29 Pages Posted: 9 Feb 2014 Last revised: 4 Apr 2014
Date Written: June 18, 2013
Last year, Senators Barbara Boxer (D-CA) and Bernie Sanders (I-VT) introduced S. 332, the Climate Protection Act of 2013. Based on a “fee-and-dividend” concept, the bill would levy a carbon pollution fee on carbon dioxide (CO2) emissions starting in 2014 at $20 per metric ton of CO2, rising at 5.6% per year through 2023. The carbon pollution fees under the Climate Protection Act would be utilized as follows: 3/5 would be directly rebated to U.S. residents; $20.5 billion per year would be used to assist trade-exposed industries, low-income households, displaced workers, and to increase energy R&D; and the remainder, about 1/4, would be used to reduce the U.S. federal budget deficit.
Using an independent version of the U.S. Department of Energy’s 2013 National Energy Modeling System (NEMS-Stanford), we analyzed the macroeconomic, environmental, and distributional impacts of the Climate Protection Act. We find that the Climate Protection Act would: Reduce energy-related CO2 emissions by 4,200 million metric tonnes (MMt) CO2 in the first ten years of the program; reduce CO2 emissions from energy by 16.8% below 2005 levels in 2020, permit-ting the U.S. to meet its commitment under the Copenhagen Accord; result in modest impacts to GDP of less than one half of one percent in 2020; rebate $744 billion to households over ten years, with an average yearly house-hold rebate of between $181 and $223; reduce net energy-related expenditures for substantially all of the 80% of U.S. households with incomes less than $100,000 per year and for the average U.S. household in all regions of the country; reduce the U.S. federal budget deficit by $311 billion over ten years.
Keywords: carbon tax, emission pricing, climate change, global warming, economic modeling
Suggested Citation: Suggested Citation
Wara, Michael W. and Cullenward, Danny and Wilkerson, Jordan T. and Weyant, John, Analysis of the Climate Protection Act of 2013 (June 18, 2013). Stanford Law and Economics Olin Working Paper No. 459. Available at SSRN: https://ssrn.com/abstract=2392656 or http://dx.doi.org/10.2139/ssrn.2392656
By J. B. Ruhl