A “new” study by the National Asssociation of Manufacturers and the American Council for Capital Formation rehashes their analysis of the Lieberman-Warner Climate bill (see “Wrong Again 2: Delayers cry wolf with same old Garbage In, Garbage Out economic model“). And both are just a rehashing of the analyses of the Clean Air Act sulfur trading program that were proven wrong by reality, which is to say by the ingenuity and technology of entrepreneurs.
But what is fascinating about the GIGO analysis by NAM/ACCCF is that even though they ignored the key cost-containment provisions in the climate bill — including virtually all of the international offsets and the strategic reserve — they still found that 20 million new jobs will be created in the United States by 2030 and GDP will be some $9 trillion higher, as Brad Johnson shows in the post below first published by Wonk Room.
So NAM has ironically made a solid case for strengthening the bill, for limiting the international offsets and setting a high ceiling price — since the climate bill manages to achieve these outcomes even with NAM’s absurdly high price estimate for carbon allowances in 2020 of up to $60. Even EIA, which uses a similar economic model as NAM/ACCF (but less biased assumptions, although EIA also ignored the strategic reserve), found a permit price in 2020 of $32 (see here), which was about double what EPA and I project and 50% higher than CBO’s projection.
A new analysis of the economic impact of clean energy legislation forecasts powerful job and economic growth through 2030. The analysis of the Waxman-Markey American Clean Energy and Security Act (ACES), commissioned by the right-wing National Association of Manufacturers and the American Council for Capital Formation (ACCF), finds that 20 million new jobs will be created in the United States by 2030, even under high-cost assumptions:
Similarly, NAM found the gross domestic product of the United States would increase by $9 trillion by 2030 from current levels. To be more precise, the analysis estimates $9.1 trillion in growth under its low-cost scenario, and $8.9 trillion under its high-cost scenario, versus $9.5 trillion in growth under its baseline scenario.
This analysis, conducted by the Science Applications International Corporation (SAIC), uses the same economic model as the U.S. Energy Information Administration (EIA), but with “input assumptions provided by ACCF/NAM”:
SAIC is a policy-neutral organization. SAIC executed the NEMS/ACCF-NAM 2 model in this project using SAIC’s and ACCF/NAM’s interpretation of the bill, and input assumptions provided by ACCF/NAM. The modeling was performed independent of EIA. Analysis provided in this report is based on the output from the NEMS/ACCF-NAM 2 model as a result of the ACCF/NAM input assumptions. The input assumptions, opinions and recommendations in this report are those of ACCF and NAM, and do not necessarily represent the views of SAIC.
These “input assumptions” for the deployment of the ACES carbon cap-and-trade market include:
– International offsets are limited to 5%. ACES allows 50% of offset use to come from international offsets.
– Wind energy deployment limited to 5 to 10 GW per year for the next twenty years. In reality, 8.5 GW in new American wind power was deployed in 2008, even without the incentive of a carbon market.
NAM also made unusually pessimistic assumptions for the deployment of biomass electricity generation and the use of banking provisions by polluting corporations. These assumptions lead to a carbon allowance price of $123 to $159 per ton of carbon dioxide in 2030. This price is more than twice as expensive as the estimates of the EIA, the U.S. Environmental Protection Agency, and the Congressional Budget Office.
Essentially, NAM is assuming that American companies will be unable to deploy clean energy and energy efficiency technologies in a timely fashion. It’s odd that the National Association of Manufacturers is so gloomy about its members’ ability to build the clean energy economy. Even so, its analysis finds vibrant economic growth while global warming pollution is kept under control.
Yet again, the SAIC team has stepped away from taking responsibility from this work: “Don’t blame us, we just ran the model, we take no responsibility for what went in and what comes out.” In modeling, one of the standard abbreviations: GIGO: Garbage In, Garbage Out. . . . For example, there is no valuing of improved health due to reduced fossil fuel pollution. There is zero valuing of how improved health of workers means lower absenteeism and therefore higher productivity. There is zero valuing of reducing the risks and impacts of catastrophic climate change.