Northeastern Alliance Bucks Kyoto Trend; Cooperative May Be Costly, Harm State Economies, Says NCPA

DALLAS, Aug. 25 -- Despite growing concern about the causes of global warming and the rising price of oil, officials in nine Northeastern states have preliminarily agreed to freeze power plant emissions and even reduce them by 10 percent by 2020, according to published reports. But scholars with the National Center For Policy Analysis’ (NCPA) E-Team project say such an alliance will impose significant regional economic costs.

The alliance, led by New York Gov. George Pataki, seeks to control emissions of carbon dioxide (CO2) at more than 600 electric generators in New York, Delaware, Maine, Connecticut, Massachusetts, New Hampshire, New Jersey, Rhode Island and Vermont.

“The impact of this initiative will require dramatic reductions in fossil fuel consumption in these states,” said NCPA Senior Fellow H. Sterling Burnett. “Every economic sector will also experience drastic energy reductions, imposing substantial costs on each state’s citizens.”

Because energy is such a vital component of economic activity and the rising price of oil will make compliance difficult, reducing CO2 will have a profound impact on individual disposable income, economic activity and employment, according to an assessment of a similar plan, the Climate Change Action Plan, proposed in a 2001 agreement between New England’s governors and East Canadian premiers. The assessment concluded that:

-- By 2010 consumption spending would fall by an estimated average of $2,634 per household and by 2020 it would fall by $3,019 per household.

-- Gross state product would decline by 1.1 percent by 2010 and 1.9 percent by 2020.

-- An estimated 191,589 jobs would be lost by 2010 and 217,815 by 2020.

“It’s bad enough that the proposed cooperative is extremely regressive policy, but the changes it requires won’t affect everyone equally,” Dr. Burnett added. “It will disproportionately and adversely impact seniors and low income households.”

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Richard W. Walker

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National Center For Policy Analysis

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