Stakeholder Based Climate and Energy Actions: Economic Impacts of National Policies and Measures

More than 30 states have created comprehensive state climate action plans, comprised of balanced portfolios of mitigation measures aimed at reducing greenhouse gas (GHG) emissions and saving or diversifying energy within their states. These policies address several sectors of the economy, including energy supply, manufacturing, agriculture, buildings, transportation, and waste management. Many are highly cost effective, save consumers money, and have other co-benefits -- such as improving public health or reducing reliance on imported oil. The report looks at recommendations for action at all levels of government under a national policy framework developed by stakeholders through climate planning.

On April 23, 2010, the Environmental and Energy Study Institute (EESI) and Center for Climate Strategies (CCS) held a briefing on The Impacts of Greenhouse Gas Policy Options on the U.S. Economy, a new study by CCS that examines the nationwide impacts of 23 major strategies formulated by over 1,500 stakeholders in more than 20 states to reduce greenhouse gas emissions and achieve energy and environmental co-benefits. At a time of recession and high unemployment, many question putting demands on our economic sectors and fear that increased energy prices will slow the economy and harm jobs. But macro-economic analysis of a diverse set of policies and measures selected and designed by stakeholders in numerous states shows that addressing climate change and promoting energy policy can spur the economy, create jobs, and reduce energy prices.

• The CCS report examined policies developed in state-level processes that included over 1,500 stakeholders in total. Ultimately, 23 greenhouse gas (GHG) reduction strategies commonly included in state climate action plans (and representing 90 percent of GHG reduction potential) were identified and extrapolated to a national scale to conduct the macroeconomic analysis.
• The policy options to reduce GHG emissions fall into four categories: Residential, Commercial and Industrial (RCI) Efficiency; Energy Supply; Transportation; and Agriculture, Forestry and Waste Management. The cost-effectiveness of GHG reductions varies by policy option.
• Every policy option in RCI efficiency category saved money on a net basis. The most cost-effective option was appliance standards, which provided a savings of $50 for every avoided ton of carbon dioxide-equivalent (CO2e) emissions.
• The most cost-effective transportation option was a mode shift from truck to rail, saving more than $90 for every ton of CO2e reduced.
• The policy options projected to have the largest impact on GHG reductions are a Renewable Portfolio Standard and demand side management programs. In 2020, a nationwide RPS is estimated to save 508 million metric tons of CO2e annually at a cost of $18 per ton. Demand side management programs would save 425 million metric tons of C02e annually at a cost savings of $41 per ton.
• A full implementation of all 23 actions would generate on net, a 2.5 million gain in employment, a $134.3 billion gain in GDP, $5.1 billion in direct cost savings, and a reduction in household energy prices including gasoline, electricity and natural gas.
• A full implementation of all 23 actions, plus electricity and industrial cap and trade, and a gasoline tax, would generate on net, a 2.8 million gain in employment, a $154.7 billion net gain in GDP, $5.1 billion in direct cost savings; and revenues for the federal government that include $25.3 billion in cap and trade allowance auction revenues and $13.1 billion in gasoline tax revenue ($38.4 billion total).
• The issue of federal preemption is of critical importance as the nation moves forward to reduce GHG emissions. Most stakeholders involved in the CCS process agreed that a federal cap and trade structure was preferable to state or regional action. Beyond that, most participants believed that the federal government should only set minimum requirements while encouraging individual states to do more to reduce emissions. If federal regulation limits the ability of individual states to address their unique energy and climate circumstances, many opportunities for cost-effective GHG reductions may be lost.