Government report claims Lieberman-Warner bill would not hit economy

The proposed Lieberman-Warner bill for curbing US emissions would have a negligible impact on the economy, according to a new report released yesterday by the US Energy Information Administration.

Critics of the bill, which proposes a 70 per cent cut in emissions by 2050 and the development of a wide reaching cap-and-trade scheme encompassing nearly 80 per cent of the economy, have argued that it would have a crippling effect on the economy.

However, the new study claimed that if implemented the bill would result in GDP being just 0.3 per cent lower than under business-as-usual projections by 2030. Even when more pessimistic assumptions were used to assess the cost of the legislation and the availability of renewable energy, the agency predicted that the difference in GDP would still be less than one per cent.

The report predicted that the bill would lead to a rapid expansion in wind and solar energy capacity and provide a financial incentive for energy firms to deploy carbon capture and storage technologies. It also argued that any increase in electricity prices resulting from the shift in the energy mix towards low carbon sources would materialise slowly over time, with prices expected to be just 11 per cent higher by 2030.

Senator Joe Lieberman welcomed the findings, which come just a few weeks after a separate study from the Environmental Protection Agency (EPA) reached a similar conclusion about the economic impact of the bill. "Two separate government analyses have now come to the same conclusion," he said. "Our bill curbs global warming without harming the US economy."

Senator John Warner said the report provided further evidence that " Americans can make significant reductions in our greenhouse gas emissions in a manner that does not harm the economy".

The findings will further crank up pressure on the Senate to approve the bill when it is debated in early June.