Under the best scenario, the EIA concluded that a cap-and-trade regulatory scheme to reduce carbon dioxide emissions will:
- Raise gasoline prices by nearly 53 percent and raise energy prices by more than 86 percent;
- Reduce economic growth by 1.9 percent (about $256 billion of 2006 QIV GDP);
- Reduce economic activity across most industries including the construction, manufacturing, transportation and finance industries; and
- Exert upward pressure on overall prices and interest rates.
"Lost in all the hype on global warming is the negative impact a cap-and- trade emissions scheme will have on the economy," said Wayne Winegarden Ph.D., author of the report. "Higher energy costs will ripple throughout the economy causing a cascade of harmful affects for consumers and industry," added Winegarden.
The EIA report estimated the economic impact if the U.S. reduced carbon dioxide 7 percent below 1990 levels as prescribed by the Kyoto protocol. The report used a cap-and-trade system as the regulatory mechanism to reduce carbon dioxide emissions. Under cap-and-trade, industries are allowed a limited amount of carbon dioxide emissions and if they exceed that quantity, they must buy emission "credits" from other companies.
United States Climate Action Partnership (USCAP) -- a coalition of special interest environmental groups and corporations including GE, DuPont, Caterpillar and Lehman Brothers -- are lobbying Congress for a cap-and-trade as the preferred regulatory scheme to address global warming.
"It's shocking to see companies pursuing regulations that will harm economic growth and jeopardize future earnings. Higher gasoline and energy prices will wreak havoc on consumers' budgets already squeezed by higher interest rates and utility prices," said Steve Milloy, executive director of the Free Enterprise Education Institute.
