The Economic Impact of The Economic Impact of the Waxman Markey Bill (H.R. 2454) the Waxman Markey Bill (H.R. 2454) By: Dr. Margo Thorning, Ph.D. By: Dr. Margo Thorning, Ph.D. Senior Vice President and Senior Vice President and Chief Economist Chief Economist American Council for Capital American Council for Capital Formation Formation Washington, D.C. www.accf.org Tel: 202-293-5811 [email protected]g Prepared for: The New Mexico Prosperity Project Albuquerque, New Mexico September 10, 2009
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The Economic Impact of the Waxman Markey Bill (H.R. 2454) By: Dr. Margo Thorning, Ph.D. Senior Vice President and Chief Economist American Council for.
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The Economic Impact of The Economic Impact of the Waxman Markey Bill (H.R. 2454)the Waxman Markey Bill (H.R. 2454)
By: Dr. Margo Thorning, Ph.D. By: Dr. Margo Thorning, Ph.D. Senior Vice President andSenior Vice President and
Chief EconomistChief EconomistAmerican Council for Capital FormationAmerican Council for Capital Formation
Contributors to Global Mortality in 2000Contributors to Global Mortality in 2000
Source: John P. Holdren, “Science and Technology for Sustainable Well-Being, “ Science, May 2009.
0 50 100 150 200 250
Global climate change
Urban air pollution
Alcohol
Indoor smoke from solid fuels
War and revolution
Tobacco
Unsafe water
Unsafe sex
High blood pressure,cholesterol, overweight
Childhood and maternalmalnutrition
millions of years of life lost
Macroeconomic Impact of Waxman Markey Bill:Macroeconomic Impact of Waxman Markey Bill:Total Energy Sector CO2 EmissionsTotal Energy Sector CO2 Emissions
3000
3500
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4500
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5500
6000
6500
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
MM
tCO
2e
ACCF-Ref aeo2009Ref_Sti WM Cap (after adi.) WM Cap (before adj.)
Macroeconomic Impact of Waxman Markey Bill:Macroeconomic Impact of Waxman Markey Bill:Per Capita Energy Sector CO2 EmissionsPer Capita Energy Sector CO2 Emissions
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2016 2018 2020 2022 2024 2026 2028 2030
met
ric to
n C
O2
equi
vale
nt GAP= 43%
Baseline Emissions
Waxman Markey Target
Assumptions Used in Modeling:Assumptions Used in Modeling:Technology Build Constraints (2030 Build Limits) Technology Build Constraints (2030 Build Limits)
High Cost ScenarioHigh Cost Scenario Low Cost ScenarioLow Cost Scenario
Nuclear 10 GW 25 GW
IGCC w Sequestration 15 GW 30 GW
Biomass Max 3 GW/Year Max 5 GW/Year
Wind Max 5 GW/Year Max 10 GW/Year
NGCC w Sequestration 15 GW 30 GW
Assumptions Used in Modeling:Assumptions Used in Modeling:Other Specifications Other Specifications
High Cost ScenarioHigh Cost Scenario Low Cost ScenarioLow Cost Scenario
Offsets
(annual)
1,000 MMT (split 95% Domestic, 5% International)
1,000 MMT (split 95% Domestic, 5% International)
Oil Price Profile AEO2009 AEO2009
Natural Gas Prices Not Constrained Not Constrained
Cellulosic EthanolWith HR.6 –
Not Constrained
With HR.6 –
Not Constrained
Banking 5,000 MMT 5,000 MMT
HR.6 Yes Yes
Allowance Prices (annual growth)
Constrained to 10% Constrained to 10%
Strategic Reserve Not modeled Not modeled
Macroeconomic Impact of Waxman Markey Bill:Macroeconomic Impact of Waxman Markey Bill:Carbon Allowance Price (2007$/Ton CO2)Carbon Allowance Price (2007$/Ton CO2)
High Cost: $159/Ton CO2
Low Cost: $123/Ton CO2
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2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Ca
rbo
n A
llow
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ce P
rice
(2
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7$
/To
n C
O2
)
Low Cost High Cost
Low Cost: $48/Ton CO2
High Cost: $61/Ton CO2
