NCPA - National Center for Policy Analysis


August 7, 2007

A Senate bill to cut U.S. greenhouse gas emissions would raise energy prices and also reduce American economic output by more than half a trillion dollars over two decades, according to analysis by the Energy Information Administration (EIA).

Under the bill:

  • Emissions would gradually reduce total U.S. emissions by the year 2050 to 60 percent below 1990 levels.
  • Companies would be required to report their yearly greenhouse gas emissions and submit a matching number of government-issued allowances to equal the emissions spewed.
  • Those that emit more would have to buy allowances from cleaner companies that produce fewer emissions.

However, the proposal would cut severely into the U.S. economy, says the EIA:

  • With companies trying to meet the shrinking emissions levels, U.S. economic output would be $533 billion lower over the 2009 to 2030 time period, the agency said.
  • Gasoline prices are forecast to be 23 cents a gallon higher in 2020 and 41 cents more in 2030 because of the required emission cuts.
  • Coal would have the highest cost increase, rising 129 percent by 2020 and 245 percent by 2030; this would lead to average electricity prices 10 percent higher in 2020 and 21 percent higher in 2030, according to the EIA analysis.

Source: Tom Doggett, "Climate bill shaves $533 bln off economy," Reuters, August 6, 2007.

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