President Trump announced his plans to pull out of the Paris climate agreement today in a jazz-accompanied spectacle at the Rose Garden. He justified the decision by arguing that the terms of the accord “could cost Americans as much as 2.7 million lost jobs by 2025.” Of those, he claimed 440,000 would be manufacturing jobs. “Believe me,” the president said. “This is not what we need.”
But experts say that there are some problems with the way Trump presented those numbers. “It’s not something you can cite in a presidential speech with a straight face,” says Yale economist Kenneth Gillingham. “It’s being used as a talking point taken out of context.”
2.7 million lost jobs are probably an extreme, and unlikely, worst-case scenario
The source for President Trump’s numbers is a report by the consulting firm National Economics Research Associates (NERA). The report was commissioned by the American Council for Capital Formation and the US Chamber of Commerce, two organizations that the Natural Resources Defense Council has described as “unabashed apologists for America’s biggest climate polluters.”
NERA modeled what might happen to the economy if the US were to reduce greenhouse gas emissions as promised in the Paris climate agreements. It reported that total “economy-wide employment losses amount to about 2.7 million in 2025” and that “the manufacturing sector alone could potentially lose 440,000 job-equivalents.” (NERA did not respond immediately to an emailed request for comment.)
But the model NERA used to come up with those numbers is unrealistically rigid, says Gary Yohe, a professor of economics and environmental studies at Wesleyan University. It assumes that businesses wouldn’t innovate to keep costs down in the face of new regulations — which isn’t how industry works. “None of the outfits that are modeled in this model would stay in business in the real economy for more than 10 or 15 years,” he says. That’s why even massive oil producers like Exxon and Conoco support the Paris climate agreement — they’re adapting to a changing economy.
“If you assume that there are no benefits ... then of course things look bad.”
As a result, 2.7 million lost jobs are probably an extreme, and unlikely, worst-case scenario. After all, the number of jobs in solar grew by 25 percent in 2016, and by 32 percent in wind. In fact, while 1.1 million people work in coal, oil, and gas, there are another 800,000 people whose jobs lie with low-carbon-emitting technologies like renewables, natural gas, and nuclear power, according to the Department of Energy. “Put simply, they’re not accounting for the jobs in the clean energy economy that are created,” Gillingham says.
The other problem the study itself acknowledges: “It does not take into account potential benefits from avoided emissions. The study results are not a benefit-cost analysis of climate change.” That means that these dire numbers aren’t being balanced by another model estimating the potential gains to the US economy by preventing climate change. “If you assume that there are no benefits and the costs are there, then of course things look bad,” Gillingham says. Trump asked us to believe him, but he’ll have to have to stop cherry picking stats first.