Once Again, Rep. Boehner Repeated False Cap-And-Trade Cost Estimate

September 22, 2009 2:58 pm ET

Responding to President Obama's climate change speech on September 22, 2009, House Minority Leader John Boehner cited a cap-and-trade cost estimate snatched from documents analyzing 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.  In reality, the American Clean Energy and Security Act would create jobs in every state and help America become more energy independent, all for less than a quarter a day.

Rep. Boehner Repeated Irrelevant Cost Estimate

Rep. John Boehner:

"Earlier today, the President addressed a United Nations 'Climate Change Summit' in New York and touted a variation on the Democrats' national energy tax - legislation that, according to the Administration's own estimates, will cost families an average of $1,700 a year in higher costs.  Out-of-touch Washington Democrats don't seem to get it.  Middle-class families and small businesses are struggling, and they shouldn't be punished with costly legislation that will increase electricity bills, raise gasoline prices, and ship more American jobs overseas to places like China and India." [Boehner Release, 9/22/09]

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]

The Report Cited Analyzed A Completely Different Plan, Rendering It Irrelevant

PolitiFact.com Rated Claim FALSE: "His Statement That Households Will Pay $1,761 In New Taxes Every Year Is Based On A Blogger's Incorrect Assumptions And Overly Simple Math." According to PolitiFact.com: "His statement that households will pay $1,761 in new taxes every year is based on a blogger's incorrect assumptions and overly simple math. The estimate does not account for revenue that will be returned to consumers in the form of rebates and other efficiency measures. Furthermore, the number is based on old numbers; the Treasury estimate was written on the premise that all permits would be sold, which, ultimately, is not the form that the Waxman-Markey legislation has taken. Finally, both Alexander and McCullagh portray money raised by selling these permits as a tax. We rate Alexander's claim False." [PolitiFact.com, 9/16/09]

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]

Washington Post: "The Plan In The March Treasury Memo Is Not The One Being Debated In Congress." In an article describing the records obtained by the Competitive Enterprise Institute, the Washington Post wrote "the plan in the March Treasury memo is not the one being debated in Congress." [Washington Post, 9/17/09]

Treasury Department: "The Reporting On The Treasury Analysis Is Flat Out Wrong." According to the Washington Post, "The Treasury said the furor was much ado about little. The March memo was not based on any independent Treasury analysis and summarized other studies. The transition team memo said that the government could use the revenue to 'offset distortionary taxes on labor or capital.' 'The reporting on the Treasury analysis is flat out wrong,' said Alan B. Krueger, Treasury assistant secretary for economic policy." [Washington Post, 9/17/09]

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]

Study: Waxman-Markey's Benefits Far Outweigh Costs.  According to the Wall Street Journal:

As flawed as it may be, the Waxman-Markey climate bill makes economic sense, offering benefits worth at least twice as much as it costs, if not more.

"From almost any perspective and under almost any assumption, H.R. 2454 is a good investment for the United States to make in our own economic future and in the future of the planet," the paper concludes.


So, given that the Waxman-Markey bill would curb emissions over the next 40 years, it's a pretty simple job to tally up the potential benefits: about $1.5 trillion on the middle-of-the-road estimate. The benefits could be as low as $382 billion or as high as $5.2 trillion, depending on how you fiddle with the numbers.

Since Waxman-Markey is meant to cost about $660 billion, that means the bill provides $2.27 in benefits for every dollar spent, the brief concludes. That doesn't include extra benefits-cleaner air from a cleaned-up power sector, for instance. And it suggests that even tougher greenhouse-gas targets in the Senate version of the bill would make an even more compelling economic argument. [Wall Street Journal, 9/8/09; emphasis added]

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]