Assessing the American Power Act The Economic, Employment, Energy Security and Environmental Impact of Senator Kerry and Senator Lieberman s Discussion Draft Trevor Houser Visiting Fellow, Peterson Institute for International Economics Peterson Institute for International Economics Washington, DC May 20, 2010 1750 Massachusetts Avenue NW, Washington, DC 20036 Tel: +1.202.328.9000 Fax: +1.202.659.3225 Web: www.piie.com
What s in the American Power Act Elements of the bill and how we analyzed them Title I Domestic Clean Energy Development - Incentives for nuclear power, carbon capture and sequestration, clean vehicles, energy efficiency and renewable energy - Provisions on offshore drilling Title II Greenhouse Gas Pollution Reduction - Economy-wide GHG reduction targets (17% below 2005 levels by 2020 and 83% by 2050) but sector specific regulation. - International offsets available for the industrial and power sectors. No allowance trading in the transport sector. Title III Consumer Protection - 65% of allowance value used to offset the impact of higher energy prices on consumers, with 15% going to low-income consumers. - Non-low income consumer assistance delivered through LDC allocations in early years and through direct rebate later on. Title IV Job Protection and Growth: - Output based rebating then border measures for energy-intensive industry - Natural gas vehicle incentives and EPA guidance on motor vehicle emissions standards
Energy Sector Changes: Consumption by Source Quadrillion btu, 2008, 2020 and 2030 100 90 84.3 87.7 80 73.9 70 60 50 40 30 20 10 8.3 7.7 9.3 13.8 14.7 16.7 0 2008 2030 - Business-as-Usual 2030 - American Power Act Source: Authors' estimates of the impact of the American Power Act as modeled using the Energy Information Administration's AEO2009 version of the National Energy Modeling System.
Energy Sector Changes: New Power Capacity New investment in power generation, million kw gross capacity, 2010-2030 120 100 With CCS Without CCS 80 60 40 18.3 53.7 77.9 105.8 20 40.0 0 0.1 Petroleum Natural Gas Coal Nuclear Renewables Source: Authors' estimates of the impact of the American Power Act as modeled using the Energy Information Administration's AEO2009 version of the National Energy Modeling System. 19.8
Energy Sector Changes: Power Generation By source, billion kwh 5000 4500 5.5% 4000 3500 3000 2500 2000 1500 1000 500 44.7% 48.8% 17.0% 20.5% 17.1% 9.6% 19.5% 19.3% 36.5% 41.6% 16.3% 14.5% 18.8% 19.5% 22.5% 22.6% 28.3% 13.8% 20.9% 29.5% Coal w/ CCS Coal w/o CCS Nat. Gas w/ CCS Nat. Gas w/o CCS Petroleum Renewables Nuclear power 0 2008 2015 2020 2025 2030 Source: Authors' estimates of the impact of the American Power Act as modeled using the Energy Information Administration's AEO2009 version of the National Energy Modeling System.
Energy Security Implications: CORE Scenario US oil imports, expenditures and oil producer revenue
Energy Security Implications: CAFE Scenario US oil imports, expenditures and oil producer revenue
Environmental Impacts Annual greenhouse gas emissions million tons 9000 8000 7000 6000 5000 4000 3000 2000 1000 BAU - Total Emissions APA - Total Domestic Emissions + International Offsets APA - Total Domestic Emissions APA - Covered Emissions + International Offsets 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Employment Effects Thousand average annual jobs, 2011-2020 350 300 250 96 28-72 64 4-102 200 150 100 50 0 165 19-305 169 71 81 203 Net Job Creation Macroeconomic Effects Revenue Recycling Higher Energy Prices Reduced Fossil Fuel Demand Clean Energy Deployment -50-100 Net Jobs Impact Macro Effects Adaptation Clean Energy R&D Transportation Energy Efficiency Consumer Refund Energy Prices Fossil Fuel Biofuels CCS Renewables Nuclear
Impact on Consumers Average annual household energy expenditures, real 2007 USD $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 American Power Act - Continuous CAFE Improvements American Power Act - Core Scenario $1,000 Business-as-Usual $0