Study shows state would suffer from cap-and-trade

Sidney Herald-Leader | By Louisa Barber

Montana’s future looks grim if federal climate change legislation is enacted. On Thursday, the Bozeman-based think tank Montana Policy Institute and the American Council for Capital Formation released a study that revealed Montana could lose between 4,964 and 6,761 jobs by 2030.

Carl Graham, president of the institute, told the Herald earlier this week the economy would falter sharply due to the state’s heavy dependence on manufacturing plants and energy development, a couple prime targets of cap-and-trade.

“It shows that there’s no free rides when it comes to reducing greenhouse gases,” Graham said. Montana will be disproportionately affected and a “definite net loser” if legislation goes into effect.

Graham said that, as a manufacturing state, the economy will hurt because as the cost of energy rises, so will the cost of manufacturing, therefore there’ll be less money coming into the state. Proposed legislation will also hit pocketbooks because as one of the poorest states, increased energy bills take more from Montanans, which results in less disposable income. That will hit “especially hard.”

Cap-and-trade itself seeks to cap and reduce greenhouse gases significantly over the next 40 or so years and increase the cost of fossil fuels. Companies that emit greenhouse gases the most, like oil and coal, would purchase “credits” if they go over the amount of emissions allowed.

The recent study shows some startling figures. In a press release by the institute, among the findings include:

  • By 2030, the average Montana family could expect the price of electricity to increase by up to 61 percent, gasoline 27 percent and natural gas 78 percent. Low income families and the elderly, who spend a disproportionate amount of their income on energy, will be especially hurt. Disposable income in Montana would fall by $414 to $764 in 2030.
  • Under this legislation, Montana would experience a sharp decrease in manufacturing output, especially in nonmetallic mineral product manufacturing and primary metal manufacturing, important sectors for the Montana economy. The higher energy prices, fewer jobs and loss of industrial output under this legislation are estimated to reduce Montana’s gross state product by as much as $900 million to $1.2 billion in 2030.
  • State tax revenues would be reduced by as much as $65 million by 2030, forcing Montana policymakers to make hard choices about how to fund basic services, such as law enforcement, hospitals and schools.

Graham, whose institute is releasing the findings to media outlets in the state, said he hopes Montanans will consider the study as they make their decisions regarding climate legislation.

If the economy kills jobs, Graham said, doing that will do nothing about decreasing greenhouse gases, but increasing the cost of fossil fuels will cause jobs to go overseas where manufacturing can be done cheaper.

“It’s clear from these findings that the impact would be devastating for our economy,” he said, “slashing jobs and reversing all the progress we’ve made, especially in the development of our state’s natural resources.”

The study is available for viewing at www.montanapolicy.com.