This isn’t a recent article by blog standards, but I’ve been meaning to write something about it, and I haven’t seen it posted anywhere else (which doesn’t mean it’s not, just that I haven’t seen it). Anyway, the article in question is about a report by the Energy Information Administration (EIA) which suggests that a national cap and trade system for carbon would not cause significant economic losses to the United States.

EIA estimated carrying out the [National Commission on Energy Policy’s] plan would cost each U.S. household $78 per year, reducing the gross domestic product in 2025 by about one-tenth of 1 percent.

The commission also recommended a 36 percent increase in the average fuel economy for cars and light-duty trucks between 2010 and 2015, and doubling to $3 billion a year the budget for federal energy research and development. In addition, it called for new tax incentives for gasifying coal and building nuclear plants.

At first it sounds like a cause for celebrating – the myth that reducing GHG emissions is too expensive is a myth! Then there’s that bit at the end of the above paragraph about nuclear power that makes enviros very nervous (speaking of which, no one has yet answered my call for a cradle to grave piece about nuclear power generation). But what bothers me more than the nuclear option is what the report suggests about coal use (emphasis mine):

Carrying out the plan also would reduce total fossil fuel consumption by 2.7 percent by 2025, though "oil use is reduced only minimally," EIA said. At the same time, EIA found coal use would increase 22 percent over that time, while total electricity prices would rise less than 5 percent and gasoline prices would go up by a few pennies a gallon.

Some portion of the coal increase is probably accounted for by the proposed subsidy for gasification, but the article doesn’t indicate just how much, and I’d bet it’s not a large amount. Most of the increase in coal use is almost certainly due to an increase in good old coal burning. Burning coal is easy and cheap. It’s as plentiful as it is polluting; maybe more so, and that’s telling.

As to the White House’s estimate of a $313 billion hit to GDP, I’d like to see where that number comes from. That’s over twenty times larger than the EIA report’s estimate of a tenth of a percent (~$12 billion) reduction in GDP (estimated 2005 GDP is $12.3 trillion). That’s a pretty big discrepancy.