On October 27, the American Council for an Energy Efficient Economy (ACEEE) released its report designed to examine the long term economic impacts of cap and trade legislation. The report, entitled Climate Change as an Economic Redevelopment Opportunity: The Role of Productive Investments in Mitigating Greenhouse Gas Emissions , identifies failings in existing reports that have assumed large investments in inefficient power plants, buildings and factories and those that have assumed existing markets are perfect and any changes must therefore be suboptimal. In highlighting the potential opportunities associated with productive investments, ACEEE concludes that net positive economic benefits exist.

According to the report, the details of any such legislation are critical. If cap and trade is designed to encourage investments in energy-saving devices and efficiency, more jobs will be created than lost, and energy bills will in fact be reduced. The House-passed American Clean Energy and Security Act of 2009 (H.R. 2454) contains provisions to build efficiencies into investments in buildings, factories, schools, hospitals, energy supplies, and other infrastructure, an area where U.S. expenditures will average $4 trillion per year over the next 40 years. The report argues that diverting approximately three percent of this total investment into more productive technologies and infrastructure will increase the economy’s overall productivity and achieve substantial reductions in the greenhouse gas emissions that cause climate change.

By using a model that recognizes the impact of efficiency measures, ACEEE has examined three cap and trade policy scenarios, which differ in the extent to which they encourage energy-saving measures. It concludes that, by modifying H.R. 2454 to further support such measures, consumer energy costs could decline 27 percent by 2030 and 32 percent by 2050. One million and 2.5 million additional jobs could be created respectively over those timeframes, with negligible impact on the size of the total economy.

Skip Laitner, ACEEE Economic Analysis Director and author of the report, will speak about the findings on November 6 at a briefing held by the Environmental and Energy Study Institute in the U.S. Capitol Visitor Center. Please click here for more details, including RSVP information.