Supply Chain

Green Regs Could Cost 4 Million Jobs

Oct. 15, 2009

Everybody wants to know—and rightly so—exactly how much it would cost the U.S. economy if we went ahead and adopted regulations that would restrict the amount of greenhouse gases companies could emit. One answer, based on a study conducted by the Economic Policy Institute (EPI), is: 4 million jobs.

The non-partisan Alliance for American Manufacturing (AAM) has taken a look at the report, and concluded that legislation currently pending in the U.S. Senate “should include a steady and sufficient supply of emission allowances for energy-intensive, trade-sensitive industries to rebate the cost of compliance, as well as a border adjustment fee on the carbon content of goods from countries that fail to regulate greenhouse gases (GHGs) emitted in the production of goods.”

However, the AAM adds, there’s a very real risk that climate legislation could seriously damage any chances for a near-term economic recovery, particularly if U.S. manufacturers decide it’s far easier and cheaper to step up offshoring efforts than attempt to meet the GHG regulations.

Robert E. Scott, author of the EPI study, predicts two things could happen if the climate change legislation ignores the effects such policies could have on trade:

1. “Production of energy-intensive manufactured goods, especially price-sensitive manufactured products that already face high levels of import competition, could rapidly be outsourced to countries like China and India that do not restrict GHG emissions. This could lead to job losses in manufacturing and related industries, and to a growing trade deficit.”

2. “Increased production of energy-intensive goods such as iron and steel, pulp and paper, basic chemicals and glass products in developing countries would be likely to increase net global GHG emissions,” a process known as carbon leakage.

“The stakes are simply too great, and the potential damage to the economy and environment too large, if we fail to adequately address the trade-related implications of climate change,” adds Scott Paul, executive director of the AAM.

The full report can be found here.

About the Author

Dave Blanchard Blog | Senior Editor

Focus: Supply Chain

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Contributing Editor Dave Blanchard provides the IndustryWeek audience his expertise in lean supply chain, reporting on topics from logistics, procurement and inventory management to warehousing and distribution. He also specializes in business finance news and analysis, writing on such topics as corporate finance and tax, cost management, governance, risk and compliance, and budgeting and reporting.

Dave is also the chief editor of Penton Media’s Business Finance and editorial director of Material Handling & Logistics.

With over 25 years of experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2010), and is a frequent speaker at industry events. Dave is an award-winning journalist and has been twice named one of the nation’s top columnists by the American Society of Business Publications Editors.

Dave received his B.A. in English from Northern Illinois University, and was a high school teacher prior to his joining the publishing industry. He is married and has two daughters.