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The Climate Bill and Your Bills: Getting Clean Energy at Low Cost

Frances Beinecke

Posted July 9, 2009

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The American Clean Energy and Security Act, now before the Senate, is poised to transform the way America produces and uses energy, and in the face of such major changes, Americans are asking what this new law might cost them. The answer is: very little.

I want to be honest with you: shifting to clean energy will entail some costs. But numerous studies have found that the added price per family will be small.

According to the Congressional Budget Office, America can create millions of green jobs and combat global warming for the cost of 48 cents a day per household. That's about $175 a year, or $15 a month.

That's less than most people pay for Netflix, less than going to see two movies a month. And the return on the investment is extraordinary: cleaner skies, fewer asthma attacks, more job opportunities for friends and family, and the knowledge that you are building a sustainable future for your children. All for $15 a month.

Keep in mind that the Congressional Budget Office produces independent research and is not afraid to release challenging numbers. Earlier this year, it said the economic stimulus plan passed by Congress would hurt America in the long run, and it recently reported that health care reform will cost more than the Obama administration says.

The CBO reached its climate conclusions based on numbers, not politics.

And its findings have been corroborated by other sources. The Environmental Protection Agency found that the overall cost of implementing ACES would be even smaller: between $80 and $111 per household per year. That is less than $10 a month.

The bill also ensures that low- and moderate-income households will not be burdened with these minor increases in energy costs. It calls for selling 15 percent of pollution allowances at auction and using that money to provide energy refunds to families who receive food stamps, senior citizens, and people with disabilities.

The Bill Will Save Consumers Money on Utility Bills

The CBO and EPA reports looked at total costs across the economy. Other studies have examined what the ACES bill will do to your utility bills.

Using data from the EPA and the Energy Information Agency, analysts at MJ Bradley (a research firm that works with PG&E and other utilities) found that your electric bill would be an average of just $2 a month higher if the ACES bill passes. Below is their state-by-state breakdown (and a larger version here).

Monthly change

But this data is missing something important: it does not factor in the numerous energy efficiency measures included in the ACES bill that will save Americans money. Indeed, lots of money--approximately $750 per household by 2020 and $3,900 per household by 2030.

How can you achieve these savings? Thanks to smart incentives to invest in energy efficiency upgrades, ACES will encourage consumers to quickly cut their energy use by at least 10 percent, resulting in a net reduction in their energy bills. Even bigger savings -- 30 percent or more -- can be made as they replace obsolete appliances and inefficient vehicles with state-of-the-art models.

NRDC analyzed what would happen to utility bills when the ACES efficiency measures are factored in. We found that Americans in nearly every state will save an average of $5.99 a month. Even in the few states where savings compared to business-as-usual are not projected, bills will still be lower under ACES than they were in 2007.

Average Savings

No Changes While the Economy Recovers

In this economy, consumers are monitoring every bill and watching every penny. People are rightly concerned about even small increases in monthly expenses right now. But the ACES bill will not go into effect until 2012.

That means there will be no impact on energy prices while we're in the depths of the recession: zero impact in 2009; zero impact in 2010; zero impact in 2011.

History Shows Environmental Regs Don't Cause Price Spikes

I know opponents of climate legislation claim that ACES will cause price hikes (see my colleague Laurie Johnson's post examining how cost data has been misrepresented). We have heard these false predictions before. Do you remember back in 1995? Where you stunned to open you utility bill back then? Was there an enormous spike in the cost of powering your home or business?

That was the year when acid rain regulations went into effect and utilities howled that complying with the new pollution rules would send prices through the roof. My guess is you don't remember your bills from back then, because if they changed at all, it was too minimal to notice.

A national climate law is far more sweeping than the acid rain regulations, but I still believe we will not see dramatic changes in our monthly bills. Rather, we will get a cleaner energy future for just $15 a month--the added cost of one extra pizza per household.



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Mary SerrezeJul 10 2009 10:29 AM

Fifteen bucks a month? Netflix?

