And, the cost to California consumers will be? (updated)

Russ Steele

It looks like Governor will get support for his greenhouse gas reductions plans from Obama's Green Team. It is inevitable that we will have a green house gas cap and trade system in California, the question is what is it going to cost us?

The Lieberman-Warner Climate Security Act, was a proposed national Cap and Trade systems. The The American Council for Capital Formation and the National Association of Manufacturers commissioned SAIC, a highly respected systems engineering company studied the potential costs. From the executive summary of the report:    

It is becoming increasingly recognized that the cost to U.S. consumers and employers of implementing greenhouse gas (GHG) emission reductions is highly dependent on the market penetration achieved by key technologies and the availability of carbon offsets by 2030. Understanding the potential economic impacts at the national, state and individual household levels can help guide choices on climate change policy to minimize the impacts on economic growth and maximize the benefits to the environment. Greenhouse gas reduction policies need to include consideration of impacts on energy security, economic growth, and U.S. competitiveness.

SAIC used the National Energy Modeling System (NEMS) model, which is used by the U.S. Energy Information Administration for its energy forecasting and policy analysis. I am not a great fan of models, as they can be used to distort the real world. However, in this case SAIC provides a range of values, therefore we can expect the truth to be some where between the Low and High values. 

The Analysis Report includes costs breakdowns by States.

Cost of Cap and Trade to California:

Jobs lost by 2020 and 2030
2020 Low 130,000 : High 196,000
2030 Low 338,000 : High 450,000

Annual house hold income reduction (2007 dollars).
2020 Low -$1,244 : High -$4,032
2030 Low -$5,163 : High -$9,414

Loss in gross state production (2007 dollars).
2020 Low -$19,957 : High -$27,657
2030 Low -$73,603 : High -$86,903

Increase in retail gas prices (2007 dollars).
2020 Low $0.27 : High $2.35
2030 Low $2.10 : High $5.39

Increase in electricity prices, in Cents per KW Hour.
2020 Low 0.84 : High 1.72
2030 Low 3.79 : High 5.75

Residential Natural Gas price increase per Million Btus.
2020 Low $0.53 : High $3.15
2030 Low $8.59 : High $14.46

Now you can calculate what a cap and trade systems might cost your family. How many gallons of gas do you use, how much electrical energy and how much natural gas per year? Add it up and add the  loss of family income, assuming you were not one of the job losses.

More economic analysis you will not read in your local newspaper. 

Update #1: The Institute for Energy Research has an interactive map and plotter to show the above numbers in a graphical form. Click on California and then select the specifics at the bottom of the first graphic. Some times a picture is worth an 1000 words.