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Controlling Greenhouse Gas Emissions: A Study of Studiesyaquinto

With Congress having recently freed itself of the burden of reforming healthcare in America, it can now turn attention to other weighty issues like reforming the finance industry and regulating greenhouse gases.  Visitors to AIC’s Web site have probably noticed from our past postings that we have a keen interest in how governments impose controls over greenhouse gas emissions.

Setting aside the continuing debate over the science of global warming and how/whether man-made emissions contribute to climate change in any significant way, it’s clear that control measures like cap-and-trade and carbon taxes will create disruptions in the economy.  Most studies, including AIC’s own study, indicate that these measures will create a drag on the economy.  However, some researchers predict a positive economic impact.

Well, we wanted to know who is right – or at least who is more correct:  the economists predicting GHG controls will lead to higher energy prices, fewer jobs, and less output; or those predicting positive gains through a shift to a “greener” economy.  So, we asked economists at Arizona State University to review the most prominent studies of these matters and evaluate whether they are based on sound economic analysis or simply tend more toward irrational exuberance.

Using well-established and consistent criteria, they evaluated 11 regional and national studies.  The results are detailed in a report only an economist could love, but the overall finding is straight-forward.  Controls on emissions increase costs of producing energy, which increase the price of energy to consumers, which has a negative affect on the economy.  Those studies predicting negative economic consequences get an “A”.  Those economists predicting positive outcomes didn’t pay attention in graduate class.

You can view the full report here.