Fighting Climate Change Could Come at a High Price

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President Barack Obama is making climate change a key issue in his second term, but the cost of cutting the nation's carbon footprint is likely to place a heavy burden on average Americans—and the U.S. economy.

Trying to be energy efficient and cutting greenhouse gases might slow the growth of the U.S. gross domestic product anywhere from two to four percentage points each year over the next 10 years due to potential job losses, manufacturing slowdowns and switching energy sources, according to research from the Stern Review on the Economics of Social Change.

That translates to nearly $1,000 a year for every American toward higher energy bills and items like subsidies for solar and wind programs—as well as taxes on gasoline to reduce oil consumption.

"You're taking money out of people's budgets when you put on a gas tax and that could really hurt lower incomes," said Chad Stone, chief economist at the Center on Policy and Budget Priorities.

"Purchasing power would be pulled out of the economy and slow growth down," Stone added.

That burden would be especially difficult when the economy is barely growing 2%-3% now.

"A slow economy is not always the best time to implement something like climate change," said Robert Frank, economics professor at Cornell University's Johnson Graduate School of Management. "You just don't want to hit people with another tax right now." (Read more: If the Weather Outside Is Frightful, Buy Nat Gas: Pro)

"it's best to phase things in like fuel efficient cars so people and businesses have a chance to adjust," Frank argued.

Reports say the president will first try to clamp down on emissions from coal burning power plants through regulations as well as adopt new energy efficiency standards for home appliances and buildings.

This would be on top of what he did in his first term of boosting fuel standards for cars and trucks and billions in federal dollars from the stimulus package for wind and solar energy. Those moves have put the U.S. on track to cut its carbon pollution by as much as 17 percent by 2019, according to the Environmental Protection Agency.

Efforts to pass a gasoline tax to cut down oil usage died in the Senate in 2009. It was part of a cap and trade bill—allowing firms to sell permits on mandated carbon emissions when those firms exceed their allowed emission limit. Neither idea has come up since then.

But the U.S is doing more than enough now to eliminate its carbon footprint, said Bernard Weinstein, a business economist at Southern Methodist University.

"I don't think we need any new initiatives when it comes to climate change," Weinstein said. "We are already substituting cleaner fuels for dirty ones. Utilities are moving away from coal because the price of natural gas is so cheap. When it comes to climate change, the U.S. markets seem to be working."

If there's a cost on trying to fix climate change, research shows there also a cost for inaction that could also hurt American pocketbooks even more.

Ignoring climate change—and suffering the damage from extreme weather that scientists say it brings—might cut global economic growth by as much as 4-5 percentage points a year over the next ten years and could even reach a draconian 20 percent cut every year during that time, according to the Stern Review.

That turns into a possible range of $2,000 to $9,000 each year for every American taxpayer to cover costs from storm damage—like Hurricane Sandy—crop failure and higher food costs as well as health care from climate change related illnesses.

"We need to do more and there are plenty of ways to do it without increasing societal costs," said Thomas Bourgeois, deputy director of the Pace University Energy and Climate Center.

"For instance we waste a lot of energy as our electrical power system is so old and inefficient. That waste could be re-used and would save people a lot of money on their electric bills," Bourgeois added.

Some analysts say the battle over how to fix climate change often misses a bigger picture.

"You hear about the costs but not always about the benefits like simply reducing our carbon consumption, " said Chad Stone. "There are ways to cut down on the costs like giving rebates to taxpayers and giving subsidies to companies to develop alternative energy is a boost to shareholders of those firms."

Getting any kind of climate change legislation, especially through a Republican-controlled House, won't be easy—especially since the GOP opposes any kind of tax hike after the 'fiscal cliff' deal.

While some Republicans, like the recently retired David Dreier (R-CA)m listed climate change as a top problem facing the country, others like Sen. John Boozman (R-Ark.) said he believes current warming conditions are part of normal weather volatility.

Many conservative groups like the Americans for Prosperity and oil promotion organizations have called any kind of climate change laws job killers. Instead, these groups have promoted the controversial Keystone Pipeline which they say will make the country energy efficient and create jobs. (Read more: Keystone XL Pipeline in Nebraska Gets OK After Rerouting)

But environmentalists say the project—a 1,700-mile, $7 billion pipeline that would carry oil from Canada to the Texas coast—would transport "dirty oil" and produce heat-trapping gases that contribute to global warming. President Obama blocked the project in January of last year and has said he will make a decision on it in March.

Even with the previous moves by the Obama administration, the U.S. is still the number two country in the world when it comes to emitting carbon dioxide gasses—just behind China.

Meanwhile, the price of combating climate change keeps rising.

A new report from the World Economic Forum stated that it could cost an extra $700 billion a year for nations to cut back on their addiction to fossil fuels—fuels blamed for worsening floods and heat waves and rising sea levels.

The report also said that a $36 billion annual rise in global public spending to slow climate change—could unlock greater private investment.

But Americans don't seem inclined to pay more to fix the climate. A recent poll said that while most Americans consider the climate change a serious problem, some 49 percent of those polled say they are not willing to pay more to fight it.

This comes as the U.S. is still in a drought—some 60 percent of the country—and 2012 seeing the warmest temperatures in recorded history. (Read more: Drought Could Deal Economy Another Blow)

Whatever the cost, something needs to be done, said Chad Stone

"Climate change policy need to be on the table going forward," Stone said. "We have to be sensitive to the state of the economy as it is now, but we should be looking at policies for when the economy improves. That's the best time to really have climate change regulation."