Federal proposals to cap carbon emissions are tantamount to dumping sand in the gas tank of America’s economic engine.

A new report published by the Texas Public Policy Foundation shows significant damage to the most productive sectors of our state economy, resulting in a $30-40 billion decline in Texas’ gross state product by the year 2030.

Dr. Margo Thorning, senior economist with the American Council for Capital Formation, analyzed how cap and trade, renewable energy mandates, and energy “savings” dictates would specifically affect Texas. Utilizing a version of the same model used by the U.S. Energy Information Administration, the study quantifies the dynamic impact of higher energy prices across all sectors of the economy.

Over the last decade, the Texas economy grew almost 40 percent while the U.S. as a whole grew only 28 percent. Similarly, Texas employment grew 25 percent compared to the U.S. rate of 14 percent.

However, Texas’ leading role in energy production and energy-intensive manufacturing makes our state particularly vulnerable to adverse impacts from carbon mandates. Energy production and energy-intensive businesses now generate about 14 percent of Texas’ gross state product.

According to the study, higher energy prices caused by carbon limits would lead to sharp decreases in industrial output, particularly in manufacturing. Texas manufacturing output could decrease 5.4 percent overall by 2030, but far more in certain energy-intensive sectors. Chemical, primary metals, and cement manufacturing could decline as much as 26 percent. Coal production could fall by a staggering 87 percent.

Loss of this economic activity translates to a nearly $3 billion reduction in state revenues. The greatest hardship would fall on low-income families. Projected increases in energy prices (gasoline: 26 percent, natural gas: 73 percent, and residential electricity: 54 percent) could swallow one-fifth of their incomes.

The study found that Texas could lose almost 200,000 jobs by 2030. Worse, high energy prices, high compliance costs, and heightened competition from overseas manufacturers could force industries to close operations in Texas and relocate to countries without expensive carbon caps. Texas already has faced this impasse when natural gas prices soared in the 1990s.

In the last 10 years, a resurgent oil and gas industry contributed to Texas’ robust economic performance. Enhanced oil recovery and shale gas development have driven a 52 percent increase in mining employment over the last decade.

The oil and gas sector, however, is highly exposed to federal carbon policies. The Waxman-Markey bill makes the refining sector responsible for 44 percent of all carbon reductions, although refinery emissions comprise only around 4 percent of man-made carbon emissions.

Diverse businesses connected to energy production drive the Houston regional economy. With energy intensive processes, carbon intense materials, and market demand tied to the petrochemical industry, these businesses are most at risk to carbon mandates.

For example, fabricated metals manufacturing in Texas grew almost 40 percent during the last decade. But by 2030, this economic sector could see a 6.9 percent reduction in activity and among the deepest job losses.

Since the dawn of the Industrial Revolution, economic growth has entailed increased use of energy. The study notes that each one percent increase in economic growth correlates with a 0.2 percent increase in energy use. Federal dictates on carbon, renewables, and energy “savings” force displacement of affordable, reliable, and efficient energy resources for more expensive, inefficient, and unproven energy sources and technologies.

Massive subsidy of alternative energy cannot permanently mask real costs. Nor will taxpayer subsidized “green jobs” restore economic vigor. Jobs created by private investment enlarge the economic pie, while those created by subsidy burden the economy. The needed economic driver in Houston and all of Texas is private enterprise – without the shackles of federal energy policies resembling centrally planned and controlled Soviet Five-Year Plans.

Houston’s winter will never be as cold as Detroit’s, but the economic climate could become just as dreary.

Kathleen Hartnett White is Distinguished Senior Fellow in Residence and Director of the Armstrong Center for Energy & the Environment at the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin. White is the former Chair of the Texas Commission on Environmental Quality.