The cost of reducing greenhouse gases

Federal efforts at developing climate change legislation have petered out. But the cost of climate policy is figuring strongly in California politics this fall. A new report aims to figure out how American families will feel the price of making “greenhouse gases” fall.

Cutting carbon emissions means setting a price on polluting, like burning coal, and making someone pay it. There’s research that claims the price will be too expensive.

Frank Ackerman says it’s bunk.

He’s an environmental economist at Tufts University – and he says that research misleads lawmakers.

"It looks to me like people designing legislation in Congress have assumed that too high a price will mean too much of a burden for households to bear, so they have to limit themselves to a very modest tax," said Ackerman.

By tax, Ackerman means price. He and his team looked at what people might pay for carbon emissions, either in a tax or in a “cap and trade” system where carbon pollution is limited and traded in a market.

Ackerman says the effect of cutting carbon from activities like energy production depends in part on where the money goes. "If you distribute enough of the money to households on a per capita basis, regardless of the level of the tax, most households will come out ahead."

So you’d get the environmental benefit of less pollution – and you’d save money. Even if lawmakers valued carbon at a rate double what Congress considered, Ackerman says most people would come out ahead if policies promoted energy efficiency and rebates. Utilities in California do that now.

Frank Ackerman says the state’s done well cutting emissions so far. Not surprisingly, he doesn’t think freezing “greenhouse gas” limits will heat up the California economy. "Reasonable studies show that it’s going to have relatively little net effect on the economy. I think that’s a more likely outcome."

Ackerman says set the price of carbon accurately and use the money paid correctly, and you get the environmental and the economic benefits you want. It takes the right policies – and Ackerman says Congress isn’t debating the right polices yet.

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