EPA Releases Analysis Of Lieberman-Warner Climate Security Act

Mar 14: Senators Joseph Lieberman (ID-CT) and John Warner (R-VA) today thanked the U.S. EPA for completing the analysis that they had requested of their Climate Security Act (S. 2191) last November. The Senate Environment and Public Works Committee favorably reported the bill on December 5, 2007 [See WIMS 12/6/08]. The full Senate is expected to consider the measure this June. Senator Lieberman said, "EPA's detailed analysis indicates that the U.S. can curb global warming without sacrificing economic prosperity. We will examine the results closely for improvements that they might suggest for the bill." Senator Warner said, "I am satisfied that EPA's analysis demonstrates what we have long known: You can control greenhouse gas emissions in a manner that leaves the economy whole and is not burdensome on consumers."

The ADAGE (Applied Dynamic Analysis of the Global Economy) computer model used by EPA projects the economic impacts of government policies that are designed to speed advanced energy technologies to market. The Climate Security Act is such a policy. ADAGE contains detailed treatment of new technology deployment in the power sector and explicitly models the global economy. Senators Lieberman notes that EPA has not yet updated the ADAGE model to reflect the provisions of the energy bill enacted last year [See WIMS 12/14/08]. In order to approximate the underlying impact of those provisions, however, EPA selected a "high technology reference scenario" when running the Climate Security Act through the ADAGE model. EPA said it plans an updated analysis of S. 2191, but it will not be available until May or June 2008.

According to a summary from Senator Lieberman the preliminary modeling run found:

- The Climate Security Act's cut in cumulative US greenhouse-gas emissions is deeper than one found earlier by EPA to be consistent with keeping global CO2 concentrations below 500 parts per million in 2100. The finding assumes that other developed countries reduce their emissions by less than the US, and that the developing countries do not start making similar reductions until 2025. According to the Intergovernmental Panel on Climate Change, keeping the global concentration below 500 ppm greatly decreases the risk of severe global warming impacts in the US and elsewhere.

- Under the conservative assumptions described above concerning action by other nations, the Climate Security Act does not shift US greenhouse-gas emissions abroad. In EPA's words, "no international emissions leakage occurs."

-Under the same conservative assumptions, the Climate Security Act causes US exports of energy-intensive products (e.g., steel, cement) to developing nations to increase and causes US imports of energy-intensive products from developing nations to decrease.

- Under the Climate Security Act, US gross domestic product grows by 80% from 2010 to 2030. That is just one percentage point less than the growth in the absence of the bill.

- Under the Climate Security Act, average annual per-household consumption in the US grows by 81% from 2010 to 2030. That is just two percentage points less than the growth in the absence of the bill.

- EPA notes, "The economic benefits of reducing emissions were not determined for this analysis," and "While the models do not represent benefits, it can be said that as the abatement of GHG emissions increases over time, so do the benefits of the abatement."

-The Climate Security Act's allowance price and financial support for carbon capture and sequestration (CCS) make that technology a commercial reality in the US by 2015 -- several years earlier than in the absence of the bill.

-One of the effects of the accelerated CCS deployment is to drive natural gas out of the electricity sector, to the benefit of manufacturers who use natural gas.

- Under the Climate Security Act, the price of an emission allowance is $22 in 2015 and $46 in 2030. This is significantly lower than allowance price predictions made by models which ignore the recent Energy Independence and Security Act, artificially limit technology deployment, and ignore technology incentives and cost-saving provisions of the bill.

-Under the Climate Security Act, increases in average US electricity prices materialize slowly and gradually. Even forty years after enactment, those prices reach a level only 18% higher than the 2005 level. Over that period, the bill directs more than $1 trillion to lowering and offsetting US consumers' actual energy costs. According to the release, the analysis also includes, at the request of critics of climate legislation, other modeled scenarios that make highly pessimistic assumptions about constraints on technology deployment, the formation of natural gas cartels, and the like. In responding to the same request last October, the Energy Information Administration concluded that an analysis would be realistic without these pessimistic assumptions.

