Report Questions Impact of GHG Laws on Economy

Proposed legislation to reduce greenhouse gas emissions will have little impact on America's future economic growth, according to a new report by researchers at RTI International (http://www.rti.org) and Harvard University for the U.S. Environmental Protection Agency.

The report analyzes expected future economic adjustments associated with the proposed Low Carbon Economy Act of 2007, Senate Bill 1766. This measure, proposed by Sens. Jeff Bingaman and Arlen Specter, would substantially reduce greenhouse gas emissions in the United States by placing a cap on emissions from most parts of the economy, the researchers said.

The bill includes both a trading system for emissions allowances and a technology accelerator payment system to encourage cost-effective reductions and reduce future uncertainties faced by businesses and households.

"According to our analysis using the RTI ADAGE model, the bill would achieve emissions reductions with only a slight impact on economic growth," said Martin Ross, Ph.D., an energy and environmental economist at RTI.

According to the RTI analysis, enacting the bill would result in forecasted growth for U.S. Gross Domestic Product over the next 40 years of 2.69 percent annually, compared with 2.72 percent without the bill. Similar changes are estimated for growth in household consumption, and energy prices are expected to be modestly affected.

Technological advancements such as carbon capture and storage from electricity generation are an important component of meeting the targets in the bill.

"Issues affecting the necessary economic adjustments include things such as the availability of these new technologies and the extent of international actions to reduce greenhouse gases in both developed and developing countries," Ross said. "As written, the bill encourages development of advanced technologies to lower emissions. It is also important to note that the analysis focuses on costs of reducing emissions and does not consider economic benefits associated with preventing changes in climate."

The report is part of a five-year multiple-award contract RTI has with the EPA to provide technical assistance and outreach services to the EPA's Climate Change Division.

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