Cutting Carbon Emissions at a Profit (Part Ii): Impacts on U.S. Competitiveness and Jobs

Abstract

This article examines how an integrated least‐cost implementation of the Kyoto Protocol in the United States would affect U.S. competitiveness and jobs. Drawing on previous work, the authors analyze integrated emission reduction strategies based on a $50/ton carbon tax (including border tax adjustments), a payroll tax cut, energy‐productivity–oriented market reforms, and international flexibility mechanisms. This policy portfolios is compared to conventional approaches that omit market and fiscal reforms. Input‐output data are used to estimate the impact on export prices of goods and services produced in the United States. Similar data are used to translate changes in GDP and energy production into employment impacts in energy and nonenergy sectors. The costs of providing transitional assistance for workers in the coal industry are compared to the GDP benefits of a profitable Kyoto strategy. The analysis shows that relative to purchasing international emission rights, productivity‐raising domestic market, institutional, and fiscal reforms offer much broader advantages for tradE‐exposed U.S. industries. Though allowance purchases alone increase export prices of U.S. manufactured goods and services, an integrated no‐regrets strategy reduces export prices for the large majority of U.S. industries and limits the impact of climate protection policies on the few most energy‐intensive basic materials industries to very small levels. Relative to the baseline, an integrated least‐cost implementation of the Kyoto target increases economy‐wide employment levels by several hundred thousand jobs in 2010.

Postindustrialization and Environmental Quality: An Empirical Analysis of the Environmental State

“…First, in contrast to the expectations of the environmental sociologists of past decades -and in stark contrast to the claims by major political leaders of some nations -straightforward economic indicators such as the GDP prove not to have significant effects on CO 2 emissions in any of the multivariate analyses. At least for the relatively prosperous nations of the OECD, in other words, despite the apparent strength of the political leaders' convictions, the correlations between CO 2 emissions per capita and economic output per capita drop to insignificance once other variables are controlled, just as they do in recent economic assessments that correct the shortcomings of earlier models (see Krause et al 2002Krause et al , 2003.…”

Climate change, innovation and jobs

“…Numerous similar studies for the USA (e.g. Bailie et al, 2001;Krause et al, 2003) -applying input-output analysis -showed how a comprehensive create positive economic outcomes. Bailie et al (2001 carbon, SO^ and NO^ trading, building, transport and other measures would create more than 1.3 million net package of climate change policies could ) projected that a policy mix comprising renewable energy standards and various jobs across the US economy by 2020.…”

Climate Change Policy and Subjective Well‐Being

“…There is also evidence from input–output analyses suggesting that the net employment impact of climate policies (e.g. carbon trading, setting transport and building standards) is positive (Bailie et al , ; Krause et al , ). Although further research (e.g.…”