Connect with Point of View   to get exclusive commentary and updates

Cost of the Green New Deal

smoke from factory
By: Kent Lassman & Daniel Turner – cei.orgJuly 30, 2019

In early 2019, a handful of progressive Democrats galvanized their party around a set of ideas that—even if only partially implemented—would restructure vast areas of the American economy and radically refashion the American household with large and ongoing costs.

This set of proposals, called the Green New Deal (GND)—introduced in the 116th Congress as H. R. 109 and S. 59—has earned attention, depending on the source of commentary, either as an instrument of effective leadership for the 21st century or as an unserious ideological signaling exercise. In either case, it is difficult to read as a set of genuine policy proposals; it is perhaps better described as a far-reaching, aspirational set of guideposts for a resurgent progressive force in American politics.[1]

The GND actually has a long progressive pedigree. It was championed by statewide and national Green Party candidates for governor and president as early as 2006. Presidential candidate Jill Stein gave it prominence in 2012. The GND attracted early attention from scores of Democrats including nine presidential candidates and 12 United States Senators. In response, Republicans pushed for a vote on the GND in the Senate that failed to attract a single vote from Democrats, including the resolution’s 12 cosponsors.[2]

While this paper focuses on the energy components of the GND, among other features, the GND would guarantee “a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security” as well as high-quality health care, affordable and safe housing, affordable food, and access to nature. In a word, it promises a utopia.

At its root, the Green New Deal is a radical blueprint to de-carbonize the American economy. Carbon—whether contained in wood, coal, gas, or oil—is a byproduct of burning fuel. Eliminating these energy sources would have massive ramifications for the economy.

Regardless of its authors’ intentions, our aim here is to examine the relative trade-offs associated with taking significant portions of the GND seriously. What would it actually mean to implement significant portions of proposal? Can we understand the effects at a household level in different regions of the country?

To that end, the following analysis examines the transformation of electricity production, transportation and elements of shipping, as well as construction in five representative states that implementation of the GND would necessitate. It requires a considerable number of assumptions that we share in order to allow the reader to come to his or her own conclusions about the merits of the GND compared to alternative uses of scarce societal resources.

The sum of our analysis is not favorable for the GND’s advocates. At best, it can be described as an overwhelmingly expensive proposal reliant on technologies that have not yet been invented. More likely, the GND would drive the American economy into a steep economic depression, while putting off-limits affordable energy necessary for basic social institutions like hospitals, schools, clean water and sanitation, cargo shipments, and the inputs needed for the production and transport of the majority of America’s food supply.

We do not include in this analysis estimates of the cost of the non-energy components of the GND. Those costs might dwarf the energy-related costs by an order of magnitude.

For each of five states, we provide a range of estimated costs as well as a best estimate.

Findings

At a minimum, the GND would impose large and recurring costs on American households.[3] We conclude that in four of the five states analyzed—Florida, New Hampshire, New Mexico, and Pennsylvania—the GND would cost a typical household more than $70,000 in the first year of implementation, approximately $45,000 for each of the next four years, and more than $37,000 each year thereafter.  In Alaska, estimated costs are much higher: more than $100,000 in year one, $73,000 in the subsequent four years, and more than $67,000 each year thereafter.

Sum of Household Costs

Methodology

While the Green New Deal is a wide-ranging proposal, it ultimately amounts to an imposition of a significant set of constraints on the energy sector. At present, Americans consume energy from many different resources. In general, fossil fuels and some renewable fuels directly power most transportation, and much of the equipment in the industrial, commercial, and household sectors. The GND would likely reduce the net energy consumption by these sectors while shifting all energy demand either to the electric grid or toward self-contained renewable sources like solar panel arrays designed to power particular units. Implementation of the GND would shift energy consumption entirely to electric current from today’s primary sources, including fossil fuels.

Benjamin Zycher of the American Enterprise Institute has analyzed the cost of electricity under the GND.[4] His study looks at current electricity generation and estimates what it would cost to replace all non-GND compliant electricity generation—such as coal, natural gas, petroleum, and nuclear—with wind and solar power. Zycher also looks at the cost of emissions, transmission, backup power, and land for the replacement capacity.

Zycher’s analysis is understated because it does not calculate additional demand for electricity—the dynamic effects of policy changes—that would obtain as a result of GND implementation. Zycher’s low-end estimate addresses the transformation of current power generation to GND power. Of course, other provisions of the GND would generate significant demand increases. In addition, Zycher’s cost estimates extend indefinitely and would affect American households far into the future.

Energy research firm Wood Mackenzie estimates that the greening of the U.S. power sector would cost approximately $35,000 per household and take 20 years.[5] Wood Mackenzie estimate a total price tag of some $4.7 trillion, including around $1.5 trillion to add 1,600 gigawatts of wind and solar capacity and $2.5 trillion of investments in 900 gigawatts of storage. Another $700 billion is estimated for new high transmission power lines to move that electricity from sun-drenched deserts and windswept plains to the urban areas where it would be used.

Most provisions of the GND are so broad and open-ended that the list of potential programs necessary to implement the program is limited by the capacity of legislators to imagine a new government program. Therefore, it is impossible to calculate the whole or maximum cost of the GND. However, other parts of the GND are more precise, sufficiently so that an approximate minimum cost estimate is available.

In addition to increased costs due to electric generation compliant with the GND renewable mandate, the GND calls for:

  1. The elimination of “pollution and greenhouse gas emissions from the transportation sector as much as is technologically feasible;”
  2. “[U]pgrading all existing buildings in the United States and building new buildings to achieve maximal energy efficiency, water efficiency, safety, affordability, comfort, and durability, including through electrification;”[6]
  3. Where technologically feasible, the elimination of the use of fossil fuels and other combustible, greenhouse gas-emitting energy sources.

This study evaluates the estimated cost of the GND in four specific categories across five model states. The categories are:

  1. Additional electricity demand;
  2. Costs associated with shipping and the logistics industry;
  3. New vehicles; and
  4. Building retrofits.

These cost estimates were made with the available data and analysis. However, they are only low-end approximations given the unprecedented scope of the GND. A key source, in addition to Zycher’s analysis, was produced in early 2019 by Douglas Holtz-Eakin and Dan Bosch of the American Action Forum.[7] Of interest for our analysis, Holtz-Eakin and Bosch estimate the costs of a “low-carbon electricity grid” (at $5.4 trillion versus Zycher’s $8.95 trillion annual expenditures) as well as the costs of a zero-emission transportation system, and a national policy for “green housing.”

Taken together and married to our own analysis, these estimates develop a floor of expectations for the costs associated with the implementation of the GND in the near and intermediate term.

The five selected states demonstrate diverse climates, geography, economies, and populations.

  • Alaska is a remote, sparsely populated, and cold state.
  • Florida is one of the largest states in terms of population and economy, undoubtedly the economic powerhouse of the Southeast, in a warm climate.
  • New Hampshire is a small state that is well connected with larger economies in the region in a cold climate.
  • New Mexico is a small state in terms of population, but large geographically, is generally warmer, and is situated between significant large states by all metrics.
  • Pennsylvania is a large state in terms of geography, economy, and population in a mild-colder climate and is well integrated with the largest regional economy in the United States.

Previous Analysis

[…]

To see the remainder of this article and the links to the graphs, click read more.

Read More

Source: What the Green New Deal Could Cost a Typical Household | Competitive Enterprise Institute

Viewpoints Sign-Up

Flattening the Curve

Flattening the Curve