Impact of Waxman Markey Bill on the United StatesImpact of Waxman Markey Bill on the United StatesCompared to Baseline ForecastCompared to Baseline Forecast
Low Cost CaseLow Cost Case High Cost CaseHigh Cost Case
2020 2025 2030 2020 2025 2030
Loss in GDPLoss in GDP -0.2%-0.2% -0.5%-0.5% -1.8%-1.8% -0.4%-0.4% -0.8%-0.8% -2.4%-2.4%
Impact of Waxman Markey Bill on the United States: Change Impact of Waxman Markey Bill on the United States: Change in Energy Prices Compared to Baseline Forecastin Energy Prices Compared to Baseline Forecast
Low Cost CaseLow Cost Case High Cost CaseHigh Cost Case
2020 2025 2030 2020 2025 2030
Rise in Gasoline Rise in Gasoline PricesPrices 8.4%8.4% 12.1%12.1% 20%20% 11.1%11.1% 16.1%16.1% 26.1%26.1%
Rise in Residential Rise in Residential Electricity PricesElectricity Prices 5%5% 4.9%4.9% 31.4%31.4% 7.9%7.9% 11.5%11.5% 50%50%
Rise in Industrial Rise in Industrial Electricity PricesElectricity Prices 12.5%12.5% 18.4%18.4% 48.9%48.9% 21.5%21.5% 32%32% 76%76%
Rise in Industrial Rise in Industrial Natural Gas PricesNatural Gas Prices 33.3%33.3% 61%61% 87.1%87.1% 51.1%51.1% 86.3%86.3% 113.5%113.5%
Impact of Waxman Markey Bill on the United States: Change in Impact of Waxman Markey Bill on the United States: Change in Industrial Value of Shipments and Employment in ManufacturingIndustrial Value of Shipments and Employment in Manufacturing
Low Cost CaseLow Cost Case High Cost CaseHigh Cost Case
2020 2025 2030 2020 2025 2030
% Loss in % Loss in Industrial Value of Industrial Value of ShipmentsShipments
Macroeconomic Impact of Waxman Markey Bill:Macroeconomic Impact of Waxman Markey Bill:Changes in New Mexico Economy Compared to Baseline ForecastChanges in New Mexico Economy Compared to Baseline Forecast
Low Cost CaseLow Cost Case High Cost CaseHigh Cost Case
2020 2030 2020 2030
Loss in GSP Loss in GSP (million 2007$)(million 2007$)
Loss in JobsLoss in Jobs 6060 -9,330-9,330 -400-400 -12,710-12,710
Loss in Loss in Household Household Income (2007$)Income (2007$)
-$70-$70 -$409-$409 -$166-$166 -$755-$755
Macroeconomic Impact of Waxman Markey Bill:Macroeconomic Impact of Waxman Markey Bill:Change in Energy Prices in New MexicoChange in Energy Prices in New Mexico
Compared to Baseline ForecastCompared to Baseline Forecast
Low Cost CaseLow Cost Case High Cost CaseHigh Cost Case
2025 2030 2025 2030
Rise in Gasoline Rise in Gasoline PricesPrices 12%12% 21%21% 16%16% 27%27%
Rise in Residential Rise in Residential Electricity PricesElectricity Prices 12%12% 28%28% 30%30% 61%61%
Rise in Residential Rise in Residential Natural Gas PricesNatural Gas Prices 5%5% 61%61% 11%11% 78%78%
World Carbon Dioxide EmissionsWorld Carbon Dioxide Emissions
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1990 2005 2020 2035 2050 2065 2080 2095
Foss
il a
nd Indust
rial
CO 2 Em
issi
ons,
Gt CO
2/yr
Africa
Middle East
Latin America
Southeast Asia
India
China
Korea
FSU
Eastern Europe
J apan
Australia_NZ
Western Europe
Canada
USA
Non-Annex 1 Emissions Equal with Annex 1 Emissions
Annex 1
Non-A
nnex 1
Source: Data derived from Global Energy Technology Strategy, Addressing Climate Change: Phase 2 Findings from an International Public-Private Sponsored Research Program, Battelle Memorial Institute, 2007.
Source: Data derived from Global Energy Technology Strategy, Addressing Climate Change: Phase 2 Findings from an International Public-Private Sponsored Research Program, Battelle Memorial Institute, 2007.
Global CO2 Concentrations:Global CO2 Concentrations:Carbon emissions are projected to rise over Carbon emissions are projected to rise over
the next several decadesthe next several decades
Waxman Markey: Comparison of the ACCF/NAM and Waxman Markey: Comparison of the ACCF/NAM and U.S. DOE Energy Information Administration U.S. DOE Energy Information Administration
20202020 20302030
ACCF/NAM*
EIA**ACCF/NAM
EIA
Loss in GDPLoss in GDP 0.4%0.4% 0.7%0.7% 2.4%2.4% 2.3%2.3%