Effort to Curb Global Warming Is Tied
To Higher Energy Prices in Two Studies
By John J. Fialka
07/16/1997
The Wall Street Journal
Page A2
(Copyright (c) 1997, Dow Jones & Company, Inc.)
WASHINGTON -- Two new Clinton administration studies show that an international effort to curb global
warming could result in a substantial increase in energy prices. But the administration played down the reports,
saying they underestimated its "flexible" approach toward applying new controls.
Summing up the results of one interagency study led by the Commerce Department, Janet Yellen, head of the White
House Council of Economic Advisers, said computer models of the economy can only provide a range of possible
impacts, "not definitive answers."
The costs of reducing man-made "greenhouse gases," such as carbon dioxide, that are believed to be heating the
atmosphere are "very difficult to predict with any certainty at all," she told members of a House Commerce
subcommittee.
Ms. Yellen was asked about one midrange estimate in the study, which predicted increases of 26 cents per gallon of
gasoline, $1.49 per thousand cubic feet of natural gas, $52.52 per ton of coal and two cents per kilowatt hour of
electricity by the year 2010. She noted that the study didn't take into consideration an international emissionspermit-trading plan being promoted by the Clinton administration that could, she said, "substantially" reduce the
cost of pollution-control efforts.
The studies didn't account for the administration's emissions-permit-trading proposal because the computer models
couldn't predict what trades would occur, administration officials said.
A second study, prepared by the Energy Department's Argonne National Laboratory, said energy-price increases
would result in "significant reductions in output and employment" in six industries: chemicals, aluminum, steel,
paper and pulp, petroleum refining and cement.
One of the worst-hit industries would be chemicals, the study said. It predicted that 20% to 30% of the nation's
chemical-manufacturing capacity would move to developing nations that initially wouldn't be covered by a global warming treaty. The move would mean U.S. job losses "as high as 200,000," the study said. The steel industry, it
said, risked losing as many as 100,000 jobs.
In a statement accompanying the study, Marc W. Chupka, acting assistant energy secretary, said the report was
based on "outdated" price-increase scenarios that would be "significantly lower" if the administration's international
trading approach were taken into account. The plan has been used in the U.S. to cut the costs of complying with
1990 restrictions on sulfur dioxide, which causes acid rain.
As Washington roasted in a near-record heat wave, Ms. Yellen and Timothy E. Wirth, undersecretary of state for
global affairs, told members of the House panel that the administration won't pick specific target levels for cuts in
emissions until after a White House conference on global warming scheduled in October. The U.S. will then take
its position to Kyoto, Japan, where final negotiations for a global - warming treaty will be held in December.