Study: Benefits of Cap and Trade “Far Outweigh” Costs
by Gregg Gethard
Do the benefits outweigh the costs?
This question has framed nearly all of the ongoing debate over the Waxman-Markey bill, more commonly known as the cap and trade bill. So far, the debate has been rather one-sided, with most analysis and evaluation of the bill focusing on its economic costs.
But, as detailed in a Wall Street Journal article published on Wednesday, the NYU Law School Institute for Policy Integrity has released a study that details the economic benefits of proposed cap and trade legislation. And they have found that the benefits “far outweigh” the costs.
To come up with this finding, Institute for Policy Integrity researchers first had to determine “how much a ton of carbon not emitted to the atmosphere is worth to society in terms of avoiding climate change.” That figure came out to be $19 per ton.
Researchers used that figure to determine the total benefits that could accrue over the next 40 years. Depending upon a number of variables, that number could be as low as $382 billion or as high as $5.2 trillion.
By using the midpoint of that range, roughly around $1.5 trillion, and comparing it with the cost estimate of Waxman-Markey, an estimated $660 billion, shows that the bill will provide $2.27 in benefits for every $1 spent.
If these figures are given any weight, they will provide some ammunition to supporters of the bill when the Senate debates it in the coming months. Opposition to the bill remains strong, especially in states where fossil fuels are major businesses.
As detailed on HeatingOil.com, the American Petroleum Institute argued that the Waxman-Markey bill would inflict serious damage on the American oil industry. The API estimated that, under the cap and trade bill, US oil refining production would fall 17 percent from today’s levels by 2030. In addition, refined oil purchased from other countries would nearly double from its current total.
If the API’s estimates are accurate, this would not be good news for heating oil consumers. Less production means lower supply. Lower supplies of refined oil mean higher prices. But exactly how much the price of heating oil will be affected by Waxman-Markey remains to be seen.
For more information on the cap and trade bill and how it could affect heating oil users, take a look at “What Cap and Trade Means for Heating Oil Consumers” in HeatingOil.com’s Education section.