An Economic Perspective on Complex Climate Legislation

Analysis Group worked with a large U.S. manufacturing company to develop a strategy for managing its operating costs under potential federal regulations to limit greenhouse gas (GHG) emissions. Our team estimated the economic implications of the GHG cap-and-trade program for the company and the extent to which subtle changes to the program could impact costs to regulated facilities without affecting total emissions reductions. Using detailed information about our client’s and its competitors’ energy intensity and cost structures, we constructed an economic model to simulate the effects of cap-and-trade expenses under a range of projections on the company’s core businesses over the next 25 years. The company’s senior leaders used our findings to develop a strategy for communicating the organization’s goals to policymakers and investors. Our analyses armed our client with the deep understanding of climate-regulation economics necessary to support its business and strategic interests.