Many people are concerned that an increasing concentration of greenhouse gases in the atmosphere â€” due primarily to such human activities as burning fossil fuels for energy â€” is causing the Earth to warm, with potentially harmful results. In response, many developed countries agreed to the Kyoto Protocol on Climate Change, committing them to limit and eventually reduce their greenhouse gas emissions. The United States chose not to participate, in part because the agreement exempts such developing countries as China and India, although they have the worldâ€™s fastest-growing economies and emissions.
However, the Obama administration supports a cap-and-trade system similar to the one implemented by the Kyoto agreement. The U.S. Senate will debate a cap-and-trade proposal in fall 2009 under the American Clean Energy and Security Act. The initial version of the bill would have auctioned all of the emissions allowances, but business lobbies and special interests influenced Congress to give away 85 percent of them.
Climate researcher Chip Knappenberger estimates the bill would only reduce global temperatures by about one-tenth of a degree by 2050. The U.S. Energy Information Administration estimates it would reduce U.S. gross domestic product (GDP) by 0.2 percent over the period from 2012 to 2030 â€” but other organizations estimate the cost to be much higher:
- Cap-and-trade would cost an average of $314 billion a year in lost GDP, according to Heritage Foundation estimates, or $9.4 trillion over the period from 2012 to 2035.
- It could cost taxpayers up to $200 billion year, or $1,761 per family annually, according to a U.S. Treasury Department report.
- It would increase the cost of residential electricity 31 percent to 50 percent by 2030, says the American Council for Capital Formation and the National Association of Manufacturers.
- Job losses would total 2.5 million by 2030, estimates the National Black Chamber of Commerce.
In contrast to the economic costs of limits on greenhouse gas emissions there are responses to climate change that would have substantial economic benefits.
Climate change is mainly projected to add to existing problems, rather than create new ones. Focused adaptation addresses these problems â€” including malaria, hunger and coastal flooding â€” directly now, rather than indirectly in the future via emissions reductions. For example, according to the World Health Organization, malariaâ€™s current yearly death toll of one million could be halved with annual expenditures of $1.5 billion or less (in 2003 dollars). By contrast, limiting emissions to 1990 levels, as called for under the Kyoto Protocol, would reduce the total number of people at risk from malaria in 2085 by 0.2 percent, while costing about $165 billion in 2010 alone.