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

Fact Sheet on MIT Cost Estimates of S.139 (as offered in 10/03)
Prepared by the Pew Center on Global Climate Change

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.

• 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.