The Electricity Reliability Council of Texas ran an analysis of the likely effects from a cap and trade program, on behalf of the Public Utility Commission of Texas.
The results of their analysis aren’t very promising for cap and trade advocates or consumers.
For its reference case, ERCOT found that reducing carbon emissions to 2005 levels by 2013, a carbon permit will have to cost between $40 and $60 a ton. That means wholesale power costs will increase $10 billion and a typical consumer pays $27 a month extra. They assumed a $7/MMBtu natural gas price, expected load levels and the existing and committed level of wind and other generation to get to that price.
A few more findings:
- If natural gas prices rise to $10/MMBtu, as demand increases, because it’s cleaner than coal, the increase in power costs hit $20 billion.
- If energy use slips by 10%, then credits could cost $25 and $40, meaning that monthly bills jump by $17.
- If wind power jumps by 18,456 MW as hoped, with $7/MMBtu gas, to hit 2005 CO2 emission levels, wholesale power lifts $7 billion. Consumer bills raise $22.
As Environmental Capital points out, the ERCOT simulation is good because Texas has a diverse mix of energy sources including nuclear, wind, coal and natural gas, that are pretty much reflective of the nation as a whole.
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