This is an excerpt from EERE Network News, a weekly electronic newsletter.

April 20, 2005

EIA Study Finds Minor Economic Impact from Greenhouse Gas Cuts

DOE's Energy Information Administration (EIA) released a report on April 13th that examined the impacts of implementing a variety of government energy programs, tax incentives, and energy efficiency standards in combination with a greenhouse gas emissions trading scheme. The proposed programs aim to achieve reliable and affordable energy supplies while limiting the risks and impacts from global climate change, the U.S. dependence on oil, and other potential liabilities. The EIA study found that the combined proposals would cut U.S. energy use by 5 percent in 2025, compared with a business-as-usual scenario, and would simultaneously cut greenhouse gas emissions by 11 percent. The economic impact of achieving these cuts is slight, according to the EIA: By 2025, the U.S. gross domestic product would drop only 0.4 percent below the level in the business-as-usual scenario. "These changes do not materially affect average economic growth rates for the 2003 to 2025 period," concludes the report. The study also found that the proposed government programs would pay for themselves by 2022. See the EIA report.

The European Union (EU) officially launched its greenhouse gas emission trading scheme in January, although so far only five EU countries have established online registries of their greenhouse gas emissions. This Friday, April 22nd, the European Climate Exchange (ECX) will celebrate Earth Day by launching its trading of futures contracts for EU carbon dioxide emission allowances. The ECX is a wholly-owned subsidiary of the Chicago Climate Exchange (CCX), which launched a voluntary program to trade greenhouse gas emissions in the United States in late 2003. See the EU Emission Trading Scheme Web site, the EU's list of national greenhouse gas emissions registries, the CCX press release, and the ECX Web site.

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