Republicans Brazenly Misrepresent Cap-And-Trade Cost Numbers

September 16, 2009 11:59 am ET

On September 16, 2009, Republicans opposed to clean energy legislation circulated a blog post flaunting a Freedom of Information Act request by the conservative Competitive Enterprise Institute.  The documents include a cost-estimate of an out-dated, abandoned cap-and-trade plan that immediately auctioned 100% of carbon allowances.  The American Clean Energy and Security Act does not do this.  In order to contain costs, the bill initially awards allowances for free, rendering CEI's revelation meaningless.

Republicans Flaunt Misleading Numbers

House Republican Conference Email:

[House Republican Conference Email, 9/16/09]

However, the figure originates from the analysis of a different cap-and-trade plan. The plan analyzed auctions 100% of emission allowances.

Report: "Given The Administration's Proposal To Auction All Emission Allowances..."

[Competitive Enterprise Institute FOIA Document, accessed 9/16/09]

Auctioning "All Emission Allowances" Is Not The Plan

Rather than immediately auctioning 100% of the carbon allowances, the American Clean Energy and Security Act would initially give away permits - substantially lowering the cost.

Bloomberg: "85 Percent Of The Cap-And-Trade Permits Would Be Given Away In The Early Years." As reported by Bloomberg: "85 percent of the cap-and-trade permits would be given away in the early years of a proposed climate-change program that House Energy and Commerce Committee Chairman Henry Waxman, a California Democrat, wants his panel to pass next week. The biggest recipient, the electricity sector, would get 35 percent of the permits, also known as allowances or credits. Others that would receive a large share of the permits for free are energy-intensive manufacturers, natural gas distributors, automakers, and U.S. states with renewable energy and energy efficiency programs." [Bloomberg, 5/15/09]

The American Clean Energy And Security Act Would Initially Award Allowances For FREE To Contain The Cost.  According to an American Clean Energy and Security Act briefing released by the House Energy & Commerce Committee:

Protection from Electricity Price Increases. Electricity price increases will be regional in nature, with the greatest increases occurring in the coal-dependent regions of the country. To mitigate these price increases, the regulated utilities that distribute electricity to consumers will receive 32% of allowances through 2025 under a formula that distributes half of the allowances based on emissions and half based on electricity generation. These utilities are directed to use these allowances exclusively to keep rates low and, to the extent they use rebates, to do so to the maximum extent practicable by reducing the fixed-rate portion of consumer electricity bills.

Protection from Natural Gas Price Increases. To mitigate increases in natural gas prices, the regulated utilities that distribute natural gas to consumers will receive 9% of allowances from 2016 through 2025. One-third of these allowances must be used for energy efficiency programs. The remainder must be passed through to consumers through lower prices under provisions similar to those that apply to the regulated electric utilities.

Protection from Heating Oil Price Increases. To mitigate increases in home heating oil prices, states will receive 1.6% of allowances through 2025 under a formula based on home heating oil use. These allowances must be used for rebates to consumers and investments in energy efficiency.

Protection of Low- and Moderate Income Families. The electricity, natural gas, and heating oil provisions mitigate the costs of ACES on all consumers. In addition, ACES directs that 15% of the allowances be auctioned and the proceeds distributed back to consumers through a combination of refundable tax credits and electronic benefit payments. The Center for Budget and Policy Priorities estimates that these provisions will fully protect the bottom quintile of families and part of the next quintile from any direct or indirect energy price increases.

Consumer Climate Dividend. Under ACES, many of the allowance provisions phase out starting in 2026. As these allowance allocations are phased out, ACES directs that the remaining allowances be auctioned and the proceeds distributed to consumers through tax credits. [Energy & Commerce Committee, 6/9/09]

The American Clean Energy And Security Act: Rebuilding America For A Postage Stamp A Day

Reuters: "Climate Legislation Moving Through Congress Would Have Only A Modest Impact On Consumers." According to Reuters: "A new U.S. government study on Tuesday adds to a growing list of experts concluding that climate legislation moving through Congress would have only a modest impact on consumers, adding around $100 to household costs in 2020. Under the climate legislation passed by the House of Representatives in June, electricity, heating oil and other bills for average families will rise $134 in 2020 and $339 in 2030, according to the Energy Information Administration, the country's top energy forecaster." [Reuters, 8/5/09]

