NCPA - National Center for Policy Analysis


August 5, 2009

A new study by the Energy Information Administration (EIA), an arm of the Department of Energy, determines that the cap-and-trade bill passed by the House in June would hike energy costs to consumers by 20 percent by 2025.  It also finds that the bill would not actually reduce so-called greenhouse-gas emissions in the near term; electricity prices would rise 20 percent by 2030 under climate legislation being considered in Congress.

According to researchers, polluting companies would initially meet most greenhouse gas reduction targets by sponsoring forestry and agriculture projects rather than cutting their own emissions:

  • Even with the development of technologies designed to capture carbon dioxide from coal-fired power plants, gas and nuclear-fueled power generation will take market share.
  • The measure, passed by the House and under consideration by the Senate, is likely to increase electricity prices to 12 cents per kilowatt hour in 2030, or 20 percent higher than the cost if there is no climate law, using 2007 dollars.
  • Before 2025, the price would go up 3 to 4 percent.
  • The direct costs to each family will hit $204 per family each year until 2020 and then rapidly increase to $522 per household by 2030.

Moreover, the bill will exert a negative influence on the economy, reducing the gross domestic product (GDP) from 2012 to 2030 by 0.2 percent.  It will cost jobs and slow or reverse improvements in the American standard of living.

However, energy costs get folded into every product and service provided in the marketplace.  Energy cost increases magnify through the distribution chain, forcing prices higher and higher at each step.  When manufacturers have to pay higher prices for their energy, their product prices go up, as does the markup at the distributor and the retailer, say researchers.

Source: Ed Morrissey, "Obama energy policies will hike prices by 20%,", August 4, 2009; based upon: Energy Information Administration, "Energy Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009," Energy Information Administration, Office of Integrated Analysis and Forecasting, July 2009.

For text:

For study text:


Browse more articles on Environment Issues