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How Policies to Reduce Greenhouse Gas Emissions Could Affect Employment 1 (May 2010)

handle is hein.congrec/cbo07045 and id is 1 raw text is: A series of issue summaries from the Congressional Budget Office MAY 5, 2010 How Policies to Reduce Greenhouse Gas Emissions Could Affect Employment Summary and Introduction Human activities around the world are producing increasingly larger quantities of greenhouse gases, particu- larly carbon dioxide resulting from the use of fossil fuels and from deforestation. Because of concerns that the accumulation of such gases in the atmosphere will result in a variety of environmental changes over time that would have serious and costly effects, policies to reduce those emissions are being considered. Such policies would impose costs on the U.S. economy and affect patterns of employment throughout the country. Adopting policies aimed at reducing emissions of green- house gases would shift the demand for goods and ser- vices away from fossil fuels and products that require sub- stantial amounts of those fuels to make or to use and toward alternative forms of energy and products that require lesser amounts of fossil fuels. Employment pat- terns would shift to mirror those changes in demand. Changes in employment in specific industries would reflect the amounts of greenhouse gases they emit (through production and use of their output) and the dif- ficulty of reducing their emissions of those gases. The Congressional Budget Office (CBO) has analyzed the research on the effects that policies to reduce green- house gases would have on employment and concluded that total employment during the next few decades would be slightly lower than would be the case in the absence of such policies. In particular, job losses in the industries that shrink would lower employment more than job gains in other industries would increase employment, thereby raising the overall unemployment rate. Eventually, how- ever, most workers who lost jobs would find new ones. In the absence of policies to reduce emissions of greenhouse gases, changes to the climate also might affect employ- ment; however, this brief does not address such changes because that effect would probably arise after the next few decades, and it has not been studied as carefully by researchers. Various industries would be affected differently by policies to reduce greenhouse gas emissions: Coal mining would probably see the largest percentage decline in employment. Among fossil fuels-coal, petroleum, and natural gas-coal, when it is burned, produces more greenhouse gases per unit of energy than do the others. Moreover, coal is widely used to generate electricity, and electric utilities have some ability to substitute other sources of energy for coal. A mitigating factor for the coal mining industry could be the development of technologies to capture and store emissions of coal-fired power plants. Employment in oil and gas extraction and natural gas utilities would also be expected to decline as those fuels became more expensive and the demand for them declined. In percentage terms, the decline would be smaller than that in coal mining, though. Because oil is widely traded on international markets, contin- ued demand for it in other countries that did not implement emission-reduction policies would lessen some of the effects of the decline in domestic demand. Because the use of natural gas to generate electricity produces smaller quantities of greenhouse gases than does the use of coal, demand would probably shift from coal to natural gas in some instances, offsetting some or all of the reduction in demand for natural gas that would otherwise occur. Mining (for materials other than coal), construction, and the industries that produce metals, nonmetallic mineral products (such as glass), chemicals, and trans- portation services-all of which use relatively large amounts of energy directly or indirectly-would prob- ably also experience reductions in employment, although the percentage declines would be relatively small. CBO

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