Costs of Carbon Reduction by 2020: $40-$340 a year per household
Published June 20, 2009 @ 04:31PM PT
It's going to cost us to de-carbonize the economy, but apparently not near as much as ideological opponents of climate action would have the public believe.
The Congressional Budget Office's newly-released analysis of the Waxman-Markey clean energy and climate bill, the American Clean Energy and Security Act (ACES), states that in 2020, the bill's carbon cap-and-trade provisions will cost around $22 billion a year, or $175 on average per household
This is far below the thousands per household some opponents of the bill have claimed.
As ACES is currently written, in 2020 the cap-and-trade market will have been operation for about eight years, with 17 percent of all carbon allowances, or credits, being sold by the government, and the remaining 83 percent given away.
The give-aways will help to cut the costs being passed back to consumers, and money raised by selling emissions credits will be distributed to the public as tax breaks. CBO estimates that in 2020, the poorest Americans will actually be getting a little money back:
- The bottom fifth of households by income would see a net benefit of $40 a year
- The richest fifth would pay a net cost of $245 annually
- Of the remaining American households, those in the second lowest fifth would pay around $40 a year; those in the middle, around $235; and households in the second highest fifth, about $340.
$340 a year. That's less than $1 a day per family to create a safer future.
I pay more than $300 a month right now just to keep myself health-insured. So a couple hundred more a year to restore the health of the entire planet's climate sounds positively cheap. [[This assumes there will still be an American middle class 11 years from now, and that I'll still be a gainfully employed part of it...here's hoping.]]
Even these relatively minimal costs may end up being lower, because the CBO "does not include the economic benefits and other benefits of the reduction in greenhouse gas emissions and the associated slowing of climate change."
So many things in our lives have been made so inexpensive, for so long, by use of fossil energy. Slashing our carbon pollution will be expensive in ways we're not yet used to accounting for. But the costs of global warming -- in mitigation, insurance, medical care, damaged infrastructure, food prices, humanitarian relief, lost biodiversity, and more -- would really break the bank.
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Image: "The effects of global warming are already being felt worldwide. The Larsen-B Ice Shelf on the Antarctic Peninsula collapsed over 35 days in early 2002, prompted by 3°C of warming since the 1940s." Source: NASA Earth Observatory
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Comments (22)
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Emily is a journalist and editor covering the environment and science, and has been working in online news, community and content since 1994.
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This sounds like a reasonable estimate, and well worth the cost in order to thwart the catastrophic effects of climate change, effects we are already beginning to experience.
Unlike the thousands of dollars per year per household conservatives are erroneously claiming it will cost, based on their own gross misinterpretation of a study conducted by MIT over four years ago, even after the author of this study contacted the GOP and told them their estimate was not even close to the original.
Posted by Alan Haggard on 06/20/2009 @ 05:44PM PT
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That anti-climate-action distortion of the MIT study has really caught hold, as you can see from the next comment on this post.
Posted by Emily Gertz on 06/21/2009 @ 01:55PM PT
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As per a leaked memo from the Obama administration, cap and trade would reduce household income by more than $7,000 each and every year.
http://www.heartland.org/publications/environment%20climate/article/25508/Economic_Studies_Support_Leaked_Memo.html
Obama's ACES Act (cap and trade), however, will cost us much, much more than $7,000 per household! It will cost many of us our businesses. It will cost many of us our jobs. It will cost all of us our freedoms and our future.
Cap and Trade "would be the equivalent of an atomic bomb directed at the U.S. economy-all without any scientific justification," said famed climatologist Dr. S. Fred Singer. It would significantly increase taxes and the cost of energy, forcing many companies to close, thus increasing unemployment, poverty and dependence.
Cap and trade represents huge taxes and cost increases, which will hurt mostly the poor and the middle class. Cap and trade will give dictatorial powers to Obama and will further enrich his billionaire friends (Gore, Soros, Goldman Sachs, Obama's Chicago Climate Exchange friends, GE, the United Nations, etc.) -- all at our expense and at the expense of our children and grandchildren.
