CBO: Waxman-Markey Climate Bill to Cost Just $175 per Household

  • Published on June 23rd, 2009

dollar bill

With Speaker Nancy Pelosi likely bringing climate change legislation to the House for a floor vote later this week, a newly-released report by the Congressional Budget Office found that the per-household cost of The American Clean Energy and Security Act was far lower than previously estimated costs.


According to the report, released late Friday afternoon, the annual cost of the Waxman-Markey climate change bill would be an estimated $175 per American household. In addition to the project low cost of Waxman-Markey, the CBO report also suggests the bill would achieve emissions reductions of approximately 17% below 1990 levels by 2020.

Authors of the report broke down projected costs (subscription req’d.) of the legislation by different economic demographics, with the lowest of the five income brackets seeing an average annual net benefit of about $40 in 2020 because of the different direct rebates and other payback provisions written into the legislation. The highest bracket can expect to see net costs of $245 per year.

Democrats respond positively, but environmental groups split over bill’s effectiveness

Democrats voiced varying levels of support for the bill, with many believing something is better than nothing, especially as the next round of UN climate talks is set to begin in Copenhagen later this year.

“This analysis underscores that this legislation is effective and affordable,” said Energy and Commerce Chairman Henry Waxman (D-Calif.), in a statement. “It sets America on a course of energy independence while taking significant steps to reduce dangerous global warming pollution.”

But many would-be supporters of the legislation are still not sold, arguing that the bill was watered-down with concessions to aid its passage. Broad-based environmental organizations like the Sierra Club are showing some internal divisions with respect to Waxman-Markey as some believe the bill is far too diluted to be an effective vehicle for substantive carbon reduction.

One particular point of contention in the current language the absence of any carbon-capping authority in the Environmental Protection Agency. Some argue that EPA must have the ability to enforce caps on power plants and other major greenhouse gas emitters. Josh Dorner, deputy director of communications for the Sierra Club said, “We think that to get where we need to go on global warming and to solve a whole bunch of other problems, that it’s fundamentally important that EPA retain the authority it has to go clean up these old coal plants,” said Dorner.

Republicans less enthused

Not surprisingly, Republicans were not particularly enthused about the report, complaining that the CBO report omitted several billions of dollars in direct and indirect costs. The GOP has said American households would pay between $770 and $1,380 more per year for energy and other consumer items.

A spokesman for House Minority Leader John A. Boehner (R-Ohio), told the Washington Post that the CBO analysts “got an unrealistically low number for cost per family because they didn’t factor in the millions of American jobs that will move overseas if the United States imposes this tax and our foreign competitors, like China and India, do not.”

Boehner has asserted that the bill would raise annual energy costs by $3,128 per household in 2015.

Ranking minority member of the House Ways and Means Committee also found issue with the report. “The CBO analysis makes clear that this is a new multi-billion dollar tax on every American family,” said Rep. Camp (R-Mich.) in a press release.

Here’s the hook that does have some political bite to it. Camp says that what would amount to a tax is in direct violation of the President Obama’s pledge that families making less than $250,000 would not pay higher taxes.

And for all intents and purposes, he’s right.

Images via Serge Arsenia and thewritingzone under a Creative Commons License

About the Author

is the founder of ecopolitology and the executive editor at LiveOAK Media, a media network about the politics of energy and the environment, green business, cleantech, and green living. When not reading, writing, thinking or talking about environmental politics with anyone who will listen, Tim spends his time skiing in Colorado's high country, hiking with his dog, and getting dirty in his vegetable garden.
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  • sixkiler

    The only thing that I know for sure is that global warming and cooling has been going on for billons of years. In the 70’s, there was a call to protect us from global cooling, it is July in the Midwest and I have my windows open and the AC off. Cap and Trade is nothing more than a tax designed to push the United States into the Communist State of America.

  • russ

    Whether it is a tax or not depends on the individual's definition of a tax. Like Clinton's definition of sex.

    Parabolic cooling towers are used many places besides nuclear plants. They are capital intensive but cheap to operate – you choice between capital costs and operating costs.

    In blowing up the photo it is difficult to see much difference between the columns of vapor but looking at the green countryside around the plant I would guess the emissions are not too much of a local problem.

  • The image is still a coal-fired power plant and not a nuclear power plant, right?

