CBO stunner: Waxman-Markey cuts U.S. GHGs sharply but costs only a postage stamp a day — without counting the efficiency savings
"CBO stunner: Waxman-Markey cuts U.S. GHGs sharply but costs only a postage stamp a day — without counting the efficiency savings"
A June 5 Congressional Budget Office analysis found under the American Clean Energy and Security (ACES) Act, greenhouse gas emissions in capped sectors would be cut nearly 12% in 2020. And I’ve argued we would actually achieve even deeper U.S. reductions in 2020 thanks in part to soaring production of unconventional natural gas. On Friday, CBO released a new analysis showing just how little it would cost American families to start down this path of averting catastrophic global warming — and another new study found that accelerating the transition to a clean energy economy would generate 1.7 million jobs. Daniel J. Weiss, Director of Climate Strategy at the Center for American Progress Action Fund, discusses the latest CBO analysis in a post for CP.
The opponents of ACES, H.R. 2454, keep raising their estimated cost of the clean energy and global warming pollution reduction programs like some out of control auctioneer. These wild estimates were based on either perversions or distortions of independent government or university studies, or partisan studies with rigged assumptions designed to produce an outlandish estimate.
On June 19, the Congressional Budget Office announced that the average household would spend a miniscule amount to reduce global warming pollution under H.R. 2454. This independent analysis determined “that the net annual economywide cost of the cap-and-trade program in 2020 would be $22 billion””or about $175 per household.” This is 48 cents per day — a little more than the cost of a postage stamp.
The least well off households — those “in the lowest income quintile — would see an average net benefit of about $40 in 2020.” These households had an income under $20,292 in 2007.
CBO acknowledges that its estimates are quite conservative (low) since the calculation “does not include the economic benefits and other benefits of the reduction in GHG emissions and the associated slowing of climate change.”
Signficantly, CBO’s estimate also does not include the economic benefits of other provisions in H.R. 2454. The American Council for an Energy Efficient Economy estimates that the efficiency provisions alone could save businesses and consumers $22 billion annually by 2020. The savings would be $170 per household in 2020 — roughly equal to CBO’s cost per household estimate for ACES in 2020.
Economic models that attempt to predict the future compliance costs of pollution reduction legislation generally overestimate the actual costs. That’s because they do not account for the vast potential for innovation and entrepreneurship once binding reductions and deadlines are set. This would put a price on greenhouse gas pollution for the first time, which creates economic incentives to spur engineers and managers to devise technologies and methods to meet the gas reduction requirements more cheaply than estimated in the CBO’s model.
The estimated cost of compliance with the acid rain control provisions in the Clean Air Act of 1990 were much lower than EPA predicted. The “annual cost of the program was expected to be $2.7 billion — 4.0 billion.” Yet an EPA analysis a decade later determined that the actual cost of cutting sulfur emissions by 40 percent was substantially lower”””$1 to $2 billion per year, just one quarter of original EPA estimates.”
The bottom line is that CBO predicts the net costs of the global warming reduction program in H.R. 2454 will have a relatively small cost. And energy efficiency measures alone will save nearly as much as this estimated cost. Conservatives that cite horrendous dollar figures are engaging in statistical demagoguery in an attempt scare enough representatives to defeat the American Clean Energy and Security Act. Hopefully, a majority of the House will use this CBO estimates as its guide, and ignore conservatives’ imaginary estimates.
Thanks to Center for American Progress Associate Director for Housing and Economics Andrew Jakabovics.