NCPA - National Center for Policy Analysis


July 11, 2005

A report by the Energy Information Administration (EIA) based on recommendations by the National Commission on Energy Policy (NCEP) claims that greenhouse gas (GHG) limits are affordable; in actuality, the report shows that an attempt to slow the growth rate of GHG emissions would cost Americans hundreds of billions of dollars over the next 20 years, while an attempt to freeze emissions would cost trillions, says Joel Schwartz (CANSTATS).

EIA modeled a number of different scenarios for future energy usage that would be implemented in 2010:

  • A "business-as-usual" baseline that assumes no change in current GHG policies.
  • A cap-and-trade GHG reduction program.
  • The full suite of NCEP recommendations that includes the cap-and-trade program, a 36 percent increase in average automobile fuel economy and various incentives and subsidies to cap energy prices and encourage energy efficiency and alternative fuels.

With the cap-and-trade program:

  • EIA projects that GHG emissions will be reduced by 3.7 percent in 2015 and 7.1 percent in 2025; corresponding reductions for the NCEP plan are: 5.2 percent and 11 percent.
  • Compared to today, GHG emissions would still rise substantially under either programs, says Schwartz.

EIA estimates its program to cost $320 billion between 2010 and 2025 creating a 0.1 percent reduction in Gross National Product (GNP); NCEP recommendations will cost $620 billion, or a 0.2 percent reduction in GNP. The researchers claim these figures to be affordable, but even a modest reduction in the growth rate of GHG emissions will cost tens of billions of dollars per year, argues Schwartz, these estimates imply that an attempt to freeze GHG emissions by 2025 will cost in excess of $125 billion per year, trillions of dollars in total.

Based on EIA's estimates, he concludes, it appears that the main thing Americans will gain from GHG reductions is higher energy bills.

Source: Joel Schwartz, "Why Diamonds are like Greenhouse Gases," Canstats Bulletins, April 19, 2005; "Impacts of Modeled Recommendations of the National Commission on Energy Policy," Energy Information Administration, April 2005; and "Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's Energy Challenges," National Commission on Energy Policy, December 2004.

For EIA report:


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