Consider that fifteen bucks represents half a day's work for a minimum wage worker after taxes and transportation. So for some, it's a real hit. It means skipping lunch and hitchhiking to work. And who can afford a new, energy-efficient refrigerator? Report from the field: Not Everybody.

Fifteen bucks a month? For some, that represents a latte and the Sunday Times picked up on the way to the vacation home on the coast of Maine. So for some, there's no sacrifice required at all. Pack up the Escalade and put it in the fast lane, folks.

Watch this video conversation between Brown University's Glenn Loury and Cato's Brink Lindsey--a liberal and a libertarian who end up agreeing that saving the planet is going to require real personal sacrifice from Americans:

Frances BeineckeJul 10 2009 02:14 PM

Mary, I appreciate your concern about affordability. NRDC and our partners are concerned about it too, and that's why we helped make sure the ACES bill includes provisions to protect low- and moderate-income families from additional energy costs.

For instance, it has programs to improve the energy efficiency of these families' homes--an effort that will reduce living costs be an average of 3 to 4 percent for low-income households.

As a result of this and other measures, the Congressional Budget Office estimates that low-income households (the fifth of the population with the lowest incomes) will actually be slightly better off under the bill, gaining $40 per year.

Just as important, the ACES bill will offer a path out of poverty for many Americans. Combined with the American Reinvestment and Recovery Act, the ACES bill will help create 1.7 million jobs. That's 3 times as many good jobs--those that pay at least $16 an hour--as the oil industry.

About 614,000 of those new green jobs will be available to workers with few educational credentials and little work experience, but they still offer opportunities for promotion and rising wages--giving workers a chance to lift their families out of poverty.

This is why Green for All and other social justice organizations support the clean energy and climate bill.

Tom BlasingfireJul 12 2009 05:53 PM

I am a retired equipment designer that has
spent the past 18 years designing equipment capable of operating on fuels other than oil.
I began this project after working on the Valdez Terminal Project of the Alaska Pipeline. I saw firsthand the air and water
pollution caused by petroleum and petroleum
based fuels, and determined to do something
about it. A duck can stand on a pile of solid fuel forever without injury, but if he comes in contact with oil for 15 seconds, he's looking at his hole card. So the
equipment I designed can use coal, cubed and
densified municipal solid wastes that are normally consigned to landfills in every community, or "E-Coal" - solid biomass fuel
that burns very cleanly.
Recently I went back and made major modifications to my equipment designs to make them conform to the new requirements
for green and renewable fuels. These
changes were 1. Changing the combustion
system to use "Synthetic Air" instead of
normal air; since the "Synthetic Air" does
not contain nitrogen, the exhaust gases do
not include NOx. 2. Since the "Synthetic
Air" has 80% oxygen (instead of the normal oxygen content of normal air), only 25% of it is needed, and this results in reducing the exhaust gas volume to 20%. 3. The CO2
is converted to a secondary fuel to reduce
the amount of solid fuel needed to power
the equipment. Finally, provision was made
to cool this remaining 20% of usual exhaust
gas emissions before releasing them to the
atmosphere. The result is clean and cool
exhausts, using a very gentle fuel, and the
ability to qualify for carbon credits since
there are no carbon emissions.
This development means that we can
provide full time power for transportation
and power generation applications, using
low cost domestically produced fuels, in
lieu of expensive, highly polluting foreign
fuels. These solid fuels are available at
25% the cost of petroleum based fuels (and
even less that synthetic liquid fuels).
Unfortunately, I had to retire because
I could not obtain the funding to build and
test the prototypes for this equipment. If
any environmentally sensitive organization
would like to become a joint venture partner
to help me build and market this "disruptive
technology", I would be glad to provide by
designs and experience to the joint venture.
I just wanted you to know that there are
solutions to the world's energy needs other
than wind or solar power. Thanks for your
good work in saving the planet.

Best regards,


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