Cost of global warming pollution reductions: 

Based on data from the California Energy Commission, the Boulder ClimateSmart Plan, and elsewhere, we estimate that one metric ton of carbon dioxide can be avoided for $10 of public expenditure (click “More details” below).  Thus the Fund will lead to a reduction of over 20 million tons of global warming pollution -- over 20% of Colorado’s net emissions.  Note that this represents the public expenditure but most programs, particularly energy efficiency, lead to very large energy savings in the private sector (households and businesses) that more than offset the expenditure.  Also note that while we did our best to arrive at a realistic number for the cost of avoided global warming pollution, there is a wide variability in estimates.  Some programs are more cost effective and some less.  Our belief is that as the field of global warming mitigation becomes more developed, the costs will go down and, thus, the amount of global warming pollution avoided per dollar of public expenditure will go up.

More details: 200802 CEP DollarsPerTon ver 0.9.pdf

What will the fee be on my utility bill?

Electricity            an additional 0.24 cents per kilowatt-hour (less than a 3% increase)

Natural gas        an additional 2.0 cents per therm  (about a 3% increase)

Average household energy use:

We have taken the household monthly energy uses from the Department of Energy’s Energy Information Administration and Xcel Energy:

Electricity          625 kilowatt-hours

Natural gas        46 therm

Thus, a Colorado household with average energy use will pay about $2.50/month extra.  But remember: although we will pay slightly more on our bills we will save much more than that because to total energy purchased will go down.

More details: 200802 CEP RevenueSources ver 0.96.pdf

Savings to households: 

Below we explain our $5/month estimate of savings for an average household.  Based on 2007 prices, Coloradans paid $300 for every metric ton of CO2 emitted via gasoline, $120/ton for electricity, and $130/ton of natural gas (these figures come from the cost of the energy source divided by the global warming intensity of the fuel).  We assumed a weighted household average of $160 per metric ton across the three sources.

The Fund will lead to reductions in global warming pollution via renewable energy (wind, solar, etc.), energy efficiency (EE), and carbon sequestration in agricultural soils.  Only energy efficiency will lead to a reduction in household energy bills.  We propose that at least 20% of the Fund will be used for energy efficiency.  Thus, EE programs will avoid 4 million tons of global warming pollution and result in savings of approximately $640 million in energy costs.  However, not all of this will support households since the Fund will support the commercial and agricultural sectors as well.  We are making a rough estimate that about half the program will support the residential sector, leading to a savings of $320 million/yr for households.  However, to achieve these energy savings households will need to invest in measures such as efficient lighting, home insulation, etc.  We estimate that the investments will consume two-thirds of the savings, leaving about $100 million per year in net savings.  Spread across the 1.8 million households in Colorado, the net savings of the program is over $5 per month per household -- significantly greater than the fee.

More details: 200802 CEP TenDollarSavings Ver 0.91.pdf