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Pew Center: The Competitiveness Impacts of Climate Change Mitigation Policies

Authors: Joseph E. Aldy, and William A. Pizer
May 2009

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This Pew Center study takes a close look at the historical relationship between energy prices and U.S. production and consumption of energy-intensive goods. The authors suggest that energy-intensive manufacturers are likely to face only modest "competitiveness" impacts under a U.S. greenhouse gas cap-and-trade program.

Excerpt: This Pew Center study takes a close look at the historical relationship between energy prices and U.S. production and consumption of energy-intensive goods. The authors suggest that energy-intensive manufacturers are likely to face only modest "competitiveness" impacts under a U.S. greenhouse gas In the debate over mandatory policy to reduce the United States' greenhouse gas emissions, a major issue has been the potential impact on the competitiveness of American industry. Many are concerned that if the United States moves forward with mandatory climate policy while other countries do not, U.S. jobs and production will move to emerging economic powers like China and India. This economic relocation would be accompanied by emissions "leakage," with greenhouse gas reductions in the United States offset by increases elsewhere.

For the most part, the climate competitiveness debate has proceeded in the absence of hard data. With this report, the Pew Center on Global Climate Change hopes to contribute to a firmer analytical understanding of the potential for competitiveness impacts and of policies to address them.

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