David Roberts lists a few well-taken points regarding the EPA analysis of the Senate’s climate bill:
So what’s the verdict? Overall, EPA finds that the impacts of APA will be broadly similar to the impact of the House’s American Clean Energy and Security Act (ACES), i.e., affordable.
But of course his first point (which is the quite insane selling point of carbon caps) is that the costs to the consumer would be negligible:
The impact on U.S. consumers will be “modest.” Says the report: “Average household consumption is reduced, relative to the no-policy case, by 0.0-0.1% in 2015, by between 0.0-0.2% in 2020, by 0.2-0.5% in 2030, and by 0.9-1.1% in 2050.” Averaged over 2010-2050, households will pay an extra $79 to $146 a year. Not exactly a steep price to pay to avoid catastrophe. (Incidentally, overall household consumption will continue to rise, even with the mild constraints of the bill.)
Not a steep price to pay to avoid what catastrophe, exactly? If consumption continues to rise, and this bill does very little to curb the most inefficient methods of power generation (current fixed coal-fire power plants) by using the price mechanism of the marketplace (the extra $79-146 could easily come from increased transportation costs), then are we really avoiding catastrophe?
According to evidence we have seen from the run-up of energy prices in 2007-08, demand becomes closer to unit-elastic at greater-than $3 a gallon for gasoline. Thus, if the extra costs to consumers are, in fact, in transportation costs…that might induce some of this sort of behavior. However, if those costs are diffuse among all kinds of energy use (general production, gasoline, heating oil, etc.) you might not ever hit a point where elasticities would cause people to make a change. That seems to be what the EPA is telling us.
I haven’t had much time to go through the bill, but I’m sure that there are plenty industry giveaways, rent seeking, etc. involved…and remember, this is a fairly ‘weak’ bill. So what is the point? The EPA doesn’t happen to measure the highly intangible “benefits” of avoiding catastrophic climate change…however, if there is near zero price incentives — maybe they were right not to measure the benefits. Maybe there are none at all.
Update: I should have also added that if you are serious in your belief that using carbon energy is harming the planet, then what you want to do is raise the price of carbon until it induces a change. You want to punish people for indulging. That’s the point. Supporting a weak (or useless) bill so you can pat yourself on the back later when it gets passed and claim that you “got something done” is pointless.