July 25, 2005

The newly proposed McCain/Lieberman (M/L) bill to reduce greenhouse gas emissions contains "innovation" provisions, but the cap is the same, says consulting firm CRA International. It would reduce covered greenhouse gas (GHG) emissions to 2000 levels in 2010.

In their study, CRA analyzes the costs of the base program under two post-2010 assumptions: a cap equal to 2000 emissions forever (Low) and a cap that reduces emissions to 80 percent below 1990 levels by 2050 (High).

The new M/L innovation provisions would subsidize the development and deployment of selected energy technologies. CRA says these subsidies, if utilized, would only increase the costs projected in their analysis:

  • M/L would impose a financial cost of $450 - $720 per year on an average household in the United States in 2010, rising to $490 - $810 by 2020.
  • The United States would lose 550,000 - 840,000 jobs in 2010 and 793,000 - 1,306,000 jobs by 2020.
  • Energy-intensive industries would shrink by 2.6 - 6 percent by 2020, and manufacturing industries by 1.3 - 2.2 percent.
  • Raising the price of gasoline is an explicit goal of M/L, with increases of 22 - 55 cents per gallon by 2020.

CRA says M/L would place a burden on the economy with little, if any impact on reducing projected climate change. All sectors of the U.S. economy, except for crude oil production in 2010, will experience loss in output. The threat of emission caps will have a chilling effect on new investment and strand power plant and mining assets. Of the industrial sectors, those most dependent on energy, such as chemicals and steel, would suffer the greatest loss.

Source: "Costs to the Nation under Proposed Federal Cap and Trade Legislation to Limit Greenhouse Gas Emissions," CRA International, June 13, 2005.


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