Statement on climate deal omit details
The claim: “The cost of the Paris climate accord to the American economy is steep. The agreement will cost American workers 6.5 million jobs and $3 trillion in economic growth by 2040.” — Texas Railroad Commissioner Wayne Christian.
The Republican oil and gas regulator, one of three commissioners of the Texas Railroad Commission, wrote an open letter in late January that he is fed up with environmentalists and what he described as the “woke” liberal policies threatening to disrupt the smooth recovery of Texas’ energy sector from pandemic blows.
PolitiFact rating: Half True. Those figures were similarly referenced by President Donald Trump in justification of his decision to withdraw from the accord. After that announcement, authors of the study said the “Trump administration selectively used results” and failed to consider key limitations of their findings. Christian also omitted these caveats.
Discussion
In the letter, posted to the agency’s website on Jan. 5, Christian took a swipe at President Joe Biden’s pledge to rejoin the Paris climate accord, which he fulfilled on his first day in office by executive order. Former President Donald Trump withdrew in 2017 from the international treaty, designed to reduce carbon emissions, although terms of the agreement stipulated that the U.S. could not formally exit until Nov. 4, 2020.
“This would be a tremendous mistake,” Christian wrote. “The accord carries sky-high costs with very low benefits and unfairly imposes a double standard based on unproven assumptions and climate models that are wrong nearly all the time.”
Then Christian pointed to a 2017 study released by an economic research firm on behalf of the U.S. Chamber of Commerce and the American Council for Capital Formation, a pro-business think tank on economic policy.
The study, entitled “Impacts of Greenhouse Gas Regulations On the Industrial Sector,” was also cited by Trump when justifying his decision to withdraw from the Paris accord.
“The cost to the economy at this time would be close to $3 trillion in lost GDP and 6.5 million industrial jobs, while households would have $7,000 less income and, in many cases, much worse than that,” Trump said in his 2017 announcement from the Rose Garden.
The bleak outlook sparked scrutiny over the figures. When the U.S. initially joined the accord in 2016, the Obama administration set long-term goals for reducing economy-wide emissions by 80 percent from 2005 levels by 2050. The administration listed a mix of existing and planned policies that would help the U.S. meet that goal, but reductions stemming from those
policies would still fall short of the 2050 target.
Although there’s debate over how far short the policies would come, “it is clear that such a gap cannot be filled without contributions from the industrial sector,” reads the study, which was conducted by NERA Economic Consulting. The profit and job loss figures cited by Christian and Trump represent the economic cost of closing that gap according to NERA’s analysis.
Trump and Christian repeat the report’s findings accurately. More restrictions on fossil fuel emissions mean higher cost of production, and higher cost of production means the closure of uncompetitive manufacturing businesses, and those closures mean fewer manufacturing jobs. These losses and their knock-on effects beyond the manufacturing sector would amount to 1.1 million jobs lost by 2025 and 6.5 million by 2040, according to NERA.
The loss of jobs results in a corresponding decline in gross domestic product, with a loss of $250 billion by 2025 that accelerates to $3 trillion by 2040.
“The decline in GDP accelerates over time as the targets become much more difficult to comply with and the targets start to constrain output in all sectors,” the study says.
But the study’s authors note an important caveat to their key findings that Trump and Christian omit. Not only are the long-term projections subject to a great deal of uncertainty, they said, the study did not factor in all of the offsetting job gains and GDP growth associated with a clean tech transition.
In a news release following Trump’s announcement of U.S. withdrawal from the Paris agreement, NERA stated that “the Trump administration selectively used results” from its study.
“NERA’s study was not a cost-benefit analysis of the Paris Agreement, nor does it purport to be one,” their statement said. “The objective of the study was to estimate the range of cost sensitivity associated with meeting deep U.S. emissions targets under alternative implementation approaches affecting U.S. industrial sectors. NERA’s study does not provide any recommendations regarding any specific international agreements.”
There’s a smattering of predictions for how climate action will create opportunities for economic growth. For instance, a 2018 report by the Global Commission on the Economy and Climate — an economic policy initiative commissioned by seven countries in 2013 — says that the green transition could create $26 trillion in benefits across the global economy by 2030. And as new technologies accelerate the transition, new jobs could be created therewith.
When asked about considering possible offsetting benefits in his criticism of the Paris accord, Christian questioned the logic of eliminating existing energy jobs while subsidizing jobs in renewables. According to the International Renewable Energy Agency, global direct subsidies to renewables are expected to increase from $166 billion in 2017 to $192 billion in 2030, while subsidies to fossil fuels fall from $447 billion to $165 billion over the same 13-year period.
“I do not see a benefit in putting in place punitive policies that eliminate well-paying energy jobs and then using our taxpayer dollars to create new jobs through subsidizing other less efficient forms of energy,” he said.