Ambitious Climate Policy Won't Burden American Households

This week's climate fact

Posted: 09-May-2008; Updated: 13-May-2008

Last week you saw that several independent, peer-reviewed studies say that the U.S. is likely to experience robust economic growth, even if Congress adopts a strong climate bill, and that its impact on GDP will be minimal (see last week's climate fact).¹

But how will the average family be affected? The short answer is not much at all.

For the average American family, the cost of capping greenhouse gases will amount to less than a penny for every dollar of income.

And that's including all the effects from increased energy costs (which may rise as the true cost of fossil fuels is factored in).

A penny on the dollar is a small price to pay to protect us against the potentially catastrophic consequences of global warming.

Source: EDF calculations using data from the Bureau of Economic Analysis and the Census Bureau, as well as studies by MIT, EPA, and EIA. Full-size graph

By comparison, three cents of every dollar earned already goes to insurance; four cents goes to national defense; and ten cents goes to Social Security and other social insurance programs.

While the average American family may not even notice such small costs, households with lower incomes will obviously feel a greater burden. But because the overall effects of climate policy on total U.S. economic growth are so small, we can easily afford the assistance low-income families need to insulate them from these costs.

With such modest impacts, there's no excuse for inaction on climate. It's time to cap emissions.