The Low Cost of Climate Legislation

According to a new CBO estimate reported by the Washington Post:

Climate-change legislation would cost the average household $175 a year by 2020, according to the Congressional Budget Office, far below the figure commonly used by GOP critics of the House bill. The CBO said yesterday that the poorest 20 percent of American households would actually receive a $40 benefit in 2020 from the legislation, which would establish a cap-and-trade system to limit greenhouse gas emissions, while the richest 20 percent of households would see a net cost of $245 a year. The costs would result from higher prices for carbon-based fuels, offset by a complex series of tax breaks and free allowances, new technologies and behavioral changes, and impacts on corporations and their profits.

Reader Comments

4 Replies to “The Low Cost of Climate Legislation”

  1. Wow, this really brings perspective to the argument that trying to change our energy economy is too expensive for our financial system to survive! Clearly that argument holds no weight. This is just one more example that the environmental movement is going to succeed, and the sooner the naysayers get on board with progress the sooner we can all move on to a cleaner reality.

  2. I don’t know. Cap and trade schemes in Europe have been met with limited success. The idea of creating a regulated market for companies to trade off on pollution doesn’t seem in my mind to give justification to pollution if you can pay for it. I am a fan of a carbon tax instead.

  3. We should be skeptical of this cost data because it may not include the additional costs to businesses and industries that would be passed along to consumers in the form of higher prices for electricity, motor fuels, natural gas, food and most goods and services.

    More importantly, there is no mention of the climate-change benefits that would accrue to the average American household after paying these additional costs.

    As previously noted on this forum, the absence of climate benefits and the reluctance of global warming advocates, attorneys, regulators and legislators, to specify, quantify, and guarantee any benefits that would result from their legislative proposals, is the most significant obstacle facing cap & trade legislation.

    Climate change advocates seem to have great faith that the technology is available to control and modify the global climate. However there is no evidence that such technology actually exists or is likely to be developed in the foreseeable future, regardless of the cost.

    This is why it is so difficult to guarantee any climate benefits whatsoever from cap & trade legislation.

  4. This is a CBO, not a GAO analysis (hasn’t the CBO vetted what the GAO says is a crisis?). It uses 2010 dollars in its analysis and likewise, relative to its economic assumptions. 2020 is the end of the “free” phase of the implementation of ACES’s cap, trade and offset. Before getting too excited about this purported free lunch, it is best to read the cover letter and report linked here:

    The comments associated with this same optimistic assessment of the CBO’s analysis at Climate Progress are also worth considering:

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About Dan

Dan Farber has written and taught on environmental and constitutional law as well as about contracts, jurisprudence and legislation. Currently at Berkeley Law, he has al…

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