Waxman's GHG cap causes four types of real costs:
1. Adjusting to lower carbon emissions to reduce the cost of allowances
2. Reducing emission to sell domestic allowances
3. Paying for foreign allowances
4. Money wasted on inefficient subsidy schemes
There may be a negative cost if some subsidy scheme save more money on reduced energy use that what they cost. And of course there is the benefit of reduced emissions, but I'm discussing costs here.
EPA evaluates only the first three of these for obvious reasons. It uses two different models and below I report the averages.
