News: CJ Exclusives

Report Outlines Harmful Impact of Climate Policies

Economic analysis shows job losses, $4.5 billion hit to N.C. economy

RALEIGH – North Carolina would lose more than 33,000 jobs and face a $4.5 billion hit to its Gross State Product by 2011, if lawmakers adopt just a fraction of the policies under consideration now to address climate change. A Boston-based economist who has analyzed the policy proposals delivered that message this week to a legislative study group.

The policies studied also would cost the state more than $502 million in investment, lower real disposable income by $2.2 billion, and reduce state and local revenue by more than $184 million, said David Tuerck, chairman of the Suffolk University Department of Economics and executive director of the department’s research arm, the Beacon Hill Institute. Tuerck testified to the N.C. Legislative Commission on Global Climate Change Tuesday in Raleigh.

The climate commission is considering 56 policy proposals developed by the Climate Action Plan Advisory Group. The proposals aim to limit global warming by cutting carbon dioxide (CO2) emissions. Supporters contend those policy proposals would help North Carolina’s economy. A report from the Appalachian State University Energy Center suggested the policies would generate more than 300,000 jobs by 2020 and boost Gross State Product by nearly $1.5 billion.

At the request of the John Locke Foundation, Beacon Hill Institute researchers tested nine of the proposed policies. Those tested include a cap-and-trade program for CO2 emissions, a surcharge for high-emission vehicles, a California-style vehicle emission standard, and mandates for utility companies to spend money on energy-efficiency and demand-management programs.

Rigorous testing using standard economic analysis yielded far more pessimistic results than those used to support the policies, Tuerck said in an interview. “There’s an attempt to put a happy face on this legislation that’s going forward,” he said. “And the attempt is made by trying to show that implementing this legislation would create jobs and would expand economic activity in the state, rather than contract it. And the trouble with that particular representation is that it doesn’t make any sense.”

“You can’t create jobs that are good jobs — that are adding to the state economy — by shifting workers from more productive to less productive activities,” he added. “You can’t create good jobs, the kind of jobs you want to create, by increasing energy costs, by increasing the price of electricity, by imposing what amount to new taxes. This is not the way to create jobs.”

“All these claims about job creation and the like are bogus claims and unsupportable by even the most naïve sort of economic analysis,” Tuerck said.

The contrast between the Beacon Hill Institute’s numbers and the Appalachian State report should surprise no one, said Dr. Roy Cordato, JLF Vice President for Research and Resident Scholar. “The Appalachian State ‘economic’ study had nothing to do with the university’s economics department,” said Cordato, a Ph.D. economist. “ASU economics professor John Whitehead has raised serious questions about the report — writing on his Web site that he’s ‘very skeptical’ any positive benefits from climate change policies would ‘overtake’ the negative effects.”

New information from the Beacon Hill Institute should raise red flags for North Carolina policy makers, Cordato said. “It’s clear that real economic analysis shows these proposed policies would have much more drastic negative impacts than North Carolinians have been led to believe,” he said. “And remember that the Beacon Hill Institute has analyzed nine of the 56 proposals. The total negative impact is likely even greater than these numbers show.”

“Do we really want to hurt our economy and shed thousands of jobs for these policies?” Cordato asked. “Can North Carolina legislators honestly say that taxpayers and citizens should bear these costs to support policies that have no chance of affecting the climate in any significant way?”