With some politicians and interest groups heralding Europe’s energy policies as a model to follow, the U.S. Chamber’s Institute for 21st Century Energy examined what would happen if the U.S. was forced to pay EU energy prices.
The report is the third in the Energy Institute’s Energy Accountability Series. The series takes a substantive look at what would happen if energy proposals from candidates and interest groups were actually adopted.
“Saying that the U.S. should become more like Europe when it comes to energy policies has become a common refrain in some circles, so our report takes these politicians and interest groups at their word and presents the facts about what that would actually mean for our economy,” said Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy. “The types of policies being advocated by leading candidates, such as restricting energy production and imposing new mandates, would drive up energy prices and reduce America’s global competitiveness.”
In this report, the Institute examined the policies and regulations which have led to much higher prices for energy in the Europe Union. The report found that European energy policies and prices would impose a $676 billion drag on the U.S. residential sector, with the average American household seeing price increases of $4,800 per year for their energy. This increase in prices would lead to the elimination of 7.7 million jobs in the United States.
The Energy Institute’s report identifies four key factors that make energy more costly in the European Union: 1) restrictions that inhibit access to low-cost, existing electricity supply and oil and natural gas supplies; 2) more generous subsidies provided by EU members for uneconomic technologies; 3) EU policies that place a tax on carbon emissions and 4) much higher taxes on energy consumption. These factors have driven EU prices over the past several years to rates that are 1.6 to 2.4 times greater than U.S. prices per unit of energy consumed.
“Over the past few years, the growth in the U.S. economy has far exceeded Europe’s—fueled by affordable American energy,” said Harbert. “The American energy renaissance has led to resurgence in manufacturing, some of it at the expense of the Europe Union due to such high prices. The U.S. should do everything possible to retain our competitive advantage, not copy the EU’s failed approach.”
The Energy Institute’s report also provides state-level analyses of seven key states. Colorado, Illinois, Indiana, Michigan, Florida, Ohio, and Wisconsin would all see state GDP loses and less employment with EU energy prices. Florida would see the highest number of job losses (377,400) and annual GDP reduction ($28.5 billion), while Indiana households would see the biggest annual increases in energy prices ($5,450 per household.)
The report utilizes publically available data on jobs and production levels and the IMPLAN macro-economic model. A Technical Appendix to the report explains the methodology and sources of data.
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