Economic Analysis of Updated Commission Recommendations

This appendix describes the results of a modeling analysis undertaken to assess the economic and emissions impacts of updated recommendations issued by the National Commission on Energy Policy in April 2007.

Those recommendations sought to accelerate progress in areas where the Commission believes current energy-policy initiatives remain inadequate to the challenges at hand, particularly with respect to oil security and climate change. Specifically, the Commission has recently proposed to strengthen key parameters of the mandatory, economy-wide greenhouse-gas trading program first proposed in its 2004 report, Ending the Energy Stalemate, and has recommended a package of supplementary policies to improve vehicle fuel economy, promote energy efficiency, boost incentives for carbon capture and storage, and increase the renewable-energy contribution to the nation’s electricity supply.

To analyze the combined impact of these recommendations, the Commission used the National Energy Modeling System (NEMS), a detailed model of energy production and consumption used by the U.S. Energy Information Administration (EIA) to develop forecasts and assess policy options.1 The Commission was interested in using this tool to estimate benefits, costs, and sectoral impacts under different program parameters and in exploring how technology and sector-oriented policies might interact with a broad-based greenhouse-gas price signal.