Household Energy Costs Laser Talk

This page was updated on 05/08/18.

Question: How will the carbon fee and dividend affect household energy costs?

Answer: If the revenue is returned to households, the majority will get back more money in dividends than they pay in increased costs of energy and goods.

Many people are surprised to learn that more than half of their energy costs are hidden in purchases like food, clothing, and other products. Nonetheless, families pay more attention to direct energy costs like gasoline and utility bills. With a rising Carbon Fee, these costs will go up depending on how much carbon is in the fossil fuel, or how much was burned in its production.

Based on government data, [1,2,3] we calculate [4] that a first-year Carbon Fee of $15 per metric ton of CO2 equivalent will:

  • Raise gasoline by 16¢ per gallon
  • Raise natural gas by 9¢ per therm
  • Raise heating oil by 19¢ per gallon, and
  • Raise electricity by 0.5¢ to 1.4¢ per kilowatt-hour, depending on whether it’s generated by natural gas or coal. Electricity from renewables or nuclear plants will not increase.

The Carbon Dividend is the key to offsetting these cost increases. As reported in the Household Impact Study, 53 percent of American households and 58 percent of individuals will either break even or come out ahead. It all depends on what kind of energy you use, and how much. [5]

  1. “Emissions Factors for Greenhouse Gas Inventories.” U.S. Environmental Protection Agency. 4 April 2014.
  2. Bradbury, J., Z. Clement, and A. Down. “Greenhouse Gas Emissions and Fuel Use Within the Natural Gas Supply Chain: Sankey Diagram Methodology.” Jul 2015.
  3. Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET).
  4. Gasoline is regular 87 octane with 10% corn ethanol. For natural gas, 1 therm = 100,000 Btu. For electricity, 1 kWh = 1 kilowatt-hour. Power plant efficiency = 34.0% for coal, 44.6% for natural gas.
  5. “Financial Impact on Households of Carbon Fee and Dividend.” Citizens’ Climate Lobby (Feb 2016).

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