As the debate on climate legislation gears up in the Senate, evidence continues to accumulate that a climate bill will be affordable and provide a much-needed boost to our economy.
A new analysis released by the Department of Energy’s Energy Information Administration (EIA) of the comprehensive climate and energy legislation introduced by Senators Kerry and Lieberman (the American Power Act or APA), confirmed that under the bill, the American economy would continue to grow robustly, and the cost to households would be minimal. Here are the facts:
- Under climate policy, U.S. GDP would grow by a third over the period 2008-2020, and would nearly double by 2035. A “business as usual” scenario with no climate policy would add only a tiny fraction to output — just two-tenths of a percent (0.2%) in total over the next two decades. To put this in perspective, GDP is projected to reach $27.8 trillion by New Year’s Day 2035 under business as usual; under climate policy, it will get there by the middle of February.
- Under climate policy, U.S. employment is projected to grow 8% by 2020 and 22% by 2035, relative to 2008.
- The estimated cost to the average American household is $167 in the year 2020 (in 2009 dollars) – less than six dollars a month per person. (The EIA also reports an annualized figure of $206 over the entire period.)
- Estimated electricity prices would be only 4% higher in 2020 under the policy than they would be without it.
- Allowance prices in 2020 and 2030 are even lower than EIA projected under the House-passed climate legislation (HR2454).
The EIA’s analysis also points out that the vast majority of reductions would come from the electric power sector. That’s relevant to current debates, as the Senate is currently considering a scaled-down version of the cap included in APA that would only cover the power sector. Under such a policy, allowance prices would be lower — making household costs and other economic impacts even smaller.
All of EIA’s projections are consistent with an array of estimates from the most credible analyses available, in particular, the Environmental Protection Agency (EPA) and the Congressional Budget Office (CBO). EPA’s estimates for the cost to the average American household are comparable to EIA’s (amounting to just a few dollars a month for the average individual American). And just last week, CBO reported that APA would reduce future deficits by approximately $19 billion over the next decade. It also estimated even lower allowance prices under APA than under HR2454, which CBO also projected would cost the average American just a few dollars a month by the year 2020.
That is a small investment in a clean energy economy that will create jobs, reduce pollution and increase America’s energy security. And it’s always important to remember that all of these analyses only look at one side of the ledger – they do not take into account the huge costs of inaction on climate change.
Studies like those from EIA, EPA, and CBO confirm that we can readily afford a comprehensive climate and energy bill that would boost our economy, reduce our dependence on imported oil and help avert dangerous climate change. There is no more time to waste – the Senate needs to pass a cap on carbon now.