Energy

How Will Climate Regulations Impact The Economy? Experts Are Divided

(Photo by Anna Moneymaker-Pool/Getty Images)

Michael Ginsberg General Assignment Reporter
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  • President Joe Biden has promised to rejoin the Paris Climate Accord and introduce new environmental regulations.
  • Former President Donald Trump cancelled many regulations that were introduced during the Obama Administration.
  • Experts are divided on the economic impact of any regulations Biden may introduce.

President Joe Biden announced on his first day in office that the United States would re-enter the Paris Climate Agreement, in keeping with a campaign pledge.

The United States first joined the Paris Agreement in 2016. President Barack Obama introduced a Climate Action Plan to accompany the agreement, which would have created regulations intended to decrease carbon emissions by 26% by the year 2025. President Donald Trump announced that he would pull the United States out of the agreement in 2017, but did not succeed in doing so until 2020. (RELATED: Trump Says Paris Climate Accord ‘Isn’t Working Out So Well For Paris’ As Riots Engulf The City)

When Obama joined the Paris Climate Accords, conservative economists suggested that the accompanying regulations would negatively impact the job market and cost individual Americans money due to increased electricity bills. A team of economists at the Heritage Foundation predicted that Obama’s proposed regulations would cost the country 400,000 jobs a year over two decades, with half of those losses in the manufacturing sector. The regulations would cost the country’s Gross Domestic Product $2.5 trillion over that same time frame.

Biden is calling for “a carbon pollution-free power sector by 2035” and net-zero carbon emissions by 2050. The Paris Agreement does not specify the regulations that countries must institute, but does encourage them to adopt regulations with the goal of limiting average temperature increases to 1.5 degrees Celsius.

The exact impacts of new regulations from Biden will be different due to a new time frame, emissions targets, and energy landscape, Heritage Foundation economist Nick Loris told the Daily Caller. However, “regulatory costs will [still] drive up electric bills for households, disproportionately impacting low-income families. Businesses will also incur higher costs and pass them to consumers, which results in higher costs for food, clothes, health care, and all the other goods and services consumers routinely buy. If companies absorb the costs, it will prevent new hiring and new investment,” Loris said.

Biden has already canceled a permit for the Keystone XL pipeline, effectively killing the project. Environmental activists praised the move, which will cause 11,000 people to lose their jobs.

Democratic politicians and liberal economists argue that the climate regulations associated with the Paris Climate Agreement will spur new growth and will not cause high levels of unemployment. During his confirmation hearing, Secretary of Transportation nominee Pete Buttigieg said that the Biden Administration’s “climate vision will create, on net, far more jobs. Millions we hope.”

A policy brief published by professors in climate science, economics, and political science through the London School of Economics (LSE) argues that environmental regulations will aid economic growth. The brief further claims that governments can and should create green jobs via incentives.

Using the regulations that Obama proposed to create projections, the authors claim that participating in “the Paris Agreement would result in significant economic benefits for the United States, its trading partners, and the world economy.” They point to an analysis suggesting that Obama’s Clean Power Plan, which Trump rescinded due to concerns about cost, “would create net domestic benefits of $39 billion in 2030.” The professors further say that 94% of the economic benefits would be due to reduced air pollution.

The LSE brief further claims that the American jobs market in the energy sector is already trending towards renewables. “10,900 new jobs were created in renewable technologies in the United States in 2019, while 8,000 jobs were lost in coal-fired electricity generation,” the authors say, citing data from the National Association of State Energy Officials. Furthermore, “about 80,000 people were employed in the coal power industry compared with almost 250,000 in solar energy.”

Those trends may continue, since the Biden Administration is eager to move energy workers away from their current jobs and towards renewable ones. “The same people can do those [mining] jobs. But the choice of doing the solar power one now is a better choice,” Special Presidential Envoy for Climate John Kerry said on Jan. 27.

Researchers at the Brookings Institute argue that jobs in the renewable sector may be more attractive to Americans with less education because they pay more. Clean energy jobs pay between eight and 19 percent more than the national average. These jobs are accessible to workers without college education, the authors write. Since many jobs associated with clean energy policy are skilled blue-collar ones such as electricians, carpenters, and plumbers, “roughly 50 percent of workers attain no more than a high school diploma.”