Climate 411

I promised earlier today in my quick review of the flawed study from the National Association of Manufacturers that a full analysis was on the way. Here it is [PDF].

The analyis concludes, as I said this morning that “assumptions matter — and unrealistic assumptions make for outlandish results.”

The National Association of Manufacturers and the American Council for Capital Formation today continued their campaign of public deception against the American Clean Energy and Security Act with the release of an analysis that purports to show manufacturing declines and job losses if the bill passes.

Problem is, NAM’s numbers are about as trustworthy as the forged letters sent by their allies to members of Congress, which faked opposition to the ACES bill from local community groups. They are no more real that the Birthers’ imaginary Kenyan birth certificate for President Obama, which names a laundry detergent as the registrar. (Really.)

As you know, NAM has a long history of opposing virtually every major environmental law, often using similar bad arguments with flawed data. NAM/ACCF’s study from last year was seriously flawed – it claimed to look at that year’s Lieberman-Warner bill, but it ignored important provisions of the legislation and imposed artificial constraints on the economy’s ability to reduce emissions.

The analysis presumed there would be no banking of emission allowances and only limited use of offsets. The study also artificially constrained the use of renewable energy and carbon capture and storage.

In short, they applied make-believe assumptions to a make-believe bill, and they are doing it again:

• NAM/ACCF’s conclusions assume that ACES will spur 10 to 25 GW in new nuclear power. Compare that to the Energy Information Administration’s base scenario, which predicts 10 GW without the bill – and as much as 95 GW with the bill.
• NAM/ACCF assumes that 95 percent of cost-saving offsets will come from domestic projects and five percent from overseas. In fact, ACES provides for a 50-50 split between domestic and international offsets, and the latter are expected to be more cost-effective.

These are but two questionable assumptions from the very few that NAM and ACCF disclosed – from a model with a huge array of inputs. No one will ever know exactly how they reached their numbers, because important details about their analysis and underlying assumptions remain in a black box.

We’ll have a more detailed rebuttal to NAM/ACCF’s claims for you later today.

In the meantime, here’s what we already know from independent, transparent analysis:

• The Energy Information Administration says the cap on carbon pollution in ACES can be achieved for $83 per year per household – or a dime a day per person. One of the reasons for the affordability is that increases in electricity and natural gas bills of consumers are substantially mitigated through 2025 by the allocation of free allowances to regulated electricity and natural gas distribution companies.
• The Congressional Budget Office found [PDF] that ACES would cost the average household $175 a year by 2020, or about the cost of a postage stamp per day. The CBO also found that the poorest 20 percent of American households would actually see a net cash gain under the bill of about a $40 in 2020. The study factored in the value of emissions allowances that will be rebated to consumers.
• The Environmental Protection Agency puts the cost of a carbon cap on at $88-$140 per household per year over the life of the program – or about a dime a day per person. (Sound familiar?)
• The Energy Information Administration (see above) also says that ACES would reduce our dependence on foreign oil. The U.S. would reduce its consumption of oil by 344 million barrels in the year 2030 alone, a cut of more than 12 percent from predicted imports for the same year without the bill. To put that figure in perspective, 344 million barrels of oil are worth almost $26 billion today.
• The United States Global Change Research Program found that America will face hundreds of billions of dollars in costs if we don’t take steps to stop climate change. The cost of inaction will include: sea level rise of as much as two feet that will destroy property along our coasts; stronger hurricanes and other storms that will damage cities; and severe droughts that will devastate agricultural sectors.

A just-released analysis from the Energy Information Administration (EIA) says the cap on carbon pollution in the American Clean Energy and Security Act of 2009 (H.R. 2454) can be achieved for $83 per year per household – or a dime a day per person.

One of the reasons it’s so affordable is that increases in consumers’ electricity and natural gas bills are substantially mitigated through 2025 by the allocation of free allowances to regulated electricity and natural gas distribution companies.

Nat Keohane, EDF’s director of economic policy and analysis, says this:

This analysis confirms what every other credible study has found, and it – once again – refutes the widely reported scare tactics about the cost of the cap and trade bill. Opponents of action will always try to cherry-pick the numbers and use models with biased assumptions. The EPA, EIA and CBO are the non-biased standard for economic analysis.

For a dime a day we can solve climate change, invest in a clean energy future, and save billions in imported oil.

The analysis also shows that the climate bill passed by the House would reduce our dependence on foreign oil – the U.S. would reduce its consumption of oil by 344 million barrels in the year 2030 alone, under the provisions of the bill. That’s a cut of more than 12 percent of predicted imports for the same year without the bill.

Other key points about the EIA analysis:

• It considers only the costs of reducing global warming pollution, and does not take into account the many potential benefits.
• It has similar findings to two other impartial and substantive studies done recently, from the Environmental Protection Agency and the Congressional Budget Office.
• A leaked draft of the EIA report, which was covered in some early media stories, contained an error. The average yearly change in consumption per household for the years 2012-2030 is $83 — NOT $142. The correct figure is in the final version.

With the House set to vote today on the American Clean Energy and Security Act, the misinformation from the bill’s opponents is flying fast. Our staff economists have been working furiously to circulate the facts:

• Grade: F. Dr. Nat Keohane pulled out his professor pen again to mark up a Heritage Foundation fact sheet.
• It only takes a dime a day. Opponents of action have been trying to scare voters with inflated and misleading accounts of how this bill will affect consumers’ daily expenses. However, the two most independent and credible analyses project much lower costs.
• Draconian assumptions. One tactic opponents use to get such inflated cost estimates is to make assumptions that ignore policy provisions and impose artificial constraints. This paper breaks it down.

When floor debate starts later today, the policy and economics specialists here at EDF will be hard at work correcting misstatements. Stay tuned here to see the facts.