Greenhouse Gas Reduction Will Be Costly

Greenhouse Gas Reduction Will Be Costly
March 9, 2004

In August 2001, six New England governors, in conjunction with five eastern Canadian premiers, signed a pact to reduce greenhouse gas emissions to 1990 levels by 2010 and at least 10 percent below 1990 levels by 2020. They are meeting again in Boston on March 15 and 16 to discuss just how they are going to accomplish this misguided but well intentioned goal.

Numerous econometric models that have been developed by unbiased experts showing the negative impact of a national program to reduce U.S. greenhouse gas emissions to the Kyoto Treaty target goal of 7 percent below 1990 levels by 2012. In the United States it would cause our 50 states collectively to lose $116 billion a year in revenues and would destroy 2.4 million jobs.

States that try to reduce emissions on their own incur costs 10 times as great as would result from a national program. Businesses and residents would find it easier to move to nearby states with lower energy costs or less burdensome regulations, and individual states would have to rely on more costly regulatory approaches.

Based on New Jersey's current experience, there are few "free" energy conservation opportunities. New Jersey is spending $55 per ton of greenhouse gas eliminated. It is estimated that the average state will have to spend $530 million a year to implement a comprehensive greenhouse gas program, while losing $2.6 billion a year in revenues, making the total annual cost $3.2 billion. This is more than 28% of an average state government's annual budget.

Consumers and business in an average state would pay a staggering $21.8 billion a year more for goods and services due to the higher cost of energy and migration of businesses and commerce to other states and countries. The cost to the average household could be $10,000 a year, as much as two or three months of take-home pay.

But there is a silver lining for the New England States. They are not average states and our calculations show the costs for New England state households to be well below the national average. Our econometric models predict the annual household cost to be only $6,200 in Connecticut and Vermont, $6,300 in Maine and Massachusetts, and$4,500 in Rhode Island.

Sadly, reducing greenhouse gas emissions on a state by state basis will produce little benefit to state residents and will not alter the earth's greenhouse gas content by any measurable amount. If the citizens of New England have a warm spot in their hearts for the future of civilization, think what even a small part of this greenhouse gas reduction money could accomplish were it to be spent fighting hunger or disease in Third World countries. Millions of lives could be saved.

There is actually no reliable evidence that global warming is occurring. The temperature record regularly referred to in media reports is inaccurate because it relies on surface measurements affected by urban heat islands. More reliable satellite and weather balloon data show no warming trend.

While the reports of the Intergovernmental Panel on Climate Change contain much valuable and credible information about climate change, they have misrepresented to policymakers and the general public the need to make immediate economic sacrifices based on presently unwarranted fears. We should be prepared to be adaptable to weather changes, but not be willing to sacrifice the financial welfare of our families to the whims of scientific models with too many unknown variables to have any validity. In case you have not noticed your local TV weatherman, backed up by your talented state climatologists, are only correct 57% of the time on their seven day forecast.

A small amount of warming, should it occur, would be beneficial to human health, agriculture, and wildlife. Carbon Dioxide is a natural fertilizer, so higher concentrations in the air have beneficial effects on forests and agriculture. Most warming is likely to occur in the coldest regions of the world and during winter months.

Governors of New England states facing record budget deficits due to lower-than-expected revenues in 2002 and 2003 should not adopt greenhouse gas reduction programs that cost taxpayer dollars, destroy jobs and do nothing to protect the environment. The taxpayers deserve an honest and open discussion of the effect of greenhouse gases on the environment and the economic disaster that may result from ill-advised and misinformed emission reduction plans.