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EPA Analysis Finds Climate Security Act Could Cut GHG Emissions 25% Below 1990 Levels By 2050 at a Cost of 0.06 to 0.16 Percentage Points of GDP per Year; Transportation Contributes Little

Sources of GHG abatement under EPA’s ADAGE modeling. Click to enlarge.

An analysis by the US Environmental Protection Agency (EPA) of the Lieberman-Warner Climate Security Act (S. 2191) currently pending before the full Senate concluded that under the act total US greenhouse gas (GHG) emissions are approximately 40% lower (~ 3,749 MtCO2e) than reference case emissions in 2030 (~11% below 1990 levels) and 56% lower (~ 6,030 MtCO2e) in 2050 (~25% below 1990 levels).

These reductions would be achieved at a projected cost to GDP of between 0.9% ($238 billion) and 3.8% ($983 billion) lower in 2030 and between 2.4% ($1,012 billion) and 6.9% ($2,856 billion) lower in 2050 than in the Reference Scenario. That works out to a cost of about 0.06 to 0.16 percentage points per year from 2010 to 2050.

S. 2191 places declining GHG emission caps upstream on petroleum, natural gas, as well as manufacturers of F-gases and N2O and downstream on coal facilities. The bill establishes a market-driven system of tradable emission allowances and permits the use of domestic offsets and international credits. There also are bonus allowances for carbon capture and storage and set-asides for agriculture & forestry sequestration and landfill and coal mine methane mitigation.

The EPA concluded that the greatest emission abatement under S. 2191 occurs in CO2 emissions from the electricity sector. Transportation sector provides a relatively small proportion, due to the “relatively modest” indirect price signal an upstream cap and trade program sends to the transportation sector.

The projected ~$0.53 increase in the price of gasoline in 2030 and ~$1.40 increase in 2050 is not high enough to cause large changes in the demand for transportation or changes in how transportation services are provided, according to the EPA. The EPA did not evaluate reductions that could be achieved under a direct fuel and vehicle regulatory framework.

According to the latest US greenhouse gas inventory released by the EPA, when electricity-related emissions are distributed to economic end-use sectors,transportation activities accounted for 27% of inventoried US greenhouse gas emissions in 2006. Of that, the transportation end-use sector accounted for 1,855.1 Tg CO2 in 2006, representing 33% of total CO2 emissions in the US—the largest share of any end-use sector. (Earlier post.)

The transportation sector also carries the lowest allocation of CO2 resulting from electricity generation—4.9 Tg CO2 in 2006, or 0.2% of the 2,328.2 Tg CO2 produced from electricity generation in 2006.

Other conclusions from the analysis include:

  • The Climate Security Act’s cut in cumulative US greenhouse-gas emissions is deeper than one found earlier by EPA to be consistent with keeping global CO2 concentrations below 500 parts per million in 2100. The finding assumes that other developed countries reduce their emissions by less than the US, and that the developing countries do not start making similar reductions until 2025. According to the Intergovernmental Panel on Climate Change, keeping the global concentration below 500 ppm greatly decreases the risk of severe global warming impacts in the US and elsewhere.

  • Under the assumptions described above concerning action by other nations, the Climate Security Act does not shift US greenhouse-gas emissions abroad—“no international emissions leakage occurs.&rduqo;

  • The Climate Security Act’s allowance price and financial support for carbon capture and sequestration (CCS) make that technology a commercial reality in the US by 2015&madsh;several years earlier than in the absence of the bill.

  • One of the effects of the accelerated CCS deployment is to drive natural gas out of the electricity sector, to the benefit of manufacturers who use natural gas.

  • Under the Climate Security Act, increases in average US electricity prices materialize slowly and gradually. Forty years after enactment, prices reach a level 18% higher than the 2005 level. Over that period, the bill directs more than $1 trillion to lowering and offsetting US consumers’ actual energy costs.





Rafael Seidl

25% below 1990 levels by 2050 may not be enough, there could be a war over oil & gas between the US and China before then.

Spending 1% of GDP on abatement might be more appropriate, as part of a new defense strategy for the 21st century. Super-expensive military hardware and highly trained soldiers are not increasing the amount of oil & gas being produced, so it's time to re-define national security.

Tom Street

While there is pretty widespread recognition that cutting back on our oil use would be good for national and international security, there is less recognition that cutting back would be good for our financial security. There is a relationship between the ongoing financial meltdown, the price of oil, our worsening trade deficit, and the value of the dollar. Given this interconnection, the EPA may be overstating the negative GDP impacts of a serious attempt to mitigate global warming and reduce energy use.

