The Senate Energy & Natural Resources Committee held a hearing this morning on the economic effects of global climate change legislation, and as expected, it was largely devoted to stoking fears about the potential costs of meaningful action.
“On the extremes, models have been used to show that legislation will have massive disruptions to the economy and cause widespread unemployment,” Committee Chair Jeff Bingaman (D-N.M.) said in his opening remarks. “They have also been used to show that legislation will be free to society and a net-benefit to the U.S. economy.”
The hearing brought forward experts from the Congressional Research Service, Energy Information Administration, Congressional Budget Office, and the EPA (all speaking from the viewpoint of classical economics) to discuss the findings of various economic studies and models of the Lieberman-Warner Climate Security Act and other climate bills that have been floated in the Senate. Notably absent were experts on the potential costs of inaction, or non-economists familiar with the potential for innovation and economic growth around energy efficiency and renewable energy. (See Joe Romm for more on this point.)
The other notable flaw of the hearing — pointed out multiple times — is that all the models and studies discussed were based on the version of Lieberman-Warner from last December. They couldn’t really include perspectives on the manager’s amendment Barbara Boxer is releasing today.
The majority of remarks from senators on the committee questioned whether climate legislation is worth it at all, with conservative senators expressing their usual concerns that climate legislation would destroy the economy. “I remain concerned about the dire consequences that Lieberman-Warner could have for our nation,” said ranking minority member Pete Dominici (R-N.M.)
Most of the hearing was dominated by Republican committee members like Dominici, Lisa Murkowski (Alaska), Bob Corker (Tenn.) and Jeff Sessions (Ala.), with sympathetic Dems like Bingaman joining in the hand-wringing. Sessions also worried that if we put in place a cap-and-trade plan, “China will begin to have energy advantages” over the U.S. He also suggested it might be better to have a carbon tax rather than cap-and-trade, which presumably would not confer those same energy advantages on China.
Few of the actual panelists seemed to share the senators’ apocalyptic fears. Even the EPA’s study (PDF) found that Lieberman-Warner would likely cause a 2 percent reduction in the growth of GDP at most. Indeed, panelists warned that economic models cannot reliably forecast growth; nor can they predict the effect on jobs overall. As panelist Peter Orszag of the Congressional Budget Office pointed out, it’s a question of the types of jobs that will be available. Orzag was also clear that pricing carbon is what will prompt the development of new technologies, nixing the argument some Republican senators put forward — that technology needs to be available before we put a cap on emissions (essentially the argument the Bush administration has been making for eight years).
The high point was Bernie Sanders (I-Vt.), who berated the hearing for not including anyone who could testify to the consequences of inaction, or the potential for growth that action creates by improving efficiency and pushing new technologies to market. “I find it hard to be talking about the cost of moving away from emissions without looking at at fact that we’re driving cars that get 15 miles per gallon,” said Sanders. “The day will come when our people will be driving cars that get 50, 60 miles per gallon.”
Sanders talked up the potential for growth in solar energy, a better rail system, and better efficiency, as well as the costs of the natural disasters and wars over scarce resources that climate change could bring. “What I fear very much is that our old friends in the coal industry and the fossil fuels industries simply want us to continue the same old way, but not pursue a bold new future,” Sanders continued.
The hearing might have been helped had other Democratic committee members with a decent environmental record been present. A few wandered in for a portion of the hearing, but only Bingaman, Sanders, and Ken Salazar (Colo.) addressed the panel.
There were several other notable moments, including Larry Craig’s (yes, he’s still in the Senate) presentation of a Heritage Foundation report that says the Climate Security Act would cost “3 million jobs” — a projection unique to that report — and his repeated complaints that climate action amounts to “micromanaging the economy.”
Craig also made the classy claim that even if “climate change is going to create radical factors in the world’s climate,” the U.S. only averages 1.9 hurricanes a year, which cost about $5 billion in damages. If you force the rest of the country to absorb the costs of action on climate change, we’d be paying for “200-900 hurricanes.” “You don’t have hurricanes in Alaska, nor in Idaho, but you will now. All of the U.S. economy now gets hurricanes.” Presumably when climate change is producing 900 hurricanes a year, and not before, Craig will be ready to act.
