The analysis in this report was undertaken at the request of the Committee on Science of the U.S. House of Representatives, subsequent to the report Impacts of the Kyoto Protocol on U.S. Energy Markets and Economic Activity, published by the Energy Information Administration (EIA) in October 1998. In its request, the Committee asked EIA to “evaluate an earlier start date than 2005, which was the first year that the price signal was passed to consumers in your study of the Kyoto Protocol,” as noted in the letter in Appendix B.

In its 1998 study, EIA analyzed the impacts of the Kyoto Protocol, assuming that a price was imposed on the consumption of fossil fuels relative to their carbon content in order to reduce projected carbon emissions in the United States to the level specified in the Kyoto Protocol for the period 2008 through 2012. The carbon price was phased in beginning in 2005, in order to allow energy markets time for adjustment before 2008. The present study assumes that the United States reaches the same level of carbon emissions in the period 2008 through 2012 but begins a gradual phase-in of the carbon price in 2000, in order to analyze whether a longer, more gradual adjustment would be beneficial. The projections in this report were produced using the National Energy Modeling System (NEMS), an energy-economy model of U.S. energy markets designed, developed, and maintained by EIA, which is used each year to provide the projections in EIA’s Annual Energy Outlook. The detailed energy market results are provided in Appendix A.

The legislation that established EIA in 1977 vested the organization with an element of statutory independence. EIA does not take position on policy questions. It is the responsibility of EIA to provide timely, high quality information and to perform objective, credible analyses in support of the deliberations of both public and private decisionmakers. This report does not purport to represent the official position of the U.S. Department of Energy or the Administration.

        
Within its Independent Expert Review Program, EIA arranged for leading experts in the field of energy and economic analysis to review an earlier version of this report. The assistance of the following reviewers is gratefully acknowledged: Joseph Boyer, Yale University; William Hogan, Harvard University; Michael Toman, Resources for the Future; and John Weyant, Stanford University Energy Modeling Forum.