US climate bill will have modest economic impact: report
AFP
WASHINGTON - Cutting greenhouse gases along the lines of a climate bill pending in Congress would modestly impact the US economy over the next few decades, the bipartisan Congressional Budget Office (CBO) said Wednesday in a report.
"Reducing the risk of climate change would come at some cost to the economy," CBO director Douglas Elmendorf told a hearing of the Senate Energy and Natural Resources Committee, two weeks before the Senate takes up the climate change bill.
The House of Representatives passed its own version of the climate bill in June. Elmendorf said the Cap and Trade initiative it includes would reduce US gross domestic product (GDP) by 0.25 percent to 0.75 percent in 2020 and by 3.5 percent in 2050.
However, he added, CBO projects that inflation-adjusted GDP growth will be two-and-a-half times larger than today's, "so those changes will be comparatively modest."
He also said the House climate bill would have little impact on the standard of living of Americans -- CBO projections see purchasing power dropping 0.1 percent in 2010 and 0.8 percent in 2050, averaging out to 455 dollars per year.
The House bill sets a target of reducing greenhouse gases from 2005 levels by 17 percent by 2020, chiefly through an emissions trading market (cap and trade) that would penalize the most polluting industries and reward cleaner ones.
The cap-and-trade system is strongly opposed by both Democrat and Republican lawmakers from oil-rich and coal-dependant states, who complain the measure would drive up unemployment and the cost of energy in their areas.
Supporters of cap-and-trade, for their part, believe unemployment would be offset by the job-rich development of alternative energy sources -- wind, solar and nuclear power.
Elmendorf cautioned, however, that "one of the great uncertainties about the cost of reducing carbon emission is how readily the economy can move toward an economy that uses different sources of energy."
"The rate at which that sort of revolution can occur is difficult to predict, but in particular areas, industries, there will be significant (job) losses," the CBO chief added in response to a question from the panel.
The Senate on October 27 is scheduled to take up its own version of the climate change bill sponsored by Democratic Senators John Kerry and Barbara Boxer.
The debate comes six weeks ahead of the key international climate conference in Copenhagen in December.
The White House recently recognized the improbability of a Senate vote before the conference, making an international agreement on climate change in the Danish capital very unlikely.
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