Obama's climate plan won't cost you much

Obama pushes to curb carbon emissions
Obama pushes to curb carbon emissions

President Obama announced an ambitious new climate agenda that aims to cut carbon dioxide emissions 30% by 2030.

Critics like House Speaker John Boehner say the move will lead to a "surge" in electric bills.

Experts say it's not so simple.

For most states, the easiest and cheapest way to get the reductions Obama wants will be to close old coal-fired power plants. Those plants generally produce the dirtiest -- and cheapest -- electricity.

If those plants are closed, people in states with lots of cheap coal power plants, such as Indiana, Wyoming and West Virginia, may see increases.

Related: Obama's big climate move

But nationwide, the impact of the policy will be marginal, experts said.

"Electricity prices will go up," said Robert Stavins, director of Harvard's Environmental Economics Program. "But in most people's budgets they probably won't even notice it. I would characterize it as modest."

One reason: utilities have other, cheaper sources besides coal to produce electricity.

For example, getting electricity from new coal power plants is more expensive than natural gas and more expensive than new wind farms.

Also, producing power only accounts for about half of a household's electricity bill. The other half is driven by the cost of distributing electricity over the power grid. So even if electricity production prices rise, the increase in consumers' monthly utility bills will be muted.

Personal Finance


CNNMoney Sponsors