Obama’s New Climate Goals Could Have Significant Economic Cost
Later this month, a number of nations, including the U.S., will descend upon Paris, France for a week and a half to discuss global efforts to reduce greenhouse gas emissions. The 2015 United Nations Climate Change Conference will take place from November 30th to December 11th, and while most of the event will be used to discuss new ways to mitigate the effects of global climate change, President Obama will be gearing up to discuss the new additions to his climate plan. However, while the commander-in-chief is hoping that a bold climate agenda will spur other nations to take on or continue their own ambitious climate initiatives, the potential economic repercussions may create more of a dissuasive tone; especially for developing industrial nations such as China.
Just about one year ago, Obama announced that the administration’s new goal was to reduce greenhouse gas emissions by as much as 26-28% below 2005 levels by the year 2025. Through setting this goal, the aim was to pave the way for other countries by demonstrating that a large nation such as the United States could take up the climate baton and succeed in reducing emissions to targeted levels. However, one factor that the Obama administration fails to recognize is how this plan will adversely affect the domestic economy. In fact, an analysis carried out by the American Action Forum (AAF) has shown that the costs could be in the tens of billions.
As it stands right now, the U.S. Energy Information Administration (EIA) has stated that the nation as a whole will emit around 5.49 billion tons of greenhouse gases by 2020. When Obama first took office and set his goal at a 17% reduction rate below 2005 levels by 2020, the U.S. would have needed to emit a little more than 5 billion tons in 2020 to meet the goal. Compared with the original projections, the country would still be 303 million tons away from that 17% threshold. However, since Obama upped the ante to a 28% reduction goal by 2025, the U.S. would need to lower emissions levels to around 3.9 billion tons, which would actually call for more than 1.2 billion tons of emissions cuts. This new and ambitious goal would then cause the cost of compliance to skyrocket.
According to the AAF, the regulatory costs associated with the targeted reductions hover around $45 billion annually. In order to arrive at this number, they found that preventing one ton of greenhouse gases from being emitted into the atmosphere would yield a cost of $37.04. Since the U.S. will need to reduce emissions by 303 million tons by 2020 under Obama’s initial plan, that would yield a cost of around $11 billion to the American economy. Then you add his most recent reduction target, 1.2 billion tons in emissions cuts by 2025, and the cost quadruples to as much as $45.5 billion. As Sam Batkins, AAF’s Director of Regulatory Policy, has written, “As the U.S. approaches another round of climate negotiations, these figures demonstrate the American people have already shouldered a heavy burden to reduce emissions.”
The Obama Administration seems to believe in the bigger picture, though; assuming that other countries will follow the American lead once his climate plan is fulfilled. As Obama has recently explained to VICE News, “If I can encourage and gain commitments from the Chinese to put forward a serious plan to start curbing their greenhouse gases, that then allows us to leverage the entire world for the conference that will be taking place later this year in Paris.” However, gaining those commitments from China will most likely be harder than previously expected, considering that they were just caught utilizing 17% more coal annually than their government had formerly reported.
Diplomatically, whether or not Obama’s climate plan will be successful in Paris is up for debate. However, what we do know is that the administration’s planned agenda will be incredibly costly to the American people, and that is an unacceptable burden to force them to carry.