*Names in bold indicate Presenter
The purpose of this paper is to quantify the effect of power-sector regulation on U.S. manufacturing industries’ employment and to identify trade effects – that is, how much of any decline in production represents a shift overseas? We do this in two parts. First, we estimate a series of models of the relationship between electricity prices and employment, shipments, and trade for more than 400 manufacturing industries over 21 years. Second, we use our estimated statistical models to simulate the impacts of two power sector regulations: a hypothetical carbon pricing regime and the 2011 Cross-State Air Pollution Rule (CSAPR). For the climate change policy simulation, we focus on a carbon price of $15 per ton. For the simulation of the CSAPR, we employ the 2.2% increase in 2012 electricity rates estimated by the EPA in its regulatory impact analysis.
In the first case, we find that higher electricity prices associated with $15/tCO2 would lead to an average production decline of 1.3% but also a 0.6% decline in consumption (defined as production plus net imports). In the case of CSAPR, we find that energy-intensive industries would witness experience employment impacts less than 0.5% under CSAPR, and competitiveness impacts would be less than 0.3%.