EIA: American Clean Energy And Security Act Would Cost Only $0.23 Per Day. According to a House Energy and Commerce Committee factsheet of the Energy Information Administration's analysis of the American Clean Energy and Security Act: "The U.S. Energy Information Administration (EIA) has completed an analysis of the American Clean Energy and Security Act (H.R. 2454), as passed by the U.S. House of Representatives... The overall impact on the average household, including the benefit of many of the energy efficiency provisions in the legislation, would be 23 cents per day ($83 per year). This is consistent with analyses by the Congressional Budget Office which projects a cost of 48 cents per day ($175 per year) and the Environmental Protection Agency which projects a cost of 22 to 30 cents per day ($80 to $111 per year)." [House Energy and Commerce Committee, EIA's Economic Analysis Of "The American Clean Energy And Security Act Of 2009," 8/4/09; emphasis original]

CBO: In 2020, Cap-And-Trade Will Only Cost An Average Of $175 Annually, "About A Postage Stamp A Day." In its analysis of the American Clean Energy and Security Act, the Congressional Budget Office wrote: "On that basis, the Congressional Budget Office (CBO) estimates that the net annual economy wide cost of the cap-and-trade program in 2020 would be $22 billion-or about $175 per household." Rep. Edward Markey noted it was "the cost of about a postage stamp a day." [CBO, 6/19/09; House Committee on Energy & Commerce Release, 6/20/09]

  • Cap-And-Trade Would DECREASE Energy Prices For Low-Income Americans. In its analysis of the American Clean Energy and Security Act, the Congressional Budget Office wrote, "households in the lowest income quintile would see an average net benefit of about $40 in 2020." [CBO, 6/19/09; emphasis original]

By 2025, A Clean Energy Standard Would Save $95 Billion On Energy & Gas Bills.  According to the Center for American Progress: "A national renewable electricity standard, a key piece of the clean energy legislation currently before Congress, would save households and businesses in every state billions of dollars in electricity and natural gas bills... The numbers come from the Union of Concerned Scientists, who earlier this year analyzed a renewable electricity standard that would aim to have 25 percent of our electricity come from renewable sources by 2025. They found that this standard would save families and businesses $95 billion in electricity and natural gas bills through 2030 and spur new investments and hundreds of thousands of new clean-energy jobs." [Center for American Progress, 5/19/09

1.7 Million American Green Jobs

Investment In Clean Energy Technology Will Create Over 1.7 Million American Jobs.  According to the Center for American Progress: "Investments in a clean-energy economy will generate major employment benefits for the entire U.S. economy. Our research finds that spending $150 billion on clean-energy investments would create roughly 1.7 million jobs. This is even after assuming a reduction in fossil fuel spending equivalent to the increase in clean-energy investments." [Center for American Progress, The Economic Benefits of Investing in Clean Energy, 6/17/09]

  • Every Single State Will Gain Jobs From An Investment In Clean Energy Technologies. According to the Center for American Progress, investments in clean energy projects would create 1.7 million American jobs in every state in the country. [Center for American Progress, The Economic Benefits of Investing in Clean Energy, 6/17/09]

Investment In Clean Energy Technology Creates FOUR TIMES As Many Jobs As An Investment In Oil & Gas.  According to the Center for American Progress, "spending $1 million on energy efficiency and renewable energy produces a much larger expansion of employment than spending the same amount on fossil fuels or nuclear energy. Among fossil fuels, job creation in coal is about 32 percent greater than that for oil and natural gas. The employment creation for energy efficiency-retrofitting and mass transit-is 2.5 times to four times larger than that for oil and natural gas. With renewable energy, the job creation ranges between 2.5 times to three times more than that for oil and gas." [Center for American Progress, The Economic Benefits of Investing in Clean Energy, 6/17/09]

Investment In Renewable Energy Has Already Salvaged Many Manufacturing Facilities Closed During Economic Downturn.  Across America, factories and plants abandoned by the old economy have been re-tooled and re-opened to satisfy the growing demand for new energy technologies. For instance, once hopeless manufacturing plants in Pennsylvania, Iowa, and Michigan have re-energized their communities by creating jobs and leading the charge toward a new energy future. [Bloomberg, 4/2/09; Star Tribune, 4/22/09; Grand Rapids Press, 3/6/08]

Print