US economists, petchems warn of job losses in climate bills

10 November 2009 22:25  [Source: ICIS news]

WASHINGTON (ICIS news)--Private sector economists, refiners and petrochemical officials on Tuesday warned Congress that pending climate control legislation will kill US jobs and growth while doing nothing to reduce global emissions of greenhouse gases.

The National Petrochemical & Refiners Association (NPRA) said in testimony to the Senate Finance Committee that the two climate change bills pending in Congress “would have devastating impacts on American businesses across the economic spectrum, and specifically on domestic refining and petrochemical companies”.

The Senate Finance Committee was hearing testimony on the potential jobs impact of two major climate bills.

One bill, the 1,200-page HR-2454, “The American Clean Energy and Security Act (ACES Act) of 2009”, was approved by the US House in June.

It would cap US industrial and transportation emissions of carbon dioxide (CO2) and other greenhouse gases (GHG) and mandate annual reductions to 83% below 2005 levels by 2050. 

The Senate version - S-1733, the “'Clean Energy Jobs and American Power Act” - also has as its core a cap-and-trade mandate for US energy use. S-1733 was approved by the Senate Environment Committee last week.

NPRA cited testimony by Congressional Budget Office (CBO) director Douglas Elmendorf in which he cautioned that under a federal cap-and-trade mandate, “industries that produce carbon-based energy - coal mining, oil and gas extraction and petroleum refining - would probably suffer significant employment losses”.

“Among energy intensive industries,” the association said, again citing Elmendorf, “employment losses in chemicals and transportation services could be relatively large.”

Kenneth Green, a resident scholar at the American Enterprise Institute (AEI) for public policy research, said that based on his 15 years of research on climate change policy, “cap-and-trade, the core of greenhouse gas control legislation today, is an inappropriate policy tool”.

“It will cause significant economic harm and will kill and export jobs - for little or no environmental impact,” Green said.

“By design, the carbon-control bills now circulating will increase energy prices, slowing economic growth, killing jobs and reducing competitiveness,” Green added.

Green also challenged arguments advanced by global warming advocates that climate change legislation will generate more jobs than it will cost.

“As for the claim that the green-energy provisions of current climate legislation will create ‘green’ jobs that can’t be exported, this is simply nonsense.”

“Governments do not create jobs, they just move them around,” Green said, “inevitably resulting in less jobs on net.”

He also cautioned the panel on potential adverse environmental effects of the climate bills. 

Citing research published in Science magazine, Green argued that attempts to cap and reduce global emissions of greenhouse gases “would cause bio-energy crops to expand and displace virtually all of the world’s natural forests and savannahs by 2065 and actually increase global greenhouse gas emissions”.

Margo Thorning, chief economist at the American Council for Capital Formation (ACCF), said her analysis of the House-passed bill shows it would reduce total US employment by 80,000 jobs in 2020 and by as much as 2.4m jobs in 2030 as the carbon emissions limits became more stringent.

“Manufacturing is hard hit,” she said of the jobs impact. “It absorbs between 59% and 66% of the job losses over the 2012-2030 period.”

In addition, she said that US gross domestic product (GDP) would likely shrink by as much as 2.4% by 2030.

She also argued that despite the costs and likely job losses resulting from cap-and-trade legislation, “US climate change policies will have virtually no environmental benefits unless developing countries, whose emissions are growing strongly, also participate”.

She cited a report earlier this year by the White House Council of Economic Advisers, which said that global concentrations of carbon dioxide (CO2) by 2100 “will be almost unaffected by US emissions reductions”.

The Finance Committee is one of as many as five Senate panels that have jurisdiction on one or another aspects of the climate bill. Full Senate deliberation and action on the legislation is not expected before early next year.

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