Those brainwashed to the point of wanting to destroy the economy to "prevent global warming" are behaving like the most primitive human beings who were duped into believing that human sacrifices would ensure them good weather. Human beings don't have the power to control climate! And killing the economy will not help the environment. Poor countries can't protect the environment. Just look at Haiti!
Posted by Antonio Sosa on 06/21/2009 @ 12:10PM PT
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The Heartland Institute is doing its usual bang-up job of factual distortion in that squib. I've covered the supposed "leaked memo" from the Obama administration, which turned out to be neither, in these posts:
Stop Global Warming - Change.org: OMB Memo Update: White House ...
Stop Global Warming - Change.org: OMB: We Agree With EPA on ...
Posted by Emily Gertz on 06/21/2009 @ 01:52PM PT
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Great story but 2 points I would add. First, each additional dollar cost to a family is a dollar paid to a supplier to provide a product or service. Those products and services are jobs that drive the economy and pay your rent. Don't waste, but I'd rather pay for quality sustainable products and services that enrich my life than die a miser with nothing because I didn't want to pay. Second, has anyone compared this cost to the estimated cost of dealing with the consequences of NOT spending? That is, what is the estimated cost of living if we do not curb carbon and must pay to live in a radically changed ecosystem?
Posted by Leonard Bloksberg on 06/21/2009 @ 04:49PM PT
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Lenny, that last is a great question.
I know that Washington State and California have each had studies done on how much climate change impacts will cost their economies -- a little googling will turn them up easily. And the UK's Stern Report is still considered the go-to document comparing the costs of global warming, left unabated, vs. the costs to curb it now.
It's a really hard question to answer, in part because it's hard to know how the value of a dollar today will relate to its value in 20, 50, or 100 years (and thus, how much impact on curbing global warming it will get us to spend that dollar today, vs. in a few or several decades).
But what's interesting is that mainstream critics of Stern's report seem to take issue more with his economic methods than his message, which is that the sooner we take effective action, the less it's going to cost overall. Here's a pretty good read about that:
http://www.nytimes.com/2007/02/21/business/21leonhardt.html
Mr. Sosa is providing readers of this blog with a good example of how ideological opponents of [good science] [truth] [a black guy as president] [accepting they lost the election on their own merits] ignore such fundamental matters.
Posted by Emily Gertz on 06/22/2009 @ 08:38AM PT
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You had to go there! I think most people are happy America elected a black president. It's just that some people expected a little sanity on the part of the government, after 8 years of lies and half truths. Especially during these tough economic times.
How could you possibly predict the cost of global warming? Is it not just as likely that higher temperatures would lead to better crop yields, etc?
And as for that cost estimate due to this horrendous piece of legislation, I will bet you $100, indexed for inflation, that the cost per household will be WAY above $340/year (also indexed of course). When you factor in the effect of regulation, lower economic growth, deadweight loss of taxing and spending, permit fees, and higher gas prices, the cost will indeed be in the thousands.
Posted by Mark O on 06/23/2009 @ 10:08AM PT
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Yeah, sorry, I was feeling very cranky about trolls the day I posted that response.
But really, all this inane rhetoric about "dictator," "king," "socialist" -- it degrades whatever civic dialogue we have left in the US. It isn't the language of people who respectfully disagree but get work done. It's the language of people who want everything to fall apart if they don't get their way. It's a toddler having a temper tantrum because s/he was denied an ice cream cone.
Okay, still cranky.
Posted by Emily Gertz on 06/25/2009 @ 08:38AM PT
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You can predict the costs of global warming the same way you can predict anything else in the economy: You look at historic economic trends (costs of doing business, profits or losses, inflation and deflation, population growth, growth/loss in real income, etc.), at current trends, incorporate what's already very well understood about how global warming is and will continue to affect a given set of factors, and crunch the numbers.
This whole 'warmer temps and more CO2 leading to higher crop yields" thing is way too simplistic.
