Summary of MIT Analysis of the Lieberman-McCain Climate Stewardship Act (S.139)

Fact Sheet on MIT Cost Estimates of S.139 (as offered in 10/03)

The Massachusetts Institute of Technology (MIT), through its Joint Program on the Science and Policy of Global Change, has assembled a world-class collaboration of economists and scientists to model and analyze global climate change policies. Using their EPPA1 model, one of the world’s premier energy-economic models, MIT has undertaken the only analysis of the Lieberman-McCain Climate Stewardship Act (S.139) as it will be offered on the Senate Floor in October 2003 – i.e., Phase I only – achieving 2000 emissions in 2010.

  • MIT uses the same economic, energy use and emissions baselines as the U.S. Energy Information Agency (EIA), but has a much less pessimistic view of the future supply curve for natural gas, based on potentially available natural gas sources (federal lands, unconventional gas, Alaska, deep sea and LNG).
  • The strength of the MIT-EPPA model is its treatment of non-CO2 greenhouse gases2 (GHGs) and biomass sequestration – both these sources offer opportunities for low-cost reductions.
  • MIT finds considerable efficiency opportunities, including accelerated penetration of combined heat and power plants and distributed generation.
  • The use of efficiency, non-CO2 GHGs and sequestration means that much less switching in energy supply is required.
    - This allows coal use to remain consistent at around 24 Quads per year.
    - This also means that, although there is some fuel switching to natural gas, overall gas demand growth is less because overall, less energy is being consumed.

Year

Total consumption change
(billion $)

Consumption % change

Cost per household ($)

Natural gas % change from reference

Carbon price in $/tC [$/tCO2]

2010

-1.7

-0.02%

15

-4%

31 [9]

2015

-2.0

-0.02%

17

-8%

40 [11]

2020

-2.4

-0.02%

19

-7%

52 [14]

  • All prices are in $2001.
  • Consumption is the major component of GDP (the others are investment, government expenditures and imports/exports balance) and thus is a good measure of actual impact on the population.
  • In year 2000, US GDP was around $10 trillion with consumption at $6.3 trillion.
  • In year 2000, there were 108 million households in the US with a median income of $41,000, by 2020, there is projected to be 127 million households with a median income of $61,000.


1 Emissions Projections and Policy Analysis Model

2 The six greenhouse gases addressed by S.139 are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).