009.

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