Efficiency First

Initial EPA analysis of cap and trade shows no major increase in energy costs for American consumers

Late last week, Sen. Barbara Boxer, chair of the Senate Committee on Environment and Public Works, unveiled her chairman’s mark of the Senate energy bill. The legislation stipulates carbon emission allocations and other provisions that closely resemble the Waxman-Markey bill passed in June by the House of Representatives.

Boxer simultaneously released the results of an initial legislative analysis prepared by the Environmental Protection Agency, which shows only a modest increase in household energy costs resulting from capping carbon emissions. Averaged over a 40-year period beginning when the proposed emission caps kick in next year, the EPA estimated that annual energy costs for American consumers will rise only about $80 to $111.

ClimateWire’s Darren Samulesohn summed up the EPA’s comparison of the House and Senate bills in this way:

The House and Senate bills are close enough in scope that their models would find roughly the same price tag, EPA said in its analysis released Friday night.
For example, EPA determined that the Senate bill may cost the average household about 1 percent more per year because it has a more aggressive 20 percent emissions target for 2020, compared with the House bill’s 17 percent limit.

But at the same time, the Senate bill could lead to lower costs because it does not set a cap on the fugitive emissions that come from coal mines, landfills, and oil and gas distribution facilities. Instead, Boxer would allow those industries to conduct cleanup projects that are eligible for the offset market designed to curb the overall program’s price tag.

The Boxer bill also includes provisions designed to give industry even greater cost certainty compared to the House bill, EPA said. That is due to the strategic reserve allowance program that tucks a larger share of credits away every year to be auctioned in the event that carbon prices jump beyond $28 per ton, a level that then increases 5 percent plus inflation until 2018, rising to 7 percent plus inflation after 2018.

“For the most part, the differences between the bills result in relatively small differences in estimated costs and may even cancel each other out on net,” EPA said.

Read the complete ClimateWire report here:
www.nytimes.com/cwire/2009/10/26/26climatewire-boxers-climate-proposal-mirrors-house-on-all-78469.html

Download the EPA analysis in PDF format here:
www.eenews.net/public/25/12918/features/documents/2009/10/24/document_daily_01.pdf