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Prepared for:
National Black Chamber of Commerce
Impact on the Economy of theAmerican Clean Energy andSecurity Act of 2009 (H.R.2454)
Prepared By:
David Montgomery, Robert Baron, Paul Bernstein,Scott Bloomberg, Kenneth Ditzel, Lee Lane,Anne Smith, Sugandha Tuladhar, and Mei YuanCRA International1201 F Street, N.W., Suite 700Washington, D.C. 20004Date: May 2009
Impact on the Economy of the American Clean Energy and Security Act of 2009 (H.R.2454)May 2009 CRA International
Page i
TABLE OF CONTENTS
1.
EXECUTIVE SUMMARY................................................................................................1
1.1
E
CONOMIC
I
MPACTS
............................................................................................................3
1.2
R
ELATED
I
SSUES
.................................................................................................................5
2.
BACKGROUND..............................................................................................................8
2.1
T
HE
A
MERICAN
C
LEAN
E
NERGY AND
S
ECURITY
A
CT OF
2009...............................................8
2.2
P
ROVISIONS
M
ODELED
........................................................................................................9
2.3
S
TUDY
O
BJECTIVES
..........................................................................................................10
3.
RESULTS.....................................................................................................................11
3.1
E
CONOMIC
I
MPACTS
..........................................................................................................12
3.1.1.
Costs to consumers..........................................................................................................12
3.1.2.
Investment, employment and productivity growth............................................................14
3.1.3.
Impacts on household consumption.................................................................................19
3.1.4.
Gross domestic product...................................................................................................21
3.1.5.
Impacts by Region...........................................................................................................22
3.2
U
NCERTAINTIES OF
C
ARBON
P
RICES AND
E
CONOMIC
I
MPACTS
............................................24
3.2.1.
Uncertainty about carbon prices and cost........................................................................24
3.2.2.
Carbon price volatility.......................................................................................................31
3.2.3.
Sensitivity: no international offsets...................................................................................33
3.2.4.
Alternatives to reduce costs of uncertainty.......................................................................33
3.3
D
ISCUSSION OF
K
EY
I
SSUES
..............................................................................................35
3.3.1.
Costs should be considered in relation to benefits...........................................................35
3.3.2.
Allowance allocations.......................................................................................................35
3.3.3.
Costs of a duplicate regulatory system.............................................................................36
3.3.4.
Wealth transfers abroad...................................................................................................37
4.
UNFINISHED BUSINESS.............................................................................................41
5.
BIBLIOGRAPHY...........................................................................................................42
APPENDIX A: REPRESENTATION OF ACESA IN MRN-NEEM.......................................43
A.1
A
C
AP
-A
ND
-T
RADE
P
OLICY FOR
G
REENHOUSE
G
ASES
.......................................................43
A.2
F
EDERAL
R
ENEWABLE
E
LECTRICITY
S
TANDARD
.................................................................44
A.3
A
LLOWANCE
A
LLOCATION
M
ETHODOLOGIES
.......................................................................45
Impact on the Economy of the American Clean Energy and Security Act of 2009 (H.R.2454)May 2009 CRA International
Page ii
APPENDIX B: BASELINE ASSUMPTIONS........................................................................47
B.1
C
OST AND
P
ERFORMANCE
C
HARACTERISTICS
....................................................................47
B.2
L
IMITS ON
C
UMULATIVE
C
APACITY
A
DDITIONS
....................................................................50
B.3
O
THER
M
AJOR
I
NPUT
A
SSUMPTIONS
..................................................................................51
APPENDIX C: COMPARISON OF CRA RESULTS TO OTHER ANALYSES....................52
APPENDIX D: MODEL DESCRIPTION..............................................................................56
D.1
M
ODEL
F
RAMEWORK
.........................................................................................................56
D.2
I
NTEGRATION
M
ETHODOLOGY
............................................................................................59
APPENDIX E: ESTIMATION OF GREEN JOBS IN MRN-NEEM RESULTS.....................61
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