April 18, 2008 | WebMemo on Energy and Environment


Workers and families in the state of  may be wondering how climate change legislation before Congress will affect their income, their jobs, and the cost of energy. Members of Congress are considering a number of bills designed to address climate change. Chief among them is S. 2191, America's Climate Security Act of 2007, introduced by Senators Joseph Lieberman (I-CT) and John Warner (R-VA). 1

The Lieberman-Warner legislation promises extraordinary perils for the American economy, should it become law. S. 2191 imposes strict upper limits on the emission of six greenhouse gases (GHG) with the primary emphasis on carbon dioxide (CO2). The mechanism for capping these emissions requires emitters to acquire federally created permits (called allowances) for each ton emitted.

Arbitrary restrictions predicated on multiple untested and undeveloped technologies will lead to severe restrictions on energy use and large increases in energy costs. In addition to the direct impact on consumers' budgets, these higher energy costs will spread through the economy, injecting unnecessary inefficiencies at virtually every stage of production and consumption.

Implementing S. 2191 will be very costly in >, even given the most generous assumptions. Notable costs are listed below in Table 1:

Table 1: Estimated State-Level Economic Impact of S. 2191


Gross State Product Loss (Millions)

Non-Farm Employment Loss

Manufacturing Jobs Lost

Personal Income Lost (Millions)





Consumers will be hard hit. Table 1 shows the expected increases in retail energy prices (adjusted to 2006 dollars to eliminate the impact of inflation) in 2025 for >. Between 2012, when the restrictions first apply, and 2030, the end date of our analysis, the prices of electricity, home heating oil, natural gas, and gasoline could rise more than 100 percent compared to prices unaffected by the provisions of S. 2191.

Table 2: Changes in Energy Prices Due to S. 2191




Natural Gas




In addition to taking a bite out of consumers' pocketbooks, the high energy prices throw a monkey wrench into the production side of the economy. Contrary to the claims of an economic boost from "green" investment and "green-collar" job creation, S. 2191 reduces economic growth, gross domestic product (GDP), and employment.

[1]To learn more about the economic effects of the Lieberman-Warner legislation, see "The Economic Costs of the Lieberman-Warner Climate Change Legislation", CDA Report published on May 12, 2008. This Report is available at www.heritage.org . The authors gratefully acknowledge the work of Dr. Shanea Watkins in preparing the maps used in this briefing memo.

About the Author

Jack Spencer Vice President, the Institute for Economic Freedom and Opportunity

Related Issues: Energy and Environment