Member Focus - December 2012 The National Association of Manufacturers (NAM) released a study conducted by NERA Economic Consulting that shows a carbon tax would have a devastating impact on manufacturing. The report, titled, Economic Outcomes of a U.S. Carbon Tax, found that levying such a tax would result in higher prices for natural gas, electricity, gasoline and other energy commodities. Manufacturing output in energy-intensive sectors could drop by as much as 15 percent and 7.7 percent in non-energy intensive sectors.

The study examines two carbon tax scenarios: one levied at $20 per ton increasing at 4 percent, and the other designed to reduce carbon dioxide (CO2) emissions by 80 percent. In both cases, any revenue raised by the carbon tax would be far outweighed by the negative impact to the overall economy. A carbon tax would lead to lower real wage rates because companies would have higher costs and lower labor productivity. Over time, workers’ incomes could decline relative to baseline levels by as much as 8.5 percent. The increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy and result in higher production costs and less spending on non-energy goods.