HOUSTON – The enactment of current federal proposals to cap carbon emissions could cost Texas as much as 200,000 jobs and $41 billion in economic activity in the year 2030, according to new research released today by the Texas Public Policy Foundation.

“Texas, having an economy tied to energy development and manufacturing, is particularly vulnerable to adverse impacts from federal mandates to reduce greenhouse gases,” said the report’s co-author, Dr. Margo Thorning. “If pending legislation such as the Waxman-Markey bill is enacted, the Texas economy will experience slower growth and thousands of valuable jobs will be lost. Energy intensive industries with foreign competition could reduce their operations in Texas and relocate in countries without similar mandates.”

The report found that in the year 2030, Texas would lose:

  • 144,600 to 196,900 net jobs, after accounting for the creation of “green” jobs;
  • $29.9 billion to $40.8 billion in gross state product;
  • 4.6 percent to 5.4 percent of its total manufacturing output; and
  • $2.1 billion to $2.87 billion in state tax revenues.

“The sectors that would absorb the most damage from a cap of carbon emissions are among the most productive and central to Texas’ economic success during the last decade,” said TPPF’s Kathleen Hartnett White. “These are the type of good-paying jobs we need to bring to Texas, rather than lose those jobs to foreign countries that don’t handicap their industries with costly and ineffective carbon mandates.”

The Foundation’s new report, “The Texas Economy: How Would Climate Change Legislation Impact Economic Growth and Jobs?” is based on modeling of the economic impact of H.R. 2454, the Waxman-Markey climate change legislation approved by the U.S. House last year. Similar legislation is pending in the U.S. Senate. The Environmental Protection Agency is also preparing to regulate carbon emissions administratively, although Gov. Rick Perry, Atty. Gen. Greg Abbott, and Agriculture Commissioner Todd Staples announced on Tuesday the state had filed legal challenges against EPA’s authority to do so.

The report is based on results from a version of the National Energy Modeling System (NEMS) model, used by the U.S. Energy Information Administration (EIA) for its energy forecasting and policy analysis. In its modeling process, EIA combines the NEMS energy model results with a comprehensive and internationally recognized macroeconomic model to quantify the overall economic impacts of policy changes on energy prices, GDP, employment, industry output, and other key metrics.

U.S. Sen. John Cornyn, Texas Association of Manufacturers executive director Luke Bellsnyder, and Houston-area business leaders participated in a Houston press conference earlier this afternoon at which TPPF and Dr. Thorning released the findings.

Click here for a fact sheet summarizing the report’s key findings.

Dr. Margo Thorning is senior vice president and chief economist with the American Council for Capital Formation (ACCF), a non-profit research organization based in Washington, D.C., and an internationally recognized expert on tax, environmental, and competitiveness issues.

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. She is the former chair of the Texas Commission on Environmental Quality.