The Fed and the Federal Government will continue to try to "solve" this ongoing financial problem with financial juggling, reduced interest rates, and other tools which will only made our deficit even worse. Financial legerdemain can only go so far in an economy that is fundamentally unsound at it core. People like Krugman have pointed out for years that we have an economy that is too dependent upon housing, its value and its construction. As predicted, when the housing market goes down the tubes, the economy and all the financial players go down with it.

It is time to get real and invest in real infrastructure in the form of renewable energy systems, hardware, and jobs. This will shore up the foundations of our economy help the environment, and help move us away from a dependency which is destroying the economy of this country. Instead, it looks like we will continue to engage in smoke and mirrors as if more creative financial instruments solve all problems.


You make a very good point Tom: I recall almost 20 years ago an Actuary grumbling that the USA was trying to build an economy based on housing and litigation. Hardly a solid foundation.


i love this part:

"moves commercial CCS forward to 2015"

this despite the fact that there is no proven (or even plausible) Carbon Capture and Storage (CCS) technology at any price today.

what if it isn't a problem you can solve by throwing money at? what if there are real technological barriers that cannot be solved today at any price?

i mean, honestly, if we want to assume that any problem can be solved by throwing politicians and cash at it, then we should be focusing on a more permanent solution - like cold fusion.


"this despite the fact that there is no proven (or even plausible) Carbon Capture and Storage (CCS) technology at any price today."

Nonsense - Canadians (Weyburn) and Norwegians (Sleipner) have been running pilot(millions of tons of CO2) programs for years now.

Reality Czech

vboring, what would you call the SNG plant in ND which sends its CO2 to an oil field in Weyburn, SK? That looks like proven carbon capture and sequestration to me.


I do not feel very nationally secure when some oil producing country can throw my country's economy into a tail spin at any moment. Going to war for oil is one of the most foolish things I can think of a country doing. $1 trillion will be spent on Iraq, just the interest on that money will bring us renewable energy where we do not have to depend on those countries, nor do we have to invade them.


Unless a country sits on oil reserves, investment in renewable energies will increase GDP and not reduce it.

Germany exports over 70% of its windturbines. Does EPA think wind turbine manufacturers and wind turbine employees do not contribute to the GDP or pay taxes or what's not to get?

What about wave power plant manufacturers? No contribution to the GDP?

What solar thermal collectors (roof) manufacturers? No contribution to the GDP?

What about geothermal power plants? No contribution to the GDP?

What about insulation manufacturers? No contribution to the GDP?

What about photovoltaics manufacturers? No contribution to the GDP?

What about hybrid car manufacturers? No contribution to the GDP?

What about algae farming? No contribution to the GDP?

What about efficient lighting manufacturers? No contribution to the GDP?

What about high speed trains? No contribution to the GDP?

What about reduction of trade deficit?

Btw where's the return on investment from a B2 bomber? And is it any good in reducing trade deficits? 'Caught any Bin Ladens lately?

Where has the Dollar gone?


First of all who writes this stuff?? It is starting to plummet into the depths of not only disbelief, but dime store fiction!

"The projected ~$0.53 increase in the price of gasoline in 2030 and ~$1.40 increase in 2050 is not high enough..."

Who's using gasoline for what in forty two years?? And does EPA mean, Earth Paralysis Agency??


This is a sick joke. We have to go to ZERO carbon emissions by 2050. At whatever cost to GDP. Otherwise the cost will be measured in human lives.

We may already be above a stable carbon threshhold. Some people say 350ppm is the max sustainable level. If we've triggered positive carbon feedback, we're screwed.

But I remain hopeful--technological development should be able to accomplish decarbonization in the long run at zero cost. Getting off fossil fuels will create whole new industries with many new domestic jobs and bring a NET GAIN to the economy.


What is your proposal for getting there (making it to 2050) ?

stas peterson

Who among the politicians is actually proposing doing away with the Department of Housing?

When created, FDR described a nation with two thirds of its citizens living in rental housing, a third of which had no running water.

That is hardly the situation today. Even 2/3 the officially poverty stricken, own their own homes. It's time to declare victory and shut it down.

Neither Party proposes to close it down, but one party is asking to expand government bureaucracy to make up for the bureaucracy demanding impossibly lax loans, and the predictable results when these loans fail and foreclosures result.

stas peterson

Garbage In Garbage Out.

This study and ersatz "analysis" isn't worth the paper its printed on.

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