It's not just about the plants growing in the fields; it's also about how warming temps throw off the whole ecological cycle. They affect pollinators like bees and bats, they change the breeding cycles of birds and insects, good and bad.
Rain cycles are changing -- even if the average amount of rainfall stays the same in a given region, it doesn't help agriculture if it starts to come down in a few big bursts that alternate with droughts, instead of more steadily over time.
As long as we don't do anything effective to stop global warming, we're rolling the dice on the future of the food supply.
Posted by Emily Gertz on 06/25/2009 @ 08:42AM PT
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There would also be costs of protecting ourselves from disease vectors that move North from the tropics as the climate warms. Malaria could become more prevalent in the southern US if rainfall continues.
Posted by Christen Felton on 06/28/2009 @ 01:57PM PT
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Dear Emily, thank you for showing us how Obama's brainwashed lemmings use Alinsky's rules to defame and demonize any person or institution, like The Heartland Institute, defending the country from Obama's evil schemes. Charge.org seems to be the lemmings' home.
In spite of the demonizing, however, more and more scientists and thinking people all over the world are realizing that man-made global warming is a hoax that threatens our future and the future of our children.
More than 700 international scientists dissent over man-made global warming claims. They are now more than 13 times the number of UN scientists (52) who authored the media-hyped IPCC 2007 Summary for Policymakers. http://www.climatechangefraud.com/content/view/3562/218/
Additionally, more than 30,000 American scientists have signed onto a petition that states, "There is no convincing scientific evidence that human release of carbon dioxide, methane, or other greenhouse gases is causing or will, in the foreseeable future, cause catastrophic heating of the Earth's atmosphere and disruption of the Earth's climate." http://www.petitionproject.org
We pray that honest leaders - both Democrat and Republican - are able to save us from Obama's criminal ACES Act (cap-and-trade) scam.
Posted by Antonio Sosa on 06/21/2009 @ 06:29PM PT
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"Obama's evil schemes!" Did I wake up this morning in an Austin Powers movie?
Posted by Emily Gertz on 06/22/2009 @ 08:22AM PT
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Emily, 340.00 sounds incredibly low to Me. I'm pretty sure when We factor all costs in it will be in the thousands. I am not saying don't do it. I am saying let's not lie to people, it just makes Us sound like liars. For a total sum We need to add unemployment from shipping jobs to China and elsewhere, increased auto and other merchandise prices, increased fuel costs from government restricting domestic drilling and imposing higher taxes intentionally to increase the their prices. Much higher electricity costs because of an open attack on the coal industry. I shudder to think of things being kept from of Us at this time. People need to know the whole story if They are going to plan for the future.
Posted by Charlie Reed on 06/22/2009 @ 04:51AM PT
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You may well be right. Frankly, if ACES were half again as strong as it really ought to be, based on the science, I expect the CBO's figures would have been more than half again as higher.
The cost to buy and operate a car in coming years seems very fungible, given how much auto technology and the power infrastructure are hopefully going to change in the next 20 years. If a car costs more, but you can recoup the expense more quickly because it's more fuel efficient, and can also run on electricity, then perhaps the lifetime cost of the car would actually decrease.
But capping and trading carbon emissions credits is not a tax. It's setting a value for a resource -- using the atmosphere for a garbage dump -- that should have been recognized as limited decades ago. The cost of any limited resource (such as landfilling other kinds of garbage) is reflected in our cost of living.
And we can't assume everything else remains the same while the price for carbon pollution increases.
For example, if and when the US begins to cap carbon, that clears a big hurdle to China accepting carbon caps, somewhat equalizing the economic impacts to each nation.
Incentives to expand clean energy and cleaner manufacturing would/will create a lot of jobs in the U.S., and help to offset higher costs for coal and gas-fired power.
Increased energy efficiency needs to be part of a comprehensive climate action plan, and would help cut energy costs (and create jobs).
