Earlier today the Natural Resources Defense Council (NRDC) released a Policy Brief summarizing economic analysis of clean energy and climate protection legislation that we have been working on for more than a year. We know that the Senate debate on this legislation will turn largely on economic issues, so we used two well-known national energy models to examine the impact of the House-passed bill, the American Clean Energy and Security Act (ACES), on our economy.
The main findings include:
- ACES will boost our economy by driving $300 billion of investments toward clean energy (through 2030), creating hundreds of thousands of jobs in the process;
- ACES is affordable at a cost to American households of less than a postage stamp per day;
- ACES will make America more secure by reducing oil imports as much as 5 million barrels per day due to a combination of lower demand and greater domestic production using CO2 captured from power plants for enhanced oil recovery (EOR);
Our results are very consistent with previous estimates by the non-partisan Congressional Budget Office (CBO), the independent Energy Information Administration (EIA), and the Environmental Protection Agency (EPA), but we provide new insights in several key areas, including:
- ACES will reduce electricity bills for most households because energy efficiency improvements will more than compensate for slight increases in per kilowatt-hour electricity rates. We find that households will see an average reduction of $6 per month, with only modest variations from state to state.
- ACES will boost domestic oil production by millions of barrels per day through carbon dioxide enhanced oil recovery (CO2-EOR). Our model connects the dots between the strong incentives ACES will create to capture CO2 from power plants and the huge opportunity for CO2-EOR identified by the Department of Energy. Previous studies used models that don’t have this link.
- Strong complementary energy efficiency and renewable energy deployment policies can keep allowance prices low without heavy dependence on international offsets or nuclear power. We conducted extensive sensitivity analysis to see how alternative assumptions affect our results. While any constraints on the availability of offsets or expansion of nuclear power have the potential to increase compliance costs, we find that these effects are quite small as long as robust energy efficiency and renewable energy deployment policies are in place.