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Pervasive problems render report useless for making informed policy decisions
Two independent reports assessing the recently released recommendations of the Minnesota Climate Change Advisory Group (MCCAG) cite serious problems that appear to make the MCCAG’s report useless as a tool for policy makers. One of the assessments was a peer review study conducted by The Beacon Hill Institute (BHI), a world-renowned research center that performs innovative economic and statistical analyses of current and emerging public policy issues. The second critique is a policy memorandum issued by the Minnesota Free Markets Institute (MnFMI).
The BHI peer review, commissioned by Minnesota Majority and the American Property Coalition, identified two fundamental flaws with the MCCAG report. First, it fails to quantify benefits in a way that can be meaningfully compared to costs. Second, the cost estimates leave out important factors that grossly understate the true costs of the recommendations. BHI found MCCAG’s economic projections to be “wildly optimistic and the product of a purely fictitious analysis”. They concluded the MCCAG report “provides zero guidance to policy makers regarding the desirability of policies aimed at reducing greenhouse gas emissions.”
MnFMI’s policy memo exposed further weaknesses in the MCCAG recommendations. MCCAG’s recommendations regarding changes in land use, transportation, and agricultural policies were totally unrealistic and, in some cases, ran counter to recently enacted law. MCCAG’s focus on “increasing the cost of driving” and reducing investments in roads come under particular criticism by the MnFMI memo.
In lieu of reliable MCCAG estimates, one must look elsewhere to understand the true costs of MCCAG’s recommendations. A recent study conducted by the Science Applications International Corporation assessed the national and state economic impacts of similar federal policy recommendations. Estimated impacts for the state of Minnesota included:
· Gross state product losses of up to $4 billion in 2020 and up to $12.6 billion per year in 2030.
· Employment losses of up to 33,735 jobs in 2020 and up to 74,569 jobs in 2030.
· Household income losses of up to $3,455 per year in 2020 and up to $8,201 per year in 2030.
· Electricity price increases of up to 39 percent by 2020 and up to 153 percent by 2030.
· Gasoline price increases (per gallon) of up to 67 percent by 2020 and up to 140 percent by 2030.
· Natural-gas price increases of up to 38 percent by 2020 and up to 153 percent by 2030.
MCCAG member Will Anthony suggests that “deeper analysis of cost, impact and effectiveness for the state of Minnesota” is needed, pointing out that the MCCAG report contains no real cost/benefit analysis. Business owner Jim Marchessault, another MCCAG member said, “A big concern of mine is the whole cap and trade. It appears to be a hidden tax that government will force utilities to collect and raise everyone's energy costs.” Mitch Davis, Vice President of Davisco Foods and a MCCAG participant said, “Any policy initiatives developed around green house gas emission reductions should be self sustaining from the free market. They should be voluntary, not mandated. Businesses should not be burdened with the financial ramifications of this boondoggle.”
State legislators also expressed reservations about MCCAG’s recommendations. “These recommendations are nothing more that highly regressive taxes that will affect poor and middle-class families in a time when they can least afford it,” said Sen. Michael Jungbauer (R, East Bethel). Rep. Michael Beard (R, Shakopee) also expressed concerns regarding MCCAG’s report. “The panic over global warming seems to have fried the minds of many otherwise rational people around here, as evidenced by the avalanche of legislation attacking the energy and transportation industries in our state,” said Beard. “This melt down of rationality has left us begging the question, ‘How much is this prescription going to cost us, and what benefits will it actually deliver?’”.
Copies of the reports referenced in this press release are available online at the following addresses:
MnFMI Policy Memo
Beacon Hill Peer Review
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