    I know what a cooling tower is. I know what steam is. I also know that Drax doesn't only emit steam. See that tower in the middle of the picture? Is that steam too, Dr. Science?

  • Timothy

    Nope, While it IS a coal fired plant, the gloomy picture is of STEAM released from the cooling towers. Just like the cooling towers at a Nuclear Power plant.

    Throw water on anything hot and you'll get the same thing. Dihydrogen Monoxide. H2O. If only you and Al Gore had actually paid attention in fourth grade science class…

    Here's a link to the picture showing it.

  • Actually Christopher, that photo is of the Drax Power Station in the UK. The coal-burning Drax plant is the largest single point source of (CO2) in the UK. If Drax were a country, it would be ranked the 76th (out of 207 countries) in terms of CO2 emissions.

  • Christopher

    The dark, gloomy picture accompanying this article is titled UK_coal_pollution. Isn't that hilarious?! Credibility: Destroyed!

    (It is a nuclear power plant on a cool, humid day and what's being spewed into the atmosphere is that oh-so-deadly dihydrogen monoxide.)

  • Stephen Craig

    The author need to read the referenced document a little better- the $175, according to the CBO is ONLY for the the cap and trade provisions- not any of the other energy reduction provsions included in the legislation. The actual cost would be significantly higher.

    Cap and trade in and of itself does not save any energy or the environment(reducing the cap should), it only creates a new Wall Street opportunity for them to make money.

    There is a lot of misinformation out there on energy savings and you would hope that a reporter would not be so irresponsible as to be the one to proliferate new half truths.

  • sam


    — IT WON'T REDUCE CO2 !!!








    Question: Has anyone done and environmental impact study on the impact of wind

    turbines and the harm to children when their parents can't afford to heat their


    How anyone can sleep well at night and support the Waxman-Markey Climate Bill

    is beyond me. Oppose the Waxman-Markey Climate Bill as it will not reduce co2 but will destroy the lives of millions of people.

    P.S. Wind turbines and solar are enormously expensive and feeble sources of

    energy that can't replace oil and coal. Plus wind turbines will decimate large

    tracks of land and kill lots of birds.

  • Benton Love

    In terms of the numbers above, as usual, both sides are off. The CBO is being far too sanguine and the Republicans (esp Boehner) are being too alarmist. It’s actually about $1,750 per person (but paid just once).

    The math comes down to this: how much would it cost to install sufficient renewable capacity to meet the 15% renewable portfolio standards prescribed in the current (6/23/09) iteration of HR 2454, aka Waxman-Markey.

    In 2007, the US generated ~4,156,000,000 megawatt-hours ("MWhs") of electricity, of which 3.38% (140,000,000 MWhs) was generated from renewable sources.

    To get this number up to 15%, we'd have to generate an additional 483,000,000 MWhs of renewable electricity per year. There are 8,760 hours in a standard year, so if wind generated at 23% of capacity (which it historically has in high velocity zones), that would be ~239,000 MW of capacity (because 239,000MW capacity * 8,760 hours * 23% capacity utilization = 483,000,000 MWhs).

    Wind generation is by far the cheapest and most efficient source of renewable generation, costing ~2.2 million/MW in capacity. 239,000 kW * 2.2 million/MW = $527 billion. This country has ~300 million people in it, so that comes to somewhere around $1,750 per person, all to reduce CO2 emissions in the US by ~15% (assuming no load growth). Quite a bit of money for such a modest goal.

    There are other problems:

    There is no incentive under the RPS program to switch from the dirtiest most inefficient, coal plant to the cleanest, most efficienct combined-cycle natural gas plant (which would emit 40% the CO2 per MWh that coal would) because all “non-renewable” sources are treated the same under RPS.

    Coal and nat gas together account for ~3/4 of our generation per year (1/2 coal, 1/4 gas). Gas plants currently fire way under capacity (because coal is slightly cheaper). Replacing coal generation with gas generation would–at a stroke–reduce CO2 emissions by 20% and would require no almost no new gas capacity to be built. You could incentivize this change in power dispatch behavior through a simple, direct, and not-very-onerous carbon tax.

    Instead Harvey-Waxman uses the very clumsy bludgeon of RPS, which committees are wont to do.