Grad student Mike Sandler and Lewis Center Director J.R. DeShazo calculate cost of climate policy
posted: Feb 26, 2009

Upcoming climate change legislation that adds costs to coal and natural gas could also raise household electricity costs. To understand the magnitude of such financial costs on households, Urban Planning graduate student Mike Sandler and Lewis Center Director J.R. DeShazo estimated that a tax or price increase of $15 per ton of carbon dioxide from burning coal would increase average annual household electricity bills by 15 percent. Households in coal-rich states could see increases of 65-105 percent in annual electricity bills, while those in low-coal-burning states could increase by one percent or less. DeShazo and Sandler warn that absent other policies to help states and households cope with short-term price increases, rising electricity prices will most significantly hurt states with higher poverty rates, as these states are likely to experience a larger increase of costs as a share of median income. Although carbon pricing policies may help push the economy toward energy efficiency, job creation, and sustainability, states should consider assistance measures such as revenue recycling to mitigate the short-term costs to consumers - especially to those residing in coal-dependent states. You can read the full findings here.

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