Two new analyses on the economics of Waxman-Markey—the ever-expanding legislation tackling US greenhouse gas emissions through a cap-and-trade program and investments in renewable energy—conclude that the bill wouldn’t break the bank for consumers, and in fact could even save people money. Not bad for a law that would bring sweeping changes to the energy economy and wean the United States off carbon.
On Tuesday the Environmental Protection Agency released its latest analysis (see the June 2009 links). It pencils out the cost of the permits under the cap, the amount of power that will come from clean sources, changing energy prices, and the cost and availability of offsets (paying non-regulated polluters to reduce emissions or for the protection/planting of carbon-consuming forests).
Considering scenarios that include different strategies for meeting energy needs, the EPA concludes that by 2020, average electricity prices might not change at all, or might rise by as much as 17 percent. It goes on to say that in the best-case scenario:
“Actual household energy expenditures increase by a lesser amount due to reduced demand for energy. In 2020, the average household’s energy expenditures (excluding motor gasoline) decrease by 7 (percent)…”
In the least favorable scenario, household energy spending increases by 8 percent. Overall, the EPA said the average American could pay between $80 to $111 per year if the bill passes.
We are a nonprofit. Donate now to support more research like this!
For a little more on the EPA report, check out a post on Grist from Daniel Weiss, director of climate strategy at American Progress.
On Friday, the Congressional Budget Office released its latest analysis of Waxman-Markey’s cost to consumers. The Washington Post had a story on it Tuesday, and blogger Joe Romm offered his take on it as well.
The CBO states “the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion—or about $175 per household.”
Romm cheerily notes that breaks down to “48 cents per day—a little more than the cost of a postage stamp.”
The CBO goes on to explain that, on net, the poorest one-fifth of U.S. households would actually receive approximately $40 a year in 2020, while the highest income fifth of Americans would pay about $245 more. Those in the second-highest fifth pay more, about $340 a year, perhaps because they don’t own as much stock in coal and oil companies—the value of which would rise in the early years of Waxman-Markey because of free carbon permits.
The difference in the EPA and CBO cost estimates, according to Point Carbon, is because the EPA said its projections are in 2005 dollars (the CBO’s are in 2010 dollars) and account for cost savings households would realize through energy efficiency provisions included in the bill.
Will these rosy forecasts for consumers compel lawmakers to pass Waxman-Markey (a.k.a. the American Clean Energy and Security Act)? We hope so. Stay tuned—the bill is headed to a floor vote in the House on Friday.
Electrical meter photo courtesy of Flickr user monkeycat! under the license.