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NERA Economic Consulting's Study of US Emissions Reduction Policies: Statement of Facts

04 June 2017

In a set of talking points distributed by the White House in conjunction with its announcement of the US withdrawal from the Paris Agreement, the Trump Administration selectively used results from a NERA Economic Consulting study, “Impacts of Greenhouse Gas Regulations on the Industrial Sector.” As there have been numerous public mischaracterizations of NERA’s study, to provide further clarity, NERA is releasing the following statement of facts.

  1. NERA’s study was not a cost-benefit analysis of the Paris Agreement, nor does it purport to be one. The objective of the study was to estimate the range of cost sensitivity associated with meeting deep US emissions targets under alternative implementation approaches affecting US industrial sectors. NERA’s study does not provide any recommendations regarding any specific international agreements.
  2. NERA was retained by the American Council for Capital Formation (ACCF) in mid-2016, well before the presidential election results were known, to provide an analysis of the impact on the US economy from 2016 to 2040 if companies in industrial sectors were required to share a role in US greenhouse emissions reduction efforts being outlined by the Obama Administration. Specifically, those efforts included meeting the 2025 US targets announced in advance of the Paris Agreement and meeting post-2025 US targets on a track towards 80% reduction in US emissions by 2050.
  3. NERA analyzed five different scenarios to account for policy implementation uncertainty, and to explore the sensitivity of impacts to the differing flexibility in those alternative approaches.
  4. Use of results from this analysis as estimates of the impact of the Paris Agreement alone mischaracterizes the purpose of NERA’s analysis, which was to explore the challenges of achieving reductions from US industrial sectors over a longer term. Selective use of results from a single implementation scenario and a single year compounds the mischaracterization.
  5. NERA’s client was not the Trump Administration. NERA was neither advised nor aware that the Trump Administration would cite the study as part of its rationale for leaving the Paris Agreement.
  6. NERA’s study was done using standard economic methods and approaches that are sound and reliable.

About NERA

NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For over half a century, NERA's economists have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world's leading law firms and corporations. We bring academic rigor, objectivity, and real world industry experience to bear on issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA's clients value our ability to apply and communicate state-of-the-art approaches clearly and convincingly, our commitment to deliver unbiased findings, and our reputation for quality and independence. Our clients rely on the integrity and skills of our unparalleled team of economists and other experts backed by the resources and reliability of one of the world's largest economic consultancies. With its main office in New York City, NERA serves clients from more than 25 offices across North America, Europe, and Asia Pacific.