Now, regarding new domestic drilling (other than in the Arctic, which is a wild card): It promises very little in the way of significant oil reserves. And it takes years to develop a well. Given that there aren't any new leases in the works right now, I would not expect to see a drop of oil from a new offshore well for the better part of a decade (unless oil companies decide to work some of the undeveloped leases they've already got in the Gulf of Mexico).
Also, oil is a global commodity; whatever gets produced in American territory will go on the world market, not de facto to the US. So it's unlikely in and of itself to drive down prices more than a few cents per barrel of oil or gallon of gas.
Posted by Emily Gertz on 06/22/2009 @ 08:13AM PT
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Maybe I am an optimist Emily, but I am actually hoping electric cars last longer. Electric motors are simpler. Regards to domestic fuel, I think Our reserves of oil, gas and coal coupled with conservation, solar, wind and nuclear should help Us stop buying from dictators. We do need a clean way to dispose of batteries though. One quick question though Emily, is there any time frame on led lights for the home? Out of concern for My family I will soon convert back to incandescent. I was the first person I know to go flourescent years ago, but safety of My family is more important.
Posted by Charlie Reed on 06/22/2009 @ 12:59PM PT
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LED lights are apparently a pretty tough nut to crack in terms of engineering them to be more affordable, while maintaining a really high quality bulb.
Last week I saw a demonstration of an LED bulb that uses nano optical technology to put out a really nice, warm light -- they're very expensive right now, though, and are mostly being marketed to architectural professionals.
The new developments are coming thick and fast, though. The NY Times last month ran a good article on LEDs:
http://www.nytimes.com/2009/05/30/science/earth/30degrees.html
Posted by Emily Gertz on 06/25/2009 @ 08:27AM PT
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I just read a great book that can help all of us with global warming and the economy. Check it out on Amazon.com. It is written by an engineer but in plain english. Has tons of pictures of real life users of 100% electric vehicles that have been exceeding performance expectations for the past ten, yes,TEN years! http://www.amazon.com/Two-Cents-per-Mile-President/dp/0615293913/ref=sr_1_1?ie=UTF8&s=books&qid=1245788840&sr=8-1
Posted by Kendra L on 06/23/2009 @ 01:43PM PT
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Who actually believes any of these non-sense ideas. Forget about the science which actually points out the fact that CO2 is not a significant greenhouse gas. This scheme is obviously like buying penances like the catholic church once had. Buy these penances my son and guarantee your way into heaven. All this will do is allow the biggest corporation to built larger monopolies since they will be the only ones who can afford or are connected enough to receive these credit.In the end, there will not be any less carbon being emitted into the atmosphere, just fewer companies able to do so. It's funny how people allow politicians to manipulate them with promises. Oh, and don't worry, this scheme will cost you and your children way more than you can imagine. I feel like I'm living in a Brazil/1984 type of a distopian world. Someone please wake me up from this nightmare.
Posted by Clifford Georges on 07/01/2009 @ 09:56AM PT
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It's easy to forget the science that CO2 is not a significant greenhouse gas, because it's fiction.
Posted by Emily Gertz on 07/01/2009 @ 10:24AM PT
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I don't understand you Emily. If you believe that CO2 is not a significant greenhouse gas, why write a story promoting limiting CO2 output?
Posted by Clifford Georges on 07/01/2009 @ 12:06PM PT
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Clifford, you're mistaken. CO2 is the leading driver of human-propelled global warming.
Posted by Emily Gertz on 07/04/2009 @ 08:19AM PT
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good we all should have to pay after all it is us or our lust for stuff in one way or another tthat has pollutted this earth, who cares about global warming, this is global pollutting we are concerened about. lets stick to the fact, in a year there will be enough mmj and hemp growing to off set all co2.
so lets worry about pollution.
we didnt care enough to talk to or stop these corporations and employees so we should be fined(taxed) for letting it happen maybe we will wake up amnd live cleaner and with in our means for once in this industrialized techno jungle we live in!
Posted by rev baker aka rev420 on 07/03/2009 @ 10:13AM PT
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