March 27,2009
The Honorable John Comyn
Senator, State of Texas
United States Senate
5 1 7 Hart Senate Office Building
Washington, D.C. 205 10-0001
Dear Senator Comyn:
As efforts continue to develop greenhouse gas emission regulations our office is evaluating the significant impact such proposals could have on our state. We are committed to working with you to ensure a sustainable balance of strong economic development and concern for the environmental health of our state.
The energy industry plays a critical role in the Texas economy, employing nearly 375,000 people and providing more than $35 billion in total wages in 2006. The high concentration of energy intensive products manufactured here are used across the U.S. and the world. Chemical production, computer and electronic products and transportation equipment are among the top five production industries in the state. The transportation sector is an integral part of moving goods from production areas to market. As such, additional regulation of these industries through mandatory climate policies will have a considerable effect on the character of our economy.
Our office recently prepared the enclosed preliminary estimate of the impact a cap-and-trade program might have on the Texas economy. Based on recent Congressional Budget Office (CBO) estimates of the value of allowances in a potential cap-and-trade system, initial analysis indicates the loss of jobs in Texas by the year 2020 to be in a range from 53,690 to 3 1 1,600, resulting in a decrease in personal income from $3.9 billion to more than $22.8 billion in 2020. While this is a wide-ranging estimate and does not take into account potential reductions from offsets or increased costs of goods from rising energy prices, it indicates a substantial economic cost to consider. The CBO estimates higher energy prices resulting from a 15 percent mandatory reduction in carbon dioxide emissions could cost the average household $1,600, with a larger burden placed on low-income families. Considering this, we must take an in-depth approach in developing any mandatory regulation and fully assess all impacts and alternatives of proposed programs.
A historical leader in oil and gas production, Texas is now increasing in renewable energy potential. Our state has an abundance of technical, legal, financial and research expertise to meet upcoming challenges and create new opportunities for growth. We are gathering a group of subject matter experts to explore the overall impact to the state economy, significant areas of concern and new investments needed for continued economic development in light of proposed regulation.
We will share this information and further economic analysis to assist your efforts in a reasoned discussion on these issues.
Our office looks forward to partnering with you in developing effective and efficient solutions to enhance our state's role as a leader in energy development and economic growth. Please do not hesitate to contact me if I can provide any additional information.
Sincerely,
Susan Combs
