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By Catharine Richert October 5, 2009

Claims cap-and-trade will cause job losses has a new complaint about the cap-and-trade bill: It's a job killer.
In an Oct. 4, 2009, ad in the Washington Post , the group said that "2 million jobs lost" is "another unfortunate truth about Congress's climate bill."

The organization, which includes business associations, antitax groups, transportation companies and the American Petroleum Institute, has ramped up criticism of the sweeping cap-and-trade bill since the Senate took up its own version of the legislation in late September. The House has already passed its version of the bill; it aims to lower carbon pollution 17 percent by 2020 and 83 percent by 2050 by capping carbon emissions and requiring firms to buy credits, either from the government or from other companies, to continue polluting.
Opponents of cap-and-trade argue that forcing industry to buy pollution credits will ultimately harm consumers and business. They argue that phasing out fossil fuels will require big job cuts and many employment opportunities will be sent overseas. is among the critics.
The group's ad cites a May 27 study of the House bill written for the National Black Chamber of Commerce, which opposes the bill, by private consulting firm CRA International. The study predicts that net job losses could be as high as 2.5 million by 2030 and 3 million in 2050.
CRA International does not dispute the fact that cap-and-trade would create new jobs. But, "despite the promise of green jobs, ACESA would, if enacted, inevitably depress total employment from baseline levels. The bill would divert resources now used to produce additional goods and services into the work of obtaining energy from sources that are more costly than fossil fuels." 

That outlook doesn't square with what we've been hearing from lawmakers who support a cap-and-trade plan. The backers of the House version say the legislation would create "millions of new clean-energy jobs."

The authors of the Senate version say, "This bill includes targeted protection for our manufacturing sector to ensure that American companies remain competitive and jobs remain here at home. New programs will train workers to succeed in the new energy economy. Agriculture and rural America will see a boom in investments in biofuels and alternative energy sources."
Both bills include funding for worker training and expanded unemployment benefits; for example, the House bill would provide 156 weeks of benefits, helping to pay for health insurance, job training and employment search assistance to those who lose their jobs as the result of cap-and-trade.
But neither House nor Senate lawmakers working on the legislation have pinned down exactly how many jobs their bills would eliminate and create, so we decided to look at other estimates.
The Center for American Progress, another liberal group, says the bill could create a net increase of about 1.7 million jobs so long as $150 billion is dedicated to the clean-energy industry every year.
"These job gains would be enough — on their own — to reduce the unemployment rate in today’s economy by about one full percentage point, to 8.4 percent from current 9.4 percent levels — even after taking into full account the inevitable job losses in conventional fossil fuel sectors of the U.S. economy as they contract," according to the June 2009 report.
And a second analysis done by the American Council for an Energy-Efficient Economy, a group that is supporting the bill, estimates that the cap-and-trade bill could create anywhere between 600,000 and 1 million new jobs by 2030.
Meanwhile, the Congressional Budget Office issued a report in September 2009 that the cap-and-trade plan would have a minor effect on employment in the long-run.
"The small effect on overall employment would mask a significant shift in the composition of employment over time," according to the report. "A cap-and-trade program for carbon dioxide emissions would reduce the number of jobs in industries that produce carbon-based energy, use energy intensively in their production processes, or produce products whose use involves energy consumption, because those industries would experience the greatest increases in costs and declines in sales." But "the shifts in demand caused by the policy would also create new employment opportunities in some industries."

Stephen Seidel, vice president for policy analysis and general counsel at the Pew Center on Global Climate Change, said, "Estimating jobs is a very difficult task for the limited modeling tools that we have." Jobs will almost certainly be lost and created under a cap-and-trade program, it's just a matter to what degree, he said. The CRA International report used in the ad "falls on the high end."

So, back to's claim that 2 million jobs will be lost under cap-and-trade. As we've shown, the job predictions are all over the map. Supporters of cap-and-trade predict an increase. CRA, which was hired by an opponent of the proposal, says jobs will be lost. The independent CBO characterizes it as a wash.

Of all these groups, we're inclined to believe the CBO, since it is independent. But we can't rule out the possibility that there could be gains or losses on either end, as the predictions aligned with supporters and opponents suggest. So we find the ad's claim to be Barely True.


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Editor's note: This statement was rated Barely True when it was published. On July 27, 2011, we changed the name for the rating to Mostly False.


Our Sources

CRA International, Impact on the Economy of the American Clean Energy and Security Act of 2009 , accessed Oct. 5, 2009

National Black Chamber of Commerce, President Harry Alford: Cap-and-Trade Legislation Will Kill American Jobs , accessed Oct. 5, 2009

House Energy and Commerce Committee, summary of HR 2454 , accessed Oct. 5, 2009

Senate Environment and Public Works Committee, summary of the cap-and-trade bill , accessed Oct. 5, 2009

Center for American Progress, The Economic Benefits of Investing in Clean Energy , accessed Oct. 5, 2009

American Council for an Energy-Efficient Economy, hill briefing on HR 2454 , accessed Oct. 5, 2009

Congressional Budget Office, report on HR 2454 , accessed Oct. 5, 2009

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