An analysis conducted by ClimateWorks Foundation using the McKinsey & Cos. Low Carbon Economics Tool shows that a climate bill recently introduced in the Senate will create 540,000 jobs per year while providing an annual savings of $71 on families' utility bills.
The analysis evaluates the energy, climate, and macroeconomic implications of comprehensive energy and climate policy based on the American Power Act (APA), introduced in draft form by Sens. John Kerry, D-Mass., and Joseph Lieberman, I-Conn., on May 12.
The analysis estimates that the bill would achieve the following:
– create 440,000 additional jobs in an average year through 2020 (540,000 additional jobs in an average year through 2030);
– save consumers $35 on their annual household utility bills through 2020;
– maintain an average annual growth rate in gross domestic product of 2.3% through 2020 and 2030; and
– reduce greenhouse gas (GHG) emissions by 3.6 billion tons per year in 2030 – a 45% reduction compared to business as usual.
‘Comprehensive energy and climate reform is the next great economic stimulus, and with time a wasting, now's the time for action,’ say Kerry and Lieberman. ‘This new nonpartisan study shows the American Power Act will create hundreds of thousands of jobs each year, and put money back in the pockets of American families.’
The study finds that an economy-wide cap on GHG emissions would have significant impacts on U.S. energy production and use. The model predicts a transition to low-carbon energy sources and energy efficiency in response to carbon pricing, incentives linked to carbon allowances and supporting efficiency standards.
The economic implications of this energy transition are complex, but the model points to investments in energy efficiency and new power sources as a primary stimulant of economic activity, particularly employment. In this way, the cap drives job gains in many sectors, including manufacturing, construction, services, health and trade, according to ClimateWorks.
Comprehensive energy and climate legislation will shift energy investments and expenditures over the coming decades. New technologies – such as efficient appliances, wind power, or carbon capture and storage – will constitute a larger share of the energy economy than today.
ClimateWorks' analysis shows that APA accelerates adoption of these new technologies via a price on carbon, financial incentives funded by auction revenue and complementary efficiency standards. The result is an increase in public and private capital investments that stimulate the economy.