Last year, Senators Barbara Boxer (D-CA) and Bernie Sanders (I-VT) introduced S. 332, the Climate Protection Act of 2013. Based on a “fee-and-dividend” concept, the bill would levy a carbon pollution fee on carbon dioxide (CO2) emissions starting in 2014 at $20 per metric ton of CO2, rising at 5.6% per year through 2023. The carbon pollution fees under the Climate Protection Act would be utilized as follows: 3/5 would be directly rebated to U.S. residents; $20.5 billion per year would be used to assist trade-exposed industries, low-income households, displaced workers, and to increase energy R&D; and the remainder, about 1/4, would be used to reduce the U.S. federal budget deficit.

Using an independent version of the U.S. Department of Energy’s 2013 National Energy Modeling System (NEMS-Stanford), we analyzed the macroeconomic, environmental, and distributional impacts of the Climate Protection Act. We find that the Climate Protection Act would: Reduce energy-related CO2 emissions by 4,200 million metric tonnes (MMt) CO2 in the first ten years of the program; reduce CO2 emissions from energy by 16.8% below 2005 levels in 2020, permit-ting the U.S. to meet its commitment under the Copenhagen Accord; result in modest impacts to GDP of less than one half of one percent in 2020; rebate $744 billion to households over ten years, with an average yearly house-hold rebate of between $181 and $223; reduce net energy-related expenditures for substantially all of the 80% of U.S. households with incomes less than $100,000 per year and for the average U.S. household in all regions of the country; reduce the U.S. federal budget deficit by $311 billion over ten years.