US climate bill to boost economy by $111bn

As Republican Senators attempt to delay proposed climate change legislation on the grounds that it could harm the country's economy, a major study from three influential universities suggests that a robust climate bill would have the exact opposite effect and would boost GDP by $111bn (£66bn) by 2020.

The study, which was undertaken by research teams at the University of California Berkeley, Yale and Illinois, also indicates that action to roll out an emissions cap-and-trade scheme and accelerate the adoption of clean technologies could create between 918,000 and 1.9 million US jobs.

Meanwhile, the average household income could grow by between $488 and $1,176 as year as a result of the bill.

The report – which is entitled Clean Energy & Climate Policy for US Growth and Job Creation: An Economic Assessment of the American Clean Energy & Security Act and was commissioned by green investors group Ceres, Environmental Entrepreneurs and the Clean Economy Network – concluded that "the stronger the federal climate policy, the greater the economic reward".

The study's conclusion runs counter to numerous analyses from industry-backed groups that have warned the bill will impose huge costs on businesses, and is also more optimistic than the Environmental Protection Agency's preliminary impact assessment for the bill, which concluded it would have a negligible economic effect.

However, the recently released study argued that state economies would simply not see the "adverse impacts" predicted by "industry-commissioned estimates", on the grounds that fossil fuel prices were likely to see "a strong and sustained resurgence" in the coming years unless efforts to move away from carbon-intensive fuels are increased.

Moreover, the report argued that "complementary policies such as energy efficiency save enterprises and households money, and this money is spent on domestic and in-state goods and services with higher employment intensity than the import-dependent carbon fuel supply chain".

The result was that every state that made "significant progress" in reducing its fossil fuel energy dependence would see "higher employment and income".

But the study's findings are predicated on several conditions, which are still some way from being realised. Most notably, it argues that all US utility companies would have to generate 20 per cent of their electricity from renewable sources by 2020; an emissions cap-and-trade scheme would have to be rolled out; and investment in clean tech research and development would have to increase significantly.

The report follows attempts by Republican Senators to delay a Senate vote on the bill by boycotting key committee meetings on the legislation and demanding a new economic impact assessment from the EPA. Such an assessment is expected to take five weeks and a final vote on the bill is now not expected until early next year.