Most Economic Projections For Cap-And-Trade Are Wrong – Report

Many conventional climate economic impact studies misread the
historical record on the nation’s energy productivity opportunities, according to a new report.

The nonprofit American Council for an Energy-Efficient Economy (ACEEE) found that most studies that evaluate so-called cap-and-trade policies either ignore or greatly understate the potential advances in energy efficiency, the largest and most cost-effective form of greenhouse gas mitigation.

“The evidence shows that productive investments in energy-efficient technologies can enable the U.S. economy to save money and to substantially reduce its greenhouse gas emissions–both immediately and by mid-century,” said author John A. “Skip” Laitner, Director of ACEEE’s Economic and Social Analysis Program.

As part of the study, Laitner conducted a diagnostic review of the recent assessments of the H.R. 2454 climate change legislation, also known as the Waxman-Markey bill, which passed the U.S. House of Representatives by a narrow margin on June 26, 2009. It is now under consideration by the U.S. Senate, with action likely this fall. Unlike most other studies, ACEEE’s report finds that U.S. consumers and businesses could see their energy bills cut in half by 2050.

“In contrast to climate policies based on international offsets and banking, an efficiency-powered policy can provide a benefit to the climate while actually causing a small but net positive increase in the nation’s economy and employment,” said economist and climate policy expert James Barrett, Ph.D., among those who reviewed the study for ACEEE.

This analysis builds on the many past and recent energy efficiency resource assessments by ACEEE, McKinsey & Company, the Boston Consulting Group, and others. 

“The evidence is compelling,” Laitner noted. “With advances in new materials, new designs, and the emerging contributions from information and communication technologies, energy productivity gains can power the economy in new ways that reduce greenhouse gas emissions.”

“U.S. economic performance over the last several decades demonstrates that energy markets and consumer behaviors are much more dynamic than is commonly assumed,” stated ACEEE Research Associate Chris P. Knight. “The past and the anticipated future gains in technology performance indicate that a productivity-led climate policy can actually make the U.S. economy more competitive.”

The Positive Economics of Climate Change Policies: What the Historical Evidence Can Tell Us is available at the link below.