Issue Brief

Projected CO2 Emissions Reductions under the American Opportunity Carbon Fee Act of 2017

Jul 26, 2017 | Marc Hafstead

Summary

The American Opportunity Carbon Fee Act would levy a fee on US greenhouse gas emissions, largely on carbon dioxide. Modeling results illustrate the magnitude of the energy-related emissions reductions—projected to be 36 percent below 2005 levels in 2025.

Key Findings

  • Under the carbon fee scenario in the proposed American Opportunity Carbon Fee Act of 2017, energy-related carbon dioxide emissions in 2030 are projected to be 67 percent of the business-as-usual baseline level of emissions.
  • With respect to the commonly used 2005 benchmark year, energy-related carbon dioxide emissions in 2030 would be 39 percent below the level of emissions in 2005.
  • In 2016 the US pledged to reduce greenhouse gas emissions levels to 26–28 percent below 2005 levels by 2025. Modeling suggests the American Opportunity Carbon Fee Act would yield considerably more reductions in 2025 than outlined in the pledge.
  • Although the carbon fee levied by the proposed bill would be applied to the carbon content of all fossil fuels, including petroleum, 62–65 percent of the emissions reductions emanate from the electricity generation sector.