The Bush Administration�s decision to reject the Kyoto Protocol and omit CO2 from its multi-emissions strategy is the first step in the right direction. Today�s energy market turmoil stems from under-investment in capacity to produce power and fuels. Uncertainty about emissions policy is a significant obstacle to construction of new power plants across the nation, something that is sorely needed to improve California�s and the nation�s economic prospects.
Many of the administration�s critics are relying on natural gas supply to meet rapid growth in electricity demand. However, these expectations conflict with WEFA�s analysis of gas markets. Natural gas markets will remain tight for several years, and thus will not provide the panacea for the power industry.
Major research at WEFA has demonstrated that proposed policies to mitigate global warming seriously underestimate the economic cost, partly because they ignore all short-term effects. WEFA�s results have shown significant disruption of major industrial sectors and damage to the U.S. economy (a 3.2% decline in GDP). Further, WEFA�s analysis has shown that the impact is greatest on lower income groups, as 2.4 million jobs are lost.