Senator Barbara Boxer (D-CA), Chairman of the Senate Committee on Environment and Public Works said: "When you look at the all the scenarios the EPA analyzed, the one that most closely reflects the Lieberman Warner bill's technology driving policies shows that this bill is a winner for the environment, a winner for our economy, and a winner for the planet. Coming on the heels of White House interference in setting the ozone pollution standard, the Bush Administration appears to be continuing to pull strings to try to block global warming legislation. Despite that, even they could not stop the truth from coming out about the benefits of action."

Senator James Inhofe (R-OK), Ranking Member of the Environment & Public Works Committee, issued a statement saying, "The EPA economic analysis released today is consistent with multiple studies that expose that the Lieberman-Warner for what it is: a job killer. If Democrats have their way, Americans will pay significantly more at the pump, in their homes, and in many cases, with their jobs. No matter how anyone attempts to spin the economic impacts, this bill is wrong for America. Even using optimistic assumptions of increased nuclear plant generation and deployment of carbon capture and storage, Lieberman-Warner would still cost up to $983 billion in 2030 with a 44% increase in electricity prices. Further, Democrats made clear this week their refusal to do anything to help alleviate the economic pain of this bill. With liberal special interest groups at her side, Senator Boxer announced that Democrats would not allow any amendments during the bill's floor debate to lessen the devastating economic impacts. As a result, this bill now appears to be headed for a cameo appearance on the Senate floor before being tabled for a future Congress."

Jeremy Symons, executive director of the National Wildlife Federation's (NWF's) global warming campaign issued a release saying, "The Bush administration quietly released today's economic analysis by the Environmental Protection Agency, but the results speak loudly that we can grow America's economy and tackle global warming. EPA analyzed the bipartisan global warming bill that is headed for a Senate debate in the coming months and is opposed by the White House. According to EPA's analysis, the U.S. economy would grow by 80 percent through the year 2030 after enactment of the Climate Security Act. That is less than one-half of one percent difference from projected growth without a bill.

"It's not surprising that the Bush administration took steps to disguise the fundamental conclusion that the Lieberman-Warner climate plan is doable and protects our economy. It's important to note that even these modest results don't tell the whole story. The analysis fails to measure the important economic boom expected from the bill's aggressive investment in clean energy jobs. In 2006, the renewable energy and energy efficiency industries generated 8 million jobs in America and nearly one trillion dollars in revenue. That's a good start, but it is time for America to unleash the full economic power of a clean energy future."

Natural Resources Defense Council (NRDC) issued a statement saying the EPA analysis "hides the key conclusions of its own experts." Dan Lashof, PhD, the science director of NRDC's Climate Center said, "The only case EPA analyzed that makes reasonable assumptions reflecting current economic conditions and technological realities shows that achieving the goals of the Climate Security Act is readily achievable and affordable, but this conclusion is buried beneath multiple other cases in the report. Once again, political forces in the Bush administration are distorting the work of EPA's own economic and scientific staff."

Nathaniel Keohane, PhD, director of economic policy and analysis at Environmental Defense Fund (EDF) said, "EPA's results for the scenario that most resembles the bill confirm what we have seen in every reputable analysis. We can grow our economy and tackle global warming at the same time. The up-front costs EPA identifies are a sound investment for a strong economy down the road. For clean air, less imported oil, and avoiding the damage of climate change, they are a bargain." EDF says according to EPA's analysis, economic modeling with confident high-technology assumptions shows the U.S. gross domestic product (GDP) growing 81 percent between 2010 and 2030 without a national emissions cap -- and virtually the same amount, 80 percent, with the bill's limit on greenhouse gases. Keohane said, "The high technology scenario is a map to the pot of gold, and frankly the most realistic path, but the Bush Administration and Senator Inhofe have forced EPA to run other scenarios that are extremely unlikely -- just to frighten the public about doing what's necessary."

Access the release from Senators Lieberman and Warner (click here). Access a release from Senator Boxer (click here). Access a release from Senator Inhofe (click here). Access a release from NWF (click here). Access links to EPA's complete 189-page analysis, a 4-page summary letter to Senators Lieberman and Warner and related information (click here). Access the statement from NRDC (click here). Access a release from EDF (click here). [*Climate]