In the News

Researchers at the New York University School of Law found that the legislation would generate good, “green jobs” in areas such as construction, solar power and mass transit because a predictable carbon price spurs investment in efficiency and cleaner-energy solutions.

According to an EPA analysis released Monday, the Kerry-Lieberman climate bill—also known as the American Power Act—would cost $146 per year per household. The only catch? The EPA didn’t assess the benefits of the bill, particularly the fact that it’s a necessary step for averting the worst effects of climate change. And that’s unfortunate, because when you look at what the $146 per year would buy us, it’s a pretty good deal.

The EPA can and must proceed with new rules—but it must do so using market-based mechanisms that will not clash with possible future congressional actions. It is bound by law to proceed, but it can move wisely by laying groundwork that will come at the lowest possible costs to business and will mesh well with the legislation Congress will hopefully enact someday soon.

Some have tried to assess such impacts. In a study of energy-climate legislation last year, the nonpartisan Institute for Policy Integrity found that the House bill would generate between $750 billion and $1 trillion in total benefits between 2012 and 2050.

But Scott Holladay, an economics fellow who works on climate issues for the Institute of Policy Integrity cautioned that while he agrees that meeting biomass demands will involve cutting down whole trees and lead to increased emissions, the numbers in the report should be taken with a grain of salt. “My main concern is this a very static look at the issue, it doesn’t take into account the feedback effect,” Holladay said. “It doesn’t seem like they take into account as forest becomes more scarce the price of wood will go up and the price of this as fuel will go up as well,” potentially prompting switches to other energy sources, he said.

Some consumers would see modest cost increases — we’re talking about literally $7 a month — but the legislation includes mechanisms to help consumers offset those costs. As Dave Roberts explained, “Cost is simply not a credible reason to oppose a carbon cap.”

Michael Livermore, executive director of NYU’s Institute for Policy Integrity, argues that leaving these substantial benefits out is a huge mistake. “It’s like telling someone in the market for a home to pay $200,000 without telling them the property is a mansion on Fifth Avenue or a mountain ranch in Colorado,” he wrote in Grist.

As Michael Livermore wrote last week, the “all costs no benefits” method of analysis utterly distorts lawmakers’ perspectives. Obviously if the costs of unrestrained climate change were included, the bill would look like a screaming bargain.

As Michael Livermore wrote last week, the “all costs no benefits” method of analysis utterly distorts lawmakers’ perspectives. Obviously if the costs of unrestrained climate change were included, the bill would look like a screaming bargain.

Despite the loud cries to the contrary, there is an international consensus that the greenhouse gases that spur climate change have the potential to wreak havoc if aggressive action is not taken. A survey of 289 top economists released by New York University’s Institute for Policy Integrity in November found that most believe it would be cheaper to act now to prevent the worst potential effects of climate change than to deal with them later.