Workers and families in the state of California may be wondering
how climate change legislation before Congress would 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
The Lieberman-Warner legislation promises extraordinary perils
for the American economy, should it become law, all for very little
change in global temperature--perhaps even smaller than the .07 of
a degree Celsius drop in temperature that many scientists expected
from worldwide compliance with the Kyoto climate change accords. S.
2191 imposes strict upper limits on the emission of six greenhouse
gases 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
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 would
spread through the economy, injecting unnecessary inefficiencies at
virtually every stage of production and consumption.
Implementing S. 2191 would be costly in California, even given
the most generous assumptions. Notable costs are listed in Table
Consumers would be hard hit. Table 2 shows the expected
increases in retail energy prices (adjusted to 2006 dollars to
eliminate the impact of inflation) in 2025 for California. Between
2012, when the restrictions first apply, and 2025, the prices of
electricity, natural gas, and gasoline could rise by nearly 20
percent nationally when compared to prices in a world without S.
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.
William W. Beach is
Director of the Center for Data Analysis; David W. Kreutzer, Ph.D.,
is Senior Policy Analyst for Energy Economics and Climate Change in
the Center for Data Analysis; Ben Lieberman is Senior
Policy Analyst in Energy and the Environment in the Thomas A. Roe
Institute for Economic Policy Studies; and Nicolas D. Loris is a
Research Assistant in the Roe Institute at The Heritage
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, and available at www.heritage.org/Research/EnergyandEnvironment/cda08-02.cfm.
The authors gratefully acknowledge the work of Dr. Shanea Watkins
in preparing the maps used in this briefing me