Cost of carbon cap and trade on the U.S. economy

 
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October 28, 2009

Cap and trade is a market approach for reducing greenhouse gas emissions. The government sets a cap for a particular pollutant and then allows companies to negotiate among themselves on how to meet the limit; those that are most efficient at reducing emissions are rewarded for doing so.

A reliable resource on cap and trade is a 2008 Environmental Defense Fund study, “What Will It Cost to Protect Ourselves from Global Warming? The Impacts on the U.S. Economy of a Cap-and-Trade Policy for Greenhouse Gas Emissions.” The report is a comprehensive analysis of the leading economic modeling of cap-and-trade legislation to combat climate change. It is a meta-study in the sense that it is not original research but is instead an analysis of different research studies conducted by reputable academic economists.

Key findings of the analysis include:

  • The overall cost of capping greenhouse gases for the average American family will amount to less than 1% of household budgets over the next two decades.
  • The total number of jobs affected by climate policy in the manufacturing sector over 20 years is substantially below the number of jobs created and destroyed in the sector every three months.
  • Household electricity and natural-gas bills rise by only a few dollars a month over the next few decades well within the rise and fall homeowners already experience.

Tags: carbon, global warming, greenhouse gases, metastudy

 

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Citation: Keohane,, Nathaniel, Goldmark, Peter. "What Will it Cost to Protect Ourselves from Global Warming?" Environmental Defense Fund 2008