Source: Congressional Budget Office, The Costs of Reducing Greenhouse-Gas Emissions [PDF] Data: Energy Information Administration, the Environmental Protection Agency, CRA International, Massachusetts Institute of Technology, the Brookings Institution, and the Congressional Budget Office.
CBO makes a critical distinction often lacking in the debate on the economic effects of the proposed cap and trade bill.
All of the models reporting macroeconomic impacts project that the emission reductions required by H.R. 2454 would slightly dampen the growth of GDP over the long term. (One model projects small increases in the early years of the program). Quantitative estimates of the losses in GDP and consumption vary among studies, depending in large part on differences in assumptions about the availability of offsets (reduced availability of offsets increases the emission reductions required in the energy sector and thus increases economic costs) and differences in assumptions about the sensitivity of energy use to changes in prices (reduced sensitivity increases the price increases required to reach emission targets and thus increases economic costs).
On the basis of those estimates and its own analysis, CBO concluded that H.R. 2454 would slightly reduce real GDP—by roughly 0.25 percent to 0.75 percent in 2020 and by between 1.0 percent and 3.5 percent in 2050. By way of comparison, CBO projects that real GDP will be roughly two-and-a-half times as large in 2050 as it is today. Losses in consumption and overall well-being would probably be smaller than losses in GDP.
