NCPA - National Center for Policy Analysis


March 3, 2009

A cap-and-trade program to control greenhouse gas emissions will impose an enormous economic burden on American households, according to a new study by the George C. Marshall Institute.

As the nation's policy makers consider caps on greenhouse gas emissions, taxes on carbon dioxide, or other measures to control greenhouse gas emissions, namely energy use, they will regulate economic activity and personal behavior with the real costs being borne by the already stressed families of the United States, says Institute President Jeff Kueter.

Researchers Bryan Buckley and Sergey Mityakov of Clemson University use the popular cap-and-trade proposal discussed in the U.S. Senate last year as a point of reference.  Their study examines the likely impact of that system on personal consumption and welfare, national economic growth, employment, and the price paid for energy (electricity, natural gas and gasoline).  They found:

  • The constraints posed by the Lieberman-Warner cap-and-trade approach is equivalent to a constant (in percentage terms) consumption decrease of about 1 percent each year, continuing to 2050.
  • Put another way, the cap-and-trade approach is the equivalent of a permanent tax increase for the average American household, which was estimated to be $1,100 in 2008, would rise to $1,437 by 2015, to $1,979 in 2030, and $2,979 in 2050.
  • Reviewing a host of recent studies, Buckley and Mityakov show that estimates of job losses attributable to cap-and-trade range in the hundreds of thousands.

The price for energy paid by the American consumer also will rise, say the researchers:

  • The studies reviewed showed electricity prices jumping 5-15 percent by 2015, natural gas prices up 12-50 percent by 2015, and gasoline prices up 9-145 percent by 2015.
  • As an illustration, gasoline would suffer a 16 cent price increase per gallon at the low end of the estimates to a $2.58 penalty at the high end (using the January 2009 reported retail price of $1.78 per gallon).

Source: Brian Buckley and Sergey Mityakov, "The Cost of Climate Regulation for American Households," Marshall Institute, March 2, 2009.

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