How CBO Estimates the Costs of Reducing Greenhouse-Gas Emissions

Congressional Budget Office
Background Paper
April 2009

As part of its mandate to provide the Congress with the objective, timely, and
nonpartisan analysis needed to make informed economic and budgetary decisions, the
Congressional Budget Office (CBO) prepares cost estimates for legislation under consideration by the Congress. In recent years, a number of legislative proposals have involved efforts to restrict emissions of greenhouse gases in the United States. To estimate the budgetary impact of such proposals, CBO must first estimate the incremental costs to firms and households of mitigating greenhouse gases. This background paper briefly describes the methodology that CBO uses to estimate those incremental costs, the data sources and models used to develop that methodology, and the rationale for using it. In keeping with CBO’s mandate to provide impartial analysis, the paper contains no policy recommendations.

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