Fed study: Climate bill spells gloom for jobs

Despite President Obama’s prediction that it would create new jobs, the climate change bill passed by the House will mean fewer jobs by 2030 than if Congress did nothing at all, according to the first comprehensive study of the measure by the federal government.

The report by the Energy Department’s Energy Information Administration said the bill would lead to small increases in electricity costs for consumers — what Democrats said was an affordable sacrifice for the environmental benefits of lowering greenhouse gas emissions.

“We can move to a clean energy future at a cost of less than a postage stamp per family per day,” Energy Secretary Steven Chu said.

The report said the average cost to a household by 2020 would be $114, though those costs would more than double to $288 by 2030 as the rules on polluters tighten.

The Democrat-controlled House narrowly passed its climate change bill on a 219-212 vote June 26. A week later, Mr. Obama told chief executives that the legislation “holds the promise of millions of new jobs — jobs, by the way, that can’t be outsourced.”

Mr. Chu repeated the assertion Tuesday.

But a chart in the EIA report showed the employment rate — just like the economy as a whole — worsening for the first several years, improving slightly in the midterm, peaking in 2024 and then declining steadily. It showed 0.25 percent fewer jobs in 2030 under the Democrats’ bill, with the manufacturing sector suffering a 2.5 percent lag.

For the economy as a whole, immediate energy price spikes would be followed by relative calm as the economy adjusted. But when stricter rules go into effect in 2025 “the rapid increase in energy prices causes the economy to contract,” EIA said.

The House bill imposes a limit on overall U.S. greenhouse gas emissions and tightens that cap over time, requiring polluters to either reduce their emissions or offset their pollutants by paying others to reduce their emissions. The system is known as “cap-and-trade.”

The Senate is still drafting its version of the climate bill.

Mr. Obama has called for Congress to pass a bill that would reduce U.S. greenhouse gas emissions, and last month he and leaders of other major world economies committed to achieving specific goals. But developing economies such as Brazil, India and China have balked at an agreement, arguing that they shouldn’t be shackled.

The nations will try to forge an agreement at a December meeting in Copenhagen.

The EIA report, requested by the two Democrats who wrote the House bill, is the first comprehensive look at the measure’s effects on the economy. EIA is an independent statistical agency of the Energy Department that provides policy-neutral data and analyses and does not advocate or formulate any policy conclusions.

The analysis said that the Democrats’ decision to give away credits for emissions, rather than auction them as Mr. Obama proposed, would protect vulnerable industries.

“The Energy Information Agency estimates that the American Clean Energy and Security Act approved by the House will dramatically reduce our dangerous dependence on foreign oil, increase clean renewable electricity generation in America by 28 percent, while also keeping electricity costs affordable for all Americans,” said House Speaker Nancy Pelosi, California Democrat.

The report said renewable electricity and nuclear power would have to increase and oil consumption would be reduced to meet the bill’s goals, but it did not say less foreign oil would be used.

Republican energy lobbyist Michael McKenna said it’s as likely the bill would increase dependence on unreliable sources.

The report is “completely silent on the bill’s effect on how much we import, and it’s silent for good reason,” Mr. McKenna said. “The legislation will either A, have no effect, or B, increase our dependence on places like Saudi Arabia whose crude has relatively lower carbon content than places like Canada, whose crude has a relatively higher carbon content.”

The study also did not say how effective the bill would be in reducing global temperatures — another primary goal of Democrats.

EIA analysts said there is a lot of uncertainty about how the program would play out, and looked at six scenarios for how quickly technological advances might bring reductions in greenhouse gas levels, and how easily U.S. companies would be able to pay those overseas to offset U.S. emissions.

According to the worst-case scenario, if technology doesn’t materialize and other countries refuse to cooperate on offsets, consumer prices could be 14 percent higher in 2030 than they would otherwise be without the climate change bill.