A recent report by the U.S. Congressional Research Service explores seven studies that project the costs of H.R. 2454 to 2030 or beyond. H.R. 2454, also known as the American Clean Energy and Security Act of 2009 (ACES) or the Waxman-Markey bill, would establish a cap-and-trade program to reduce greenhouse gas emissions (the bill passed the House of Representatives in June).
The report, titled “Climate Change: Costs and Benefits of the Cap-and-Trade Provisions of H.R. 2454,” looked at seven studies released on the impact of the bill's cap-and-trade provisions; these include studies from the Environmental Protection Agency, the Energy Information Administration, the National Black Chamber of Commerce, the Heritage Foundation, the Congressional Budget Office, the American Council for Capital Formation/National Association of Manufacturers and Massachusetts Institute of Technology.
The summary of the report found that it is difficult to project costs up to 2030:
“The already tenuous assumption that current regulatory standards will remain constant becomes more unrealistic as time goes forward, and other unforeseen events (such as technological breakthroughs) loom as critical issues which cannot be modeled. Hence, long-term cost projections are at best speculative, and should be viewed with attentive skepticism.”
The study provides insights on the costs and benefits of H.R. 2454 and its provisions:
1. If enacted, the ultimate cost of H.R. 2454 would be determined by the response of the economy to the technological challenges presented by the bill.
2. The allocation of allowance value under H.R. 2454 will determine who ultimately bears the cost of the program.
3. The cases generally indicate that the availability of offsets (particularly international offsets) is potentially the key factor in determining the cost of H.R. 2454.
4. The interplay between nuclear power, renewable, natural gas and coal-fired capacity with carbon capture and storage technology among the cases emphasizes the need for a low-carbon source of electric generating capacity in the mid- to long-term. A considerable amount of low-carbon generation will have to be built under H.R. 2454 in order to meet the emission reduction requirement.
5. Attempts to estimate household effects (or other fine-grained analyses) are fraught with numerous difficulties that reflect more on the philosophies and assumptions of the cases reviewed than on any credible future effect.
The summary of the study also suggests that H.R. 2454’s climate-related environmental benefits should be considered in a global context.
The Congressional Research Service, which authored the report, has a mission to serve Congress by “providing comprehensive and reliable legislative research and analysis that are timely, objective, authoritative and confidential, thereby contributing to an informed national legislature.”
