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Appendix C: Cost of Climate Policy and the Waxman-Markey American Clean Energy and Security Act of 2009 (H.R. 2454) 1

By Sergey Paltsev, John M. Reilly, Henry D. Jacoby and Jennifer F. Morris

Abstract

The American Clean Energy and Security Act (H.R.2454) passed the House of Representatives after the completion of the main report (MIT Joint Program Report 173). In this Appendix we provide an analysis of the Act’s provisions as they relate to key features governing the cap-and-trade system, the renewable electricity standard (RES), limits on new coal power plants and support for carbon capture and storage(CCS), applying the Emissions Prediction and Policy Analysis (EPPA) model used in the main report. While the overall economy-wide target in H.R. 2454, of no more than 161 billion metric tons of CO2-equivalent released through 2050, is similar to the 167 bmt case analyzed in the main report, other features of the Bill significantly affect projections of its cost. We find that the large allowance for outside credits could reduce the cost if indeed these are forthcoming (and inexpensive). Other provisions, such as how the revenue and allowances will be distributed, will have important distributional consequences as well, but their analysis is beyond the scope of the study presented here. Our central estimate shows the CO2-e price starting at $21 per ton in 2015 and rising to about $84 by 2050. We decompose the welfare costs into a total cost including H.R. 2454 and recen

Year: 2013
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