Is EPA greenhouse-gas plan a job killer? History might offer clues.

EPA plans to regulate greenhouse-gas emissions in the US have some industries forecasting an economic 'train wreck.' But several economists say history does not support that view.

Hyungwon Kang/Reuters/File
Who's right: these supporters of clean energy (pictured in Washington in 2009), or critics who say greenhouse-gas regulations will cost the US more than one million jobs?

Jobs versus the environment.

It's a political debate that goes back decades and is again ramping up as Republican lawmakers square off with the Obama administration over whether to prohibit the Environmental Protection Agency from regulating greenhouse gases under the Clean Air Act of 1990.

Critics of the new EPA regulations are claiming that the measures will undermine the weak-as-a-kitten economic recovery, perhaps leading to a million or more lost jobs in coming years. But a cadre of economists trying to puncture that widely held view – which they call a persistent "myth" – are turning to history in an attempt to show that the impact of environmental regulations is far more positive than negative.

The argument against new laws was on display in congressional hearings Tuesday. Mike Carey, president of the Ohio Coal Association, told a House panel that the EPA greenhouse-gas regulations that were set to take effect this month – but were delayed by the agency Tuesday – are a looming "train wreck" for the economy.

Citing three independent studies, he said the regulations would mean "77 percent of all coal mining jobs in America disappear by 2030." A further study by the American Council for Capital Formation, a Washington think tank, found that legal and other uncertainties caused by EPA greenhouse-gas regulations could result in a loss to the economy of as much as $75 billion and 1.4 million jobs by 2014, Mr. Carey added.

History's lessons

But history throws doubt on claims of massive job losses from air-pollution regulation, say economists who have studied the issue for years.

"Experience since the 1970s – from air-pollution controls to appliance-efficiency standards to auto fuel-economy rules – makes clear that well conceived and executed carbon regulation will not only stimulate technological innovation but can be implemented cost effectively and in many cases lead to actual decreases in the purchase, installation, and operating costs of key technologies," Dan Reicher, executive director of the Steyer-Taylor Center for Energy Policy & Finance at Stanford University, told the committee.

China, Germany, Japan and others are all now committed to controlling carbon emissions through various means and "have grown a massive clean energy industry – measured in the trillions of dollars and millions of jobs – that was once led by the US," Dr. Reicher said.

The US Clean Air Act offers insight into the impact of environmental regulations on the economy, says Eban Goodstein, director of the Bard Center for Environmental Policy. It did reduce jobs in certain industries, but that has been outweighed by health benefits and new jobs in non-polluting industries, he suggests.

He argues that industry groups arrive at their alarming economic figures by using economic models that are overly sensitive to energy prices. “They do it – not by looking at layoffs in a particular industry – but by postulating economywide layoffs due to higher energy costs,” Mr. Goodstein adds. “There's just no evidence."

Widespread predictions of massive job losses preceded EPA's move in the early 1990s to curb sulfur-dioxide emissions from power plants. Layoffs did follow – about 2,000 people per year, mostly coal miners, says Goodstein. At the same time, manufacturing jobs related to pollution-control equipment increased.

1 percent of GDP

Other economists say any negative impact from new greenhouse-gas regulations would be similarly small – on the order of less than 1 percent of gross domestic product.

"It doesn't have a big impact on the economy or jobs,” says Dale Jorgenson, a Harvard University economist. “That's not to say you can't find specific cases where someone imposed a reduction of gas emissions and it didn't affect someone's jobs. These kinds of regulatory changes do reconfigure the economy.”

He suggests that the cap-and-trade bill abandoned by Congress last year would have been a more efficient way to maximize gain and minimize loss from greenhouse-gas regulations. But the EPA’s across-the-board measures are no job killer, Mr. Jorgenson says.

Spokespeople for coal and other industries reliant on fossil fuels "are simply presenting a point of view intended to affect legislation," he says. "They think Congress cares about jobs most right now, so they are coming up with stories about huge job losses they think will resonate. I wouldn't say there is any academically respectable support for that view."

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