Smokestack, originally uploaded by herwigphoto.com
The argument coalescing in the conservative echo chamber is that a carbon Cap and Trade system is a giant tax increase on Americans.
I can understand not letting let facts get in the way of a good argument. However, let’s figure out an estimate of the average American household carbon output and additional cost under a 100% pass-through cap-and-trade system.
I estimate that Americans would see a yearly electric bill increase of $25.68 That is only $2.14 per month.
Let’s see how we got that number.
Using the most recent EPA study I could find, the Carbon Dioxide Emissions from the Generation of Electric Power in the United States, the average American carbon output rate is 1.350 pounds of CO2 per kWh (Coal is 2.117 lbs/kWh). The average household consumes 983 kWh per month producing an average carbon footprint (from electrical use) of 1,266.3 pounds of CO2 per annum. Carbon is trading under the aegis of the Regional Greenhouse Gas Initiative for $3.38 per ton of CO2. Therefore the average residential homeowner would see an increase of $2.14 per month if (and big if) the electric company can fully pass the generating carbon load to their customers. 100% pass through isn’t likely for two reasons: each generating company will have to request an increase in fees from their regulator and economies of scale.
The American people will respond to calls of shared sacrifice, just like they did for World War II and after September 11th. Except this time we won’t be asked to shop, but rather put a down payment on our children’s future.
Later
A smart friend emails to say that this all assumes that the cap will remain constant. Furthermore, it will take quite awhile for the consensus to coalesce around how big (or small) the cap really is.