Do energy efficiency programs increase the federal deficit?
In Congressional Budget Office (CBO) budget impact estimates, energy efficiency programs cost more to the federal government than direct payments to taxpayers. The CBO methodology does not account for the benefits of energy efficiency programs, however. CBO uses a specific set of principles to estimate the cost of legislation to the U.S. government. It does so to establish consistency in implementing congressional rules against legislation that increases the federal deficit. In climate legislation, CBO accounts for the impact of each allowance allocation differently, depending on its specific ends. While the cost to industry of buying allowances reduces taxable income and thus reduces revenue to the government (CBO assumes, by 25% of the amount of reduced income), giving allowances to businesses or consumers yields the same amount of revenue, according to the CBO, because it creates taxable income. Thus, allowances that are given to individual taxpayers do not create a cost to the gove
