Paying for the “American Power Act”: an Economic and Distributional Analysis of the Kerry-Lieberman Cap-and-Trade Bill

Chamberlain Economics, LLC for the Institute for Energy Research (Policy Study No. 2010-06) / by Andrew Chamberlain and Feliz M. Ventura

[From IER press release]  In an effort to better understand the broad consequences of the Kerry-Lieberman American Power Act on the U.S. economy, the Institute for Energy Research commissioned Chamberlain Economics, L.L.C to perform an economic and distributional analysis of cap-and-trade portion of the proposal.

The following represent some of the study’s key findings:

  • The American Power Act would reduce U.S. employment by roughly 522,000 jobs in 2015, rising to over 5.1 million jobs by 2050.
  • Households would face a gross annual burden of $125.9 billion per year or $1,042 per household, with costs disproportionately borne by low-income households.
  • On a net basis, the top income quintile will benefit financially, redistributing to these households roughly $12.3 billion per year from the bottom 80 percent of earners.
  • Households over age 75 bear the largest burden at 2.3 percent of income, followed by households aged 65-74 and under age 25 at 2.1 percent. By contrast, the nation’s highest-earning households between age 45 and 54 years would bear the smallest percentage burden of just 1.5 percent.
  • Contrary to the legislation’s stated goal of reducing price volatility by excluding petroleum refiners from quarterly auctions, the Kerry-Lieberman bill is likely to significantly increase allowance price volatility from quarter to quarter, compared to an ordinary auction in which all covered industries bid for allowances.

[See also: Michael A. Levi’s rebuttal to this report:] as well as the Institute for Energy Research’s response to this rebuttal and Levi’s July 2 response to their rebuttal of July 1: ]

Other analyses of Kerry-Lieberman:

EPA Analysis of the American Power (Kerry-Lieberman) Act in the 111th Congress June 14, 2010

The American Power Act and Enhanced Energy Efficiency Provisions: Impacts on the U.S. Economy

Assessing the American Power Act : the Economic, Employment, Energy Security and Environmental Impact of Senator Kerry and Senator Lieberman’s Discussion Draft

Here We Go Again : A Closer Look at the Kerry-Lieberman Cap-and-Trade Proposal

Economic Impacts of S. 1733: The Clean Energy Jobs and American Power Act of 2009


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