USC Price School of Public Policy

Climate Policy Report

Could New Climate Policy Create Jobs?

By James Grant

Adam Rose Research professor Adam Rose was one of the primary authors of the study.

New greenhouse gas emissions policies at the federal level could generate as many as 2.5 million new jobs and $134 billion in economic activity in the United States while keeping energy costs down, according to a new report from the Center for Climate Strategies published jointly with Johns Hopkins University and co-written by a USC professor.

The study analyzed the macroeconomic effects of greenhouse gas policies adopted in recent years by 16 states. Adam Rose, research professor at the USC School of Policy, Planning, and Development, was one of the primary authors of the study.

Rose said the anticipated economic boost of a national policy on greenhouse gas mitigation comes down to cost-saving.

“Through our analysis of the actions of several states, it is clear that there are many greenhouse gas mitigation options that can reduce the price of goods and services,” Rose said. “These relative gains will increase in the future as conventional fossil fuel prices increase and energy efficiency and renewable energy technologies become even cheaper.

“Moreover, there is a stimulus from increased investment in these technologies. To be fair, we also factored in the output and job losses in conventional energy industries and their supply chain, so our results do in fact stem from a comprehensive analysis that yields a net improvement.”

The 16 states on whose climate plans the work is based are Alaska, Arkansas, Arizona, Colorado, Florida, Iowa, Maryland, Michigan, Minnesota, Montana, New Mexico, North Carolina, Pennsylvania, South Carolina, Vermont and Washington. These states were selected because they used consistent, transparent and formal procedures to develop and quantify measures, and they followed standard methodological guidelines that are peer reviewed and well accepted in practice.

The report calls for adoption of 23 specific policy approaches that have the potential to reduce pollution, are cost effective – and improve energy, health, environment and economic development.

“Several states have pioneered creation of comprehensive state climate action plans in recent years,” said Tom Peterson, president and CEO of the Center for Climate Strategies. “Our analysis provides the first economic data that show what would happen if such programs were adopted at the federal level.”

Suggested policy adoptions would focus on creation of new clean energy sources for heat and power; improved energy efficiency and industrial processes; transportation and land use improvements; agriculture and forestry conservation; and expanded recycling and waste energy recovery under a national framework.

If implemented U.S.-wide at all levels of government, the report found that the measures would yield:

  • 2.5 million net new jobs in 2020 and a $159.6 billion (in 2007 dollars) expansion in gross domestic product in 2020;
  • more than $5 billion net direct economic savings in 2020, at an average net savings of $1.57 per ton of greenhouse gas emissions avoided or removed; and
  • consumer energy price reductions of 0.56 percent for gasoline and oil; 0.60 percent for fuel oil and coal; 2.01 percent for electricity; and 0.87 percent for natural gas by 2020.
  • Assuming full and appropriately scaled implementation of all 23 actions in all U.S. states, the resulting greenhouse gas reductions would surpass national GHG targets proposed by President Obama and congressional legislation, and would reduce U.S. emissions to 27 percent below 1990 levels in 2020, equal to 4.46 billion metric tons of carbon dioxide equivalent.