Ensuring US Competitiveness and International Participation

by Trevor Houser, Peterson Institute for International Economics

April 23, 2009

Before assessing the impact on US economic competitiveness of efforts to address global warming, it is important to remember that letting that warming continue unabated is not economically sustainable. Economists estimate that the cost of projected temperature increases under a business-as-usual scenario would run between 5 and 20 percent of global GDP by 2100. Arresting this process will require imposing a price for greenhouse gas (GHG) emissions, which will raise the cost of energy for US consumers and the cost of production for US industry. As this hearing is primarily concerned with the impact of climate policy on carbon-intensive manufacturing, I will focus my comments on ways to ensure these firms are competing on a level playing field and on how the transition to a low-carbon economy will impact US competitiveness.

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