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Economic factors could stymie climate change accord
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CBO Director Douglas Elmendorf testified yesterday to the Senate Energy and Natural Resources Committee that overall employment may not be significantly impacted by cap and trade legislation, but that particular industries heavily reliant on production or consumption of fossil fuels will be hard hit as employment shifts away from them toward renewable energy sectors of the economy. "The shifts will be significant," Elmendorf said, and added that addressing climate change will require "some cost to the economy."
At the same hearing, Senator Sam Brownback of Kansas said Kansas City utilities predict a 44% increase in energy prices under the Kerry/Boxer proposal, while Senator Mary Landrieu of Louisiana said oil refinery operating cost increases under the measure could force Louisiana refineries out of business, resulting in more foreign gasoline imports. Adding to the confusion, Larry Parker of the Congressional Research Service, when asked by the committee to review various cost estimates released by federal agencies and private interests, testified that "long term cost projections are at best speculative, and should be viewed with attentive skepticism."
The same sort of troubling economic uncertainties plague the run up to the UN Copenhagen conference on climate change. The range of economist predictions regarding the world wide cost of greenhouse gas emission reduction runs from a low of $100 billion per year by 2020 to a high of $1 trillion per year. Luiz Alberto Figueiredo Machado, the lead climate negotiator for Brazil, sums up the global situation succinctly: "The level of ambition in funding is not matching up to the sense of urgency everyone now has. ... Developing countries are not convinced that the market will find them the $100 billion they need. They want guarantees."
At the same time, pledges from the governments of industrialized nations to the UN Adaptation Fund for fighting climate change have almost completely failed to materialize. And, some planned clean energy projects already on the drawing boards are being scuttled because lack of growing demand for power has scotched their project financing. Dong Energy of Denmark is pulling investment out of two planned clean coal power plants, in Scotland and Germany, though it remains involved as a design consultant on the Scotland project. E.On AG of Germany has shelved plans to build a controversial Kingsnorth clean coal power facility in southeast England.
However, one California company, eSolar Incorporated of Pasadena, has partnered with Clean Energy Solutions of South Africa to distribute eSolar's power technology in a seven nation swath across sub-Saharan Africa. Earlier this year eSolar licensed its solar thermal power plant technology to Acme Group for development of power facilities in India over the next decade.
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