Yet Another CBO Study Shows Small Costs of Clean Energy Legislation

The Congressional Budget Office (CBO) just released another report showing that the costs from clean energy legislation would be small – and could help America avoid the severe economic impacts of climate change.

The report, “The Economic Effects of Legislation to Reduce Greenhouse-Gas Emissions,” is based on other previous analysis.

Here are some of the CBO’s main findings:

  • Without policies to reduce carbon pollution, climate change will have negative and possibly severe economic impacts on the United States.
  • With legislation including a cap on carbon pollution, the cost to consumers will be modest, and in line with previous independent estimates.
  • Low-income families (the lowest 20 percent of households) would see purchasing power riseas a result of the House-passed clean energy bill, thanks to the allocation provisions. Higher income households would see a very small increase in costs.
  • The reduction in household purchasing power, taking into account compensation from the allocation provisions, would amount to 0.1-percent in 2012 and 0.8-percent in 2050, with an average of 0.4-percent over the period 2012-2050.
  • Nationally, the House legislation would reduce the U.S. gross domestic product (GDP) — relative to the no-policy scenario —  by 0.2 to 0.7 percent in 2020; 0.4 to 1.1 percent in 2030; 0.7 to 2 percent in 2040; and 1.1 to 3.4 percent in 2050. At the same time, real GDP is projected to be roughly two and a half times greater in 2050 than today under either scenario. (Note that taking no action would also reduce GDP growth, perhaps to a much greater degree, because of the impacts of climate change.)
  • Annual U.S. economic growth between 2010 and 2050 would be reduced by 0.03 to 0.09 percentage points, relative to a business-as-usual growth rate of 2.4 percent. (Again, this “business as usual” estimate assumes a fictional world in which climate change does not occur.)

An earlier CBO analysis [PDF] of the House clean energy bill found it would cost the average American household about as much as a postage stamp per day. Other analyses by the Environmental Protection Agency and the Department of Energy found similar results.

This is the fourth study to confirm the same conclusion (other ones: EPA [PDF], CBO [PDF], EIA, ) – America can afford to pass legislation that will make us more energy independent and will help fight climate change.

In fact, we can’t afford not to.

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