April 30, 2008
RALEIGH – A North Carolina commission is considering policies that “would exert significant negative effects on the state economy,” according to a new report from Boston-based economists who have analyzed the policies.
“By 2011, the state would shed more than 33,000 jobs,” according to the report from the Beacon Hill Institute, the research arm of the economics department at Boston’s Suffolk University. “Annual investment would drop by about $502.4 million, real disposable income by more than $2.2 billion, and real state Gross Domestic Product by about $4.5 billion.”
“The negative economic effects would spill over into state and local tax collections,” the report adds. “We estimate a loss of $184.6 million in revenues in 2011.”
Institute director David Tuerck shared details of the report during the April 22 meeting of the N.C. Legislative Commission on Global Climate Change. Now the 73-page document is available for review at the John Locke Foundation Web site.
The climate change commission is considering 56 policy proposals developed by the Climate Action Plan Advisory Group. The proposals aim to limit global warming by cutting carbon dioxide (CO2) emissions. The proposals would lead to new taxes and fees, restrict consumer freedom, and raise prices.
Supporters contend those policy proposals would help North Carolina’s economy. A report from the Appalachian State University Energy Center suggests the policies would generate 32,000 new jobs by 2020 and boost Gross State Product by $2.2 billion. (Those numbers have dropped from the ASU Energy Center’s October 2007 projections of 325,000 jobs and a $20 billion economic impact.)
At the request of the John Locke Foundation, Beacon Hill Institute researchers tested eight of the proposed policies. Those tested include a cap-and-trade program for CO2 emissions, a surcharge for high-emission vehicles, a California-style vehicle emission standard, and mandates for utility companies to spend money on energy-efficiency and demand-management programs.
The Beacon Hill Institute’s findings rebut predictions from climate change policy advocates. “The proposals’ negative economic and fiscal effects stem from the price and tax increases they would impose on the energy and transportation sectors,” according to the report. “Our results contrast with the positive results produced by CAPAG and ASU, which suffer from … deficiencies.”
Policymakers should look closely at the new Beacon Hill Institute report, said Dr. Roy Cordato, JLF Vice President for Research and Resident Scholar. “The Beacon Hill Institute details what it calls ‘serious methodological flaws’ in the documents used to justify these new tax hikes, artificial price increases, and increased restrictions of consumer freedom,” Cordato said. “David Tuerck and his fellow economists detail overly optimistic and implausible assumptions about the impacts of these policies.”
“It’s clear from the Beacon Hill Institute report that policies designed to cut CO2 emissions would harm North Carolina’s economy,” he added. “This finding is important, since the Beacon Hill Institute’s review of these policies offers the only analysis to date from qualified economists. Since the policies would have no significant impact on the climate, the climate commission should think twice before adopting these ill-conceived ideas.”