FOR IMMEDIATE RELEASE
Contact Prof. James K. Boyce (413) 577-0816
IMPACTS OF CLIMATE AND ENERGY POLICY ACROSS THE STATES
AMHERST, MA, August 7, 2009 – Researchers at the Political Economy Research Institute (PERI) at the
University of Massachusetts today released a new report, Cap and Dividend: A State-by-State Analysis, jointly
published with the Economics for Equity and the Environment Network.
“There is great interest in Congress and among the public in how climate and energy policy will affect families in
different states” said James K. Boyce, co-author of the report and director of PERI's environment program. “We
estimate the impact of higher fuel prices that will result from a cap on carbon emissions on family budgets. We
then ask what happens if carbon permits are auctioned, rather than given away to corporations, and most of the
money is returned to the American people as dividends. We find that in every state, at least six in ten households
come out ahead in pocketbook terms, without even counting the benefits of curbing global warming.”
Putting a cap on carbon emissions will increase prices of oil, coal, natural gas, and everything produced and
distributed using them. By calculating the “carbon footprint” of households in different income brackets in each
state, the report shows how the resulting costs to consumers will be distributed across the population.
The money that consumers pay in higher prices will not leave the nation’s economy. In this respect, carbon
permits are very different from OPEC-engineered oil price increases that send American dollars abroad. Instead
this money will go to the owners of the carbon permits created under the cap. A cap-and-dividend policy will put
this ownership in the hands of the American people. It will do so by auctioning 100% the carbon permits, as
proposed by President Obama in his 2009 budget. Businesses will pass through the carbon price (the cost of
permits) to consumers, each household paying in proportion to its carbon footprint. The government will then
return most or all of the auction revenue to the public as equal dividends, completing the recycling of dollars
within the economy.
With a permit price of $25 per ton of carbon dioxide, Boyce and his co-author Matthew Riddle report that the
annual cost to the median family would range from $239 per person in Oregon to $349 in Indiana. Under cap-anddividend, each person would receive dividend payments of $386 per year, so the net benefit to the median family
would range from $37 per person in Indiana to $147 in Oregon.
“A cap-and-dividend policy has three big things going for it,” says Boyce. “First, it affirms the ethical principle
that our natural wealth – in this case, the atmosphere’s ability to absorb and recycle our carbon emissions –
belongs in common and equal measure to all. Second, it sends a clear market price signal that burning fossil fuels
has a social cost, giving businesses and consumers the incentive to invest in energy efficiency and clean energy.
Finally, by protecting the real incomes of American families, and doing this in a very transparent and visible way,
it can win durable public support over the long haul for policies that wean our nation’s economy from dependence
on fossil fuels.”
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The report is available online at www.peri.umass.edu/ green_economics
For further information, contact Professor James Boyce at (413) 577-0816.
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POLITICAL ECONOMY RESEARCH INSTITUTE
UNIVERSITY OF MASSACHUSETTS
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AMHERST
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POLITICAL ECONOMY RESEARCH INSTITUTE
UNIVERSITY OF MASSACHUSETTS
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AMHERST