CBO analysis of clean energy legislation ignores benefits

A new Congressional Budget Office (CBO) report tells an incomplete picture about the impacts of clean energy and climate policies. Opponents of reform are pushing CBO numbers showing that policies to reduce global warming pollution would slightly lower employment during the next few decades. Based on the new CBO study, Bloomberg reports:

If greenhouse gas limits were imposed on U.S. industry, “total employment during the next few decades would be slightly lower than would be the case in the absence of such policies,” the CBO said today in a report.

Job losses in coal mining and oil and natural gas production “would lower employment more than job gains in other industries would increase employment, thereby raising the overall unemployment rate,” the CBO said in the report. Most workers who lost their jobs would eventually find new ones, the report said.

The CBO analysis once again vastly underestimates the positive economic and employment impacts of a clean energy bill. The CBO, which estimates that the House energy bill and similar version in the Senate would have modest costs and reduce the deficit, ignores benefits of climate change legislation. CBO itself acknowledges that its estimates are quite conservative (low) since the calculation “does not include the economic benefits and other benefits of the reduction in GHG emissions and the associated slowing of climate change.”


Nonetheless, the study misses billions in consumer savings from reduced energy demand and the creation of clean energy jobs. The American Council for an Energy Efficient Economy estimates that the efficiency provisions alone could save businesses and consumers $22 billion annually by 2020. The savings would be $170 per household in 2020— roughly equal to CBO’s cost per household estimate for ACES in 2020. The Alliance to Save Energy estimates that energy efficiency measures alone can create over 100,000 jobs over the next two years and reduce U.S. carbon dioxide emissions by nearly 200 million metro tons.

The CBO’s overestimate of costs and low-balling of job growth is a result of their modeling which does not account for the vast potential for innovation and entrepreneurship that will be born out of clean energy and climate legislation. A price on carbon will create economic incentives spurring the development of new technologies made in America and creating jobs that can’t be outsourced.

CBO points out, “Employment also would increase in industries that manufacture equipment for the production of energy using low-emission technologies such as nuclear, solar, and wind power.”

New investments in green manufacturing are a strong driver of economic development because they have a high multiplier effect — that is, jobs will be created in other industries such as finance and transportation as a result of expansion in manufacturing. Ramping up clean energy manufacturing will create more good-paying jobs in for Americans who deeply need them.Clean Energy Bill Creates Jobs, Saves Consumers MoneyStudies consistently show that climate policies will boost the economy, stimulate job creation. A recent study by the Center for Climate Strategies (CCS) analyzing the economic and environmental impact of legislation comparable to the Kerry-Graham Lieberman framework found that such a program would boost growth and accelerate job growth. CCS found that carbon limits and efficiency-focused policies would have a net positive employment impact of 2.8 million jobs and expand the economy by $154.7 billion by 2020, while US emissions are cut to 27 percent below 1990 levels.

This is consistent with the findings of a University of Massachusetts study which found that investing $150 billion in clean energy would create 1.7 million new jobs, in industries as diverse as new materials science, engineering, construction, and manufacturing. The same study found that investing in clean energy projects creates three-to-four times more jobs than the same expenditure on the oil industry.


Clean-energy jobs are already here and growing fastThe Pew Charitable Trusts found in “The Clean Energy Economy” the number of clean-energy jobs in the United States grew 9.1 percent between 1997 and 2008, while jobs overall only grew by 3.7 percent. There were 770,385 clean-energy jobs and 68,205 clean-energy businesses in the United States as of 2007. This only counts direct jobs and not the many indirect jobs in industries that support the clean energy economy in which 14.4 million people are currently working.

Guest Blogger Rebecca Lefton is a researcher for Progressive Media and CAPAF.

Update: Alan Durning has a good post on CBO’s many false assumptions.