Climate bill costs doubted

Industrial opponents of climate change legislation tried to slow momentum for the measure by challenging recent government studies that found the proposal would not dramatically raise consumer prices.

Supporters got a boost when the Congressional Budget Office estimated that the bill would only cost the average American household $175 in 2020. The poorest households would actually see a benefit of about $40 from the bill.

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The Environmental Protection Agency (EPA) likewise found a relatively low cost impact because much of the revenue from the cap-and-trade system would be given back to consumers.

The studies have served to buoy support for the bill, which seeks to reduce carbon dioxide and other greenhouse gas emissions by 80 percent over the next four decades, heading into a critical House floor vote on Friday.

One document distributed by lobbyists for the oil refining industry argues that EPA assumes a “permanent recession.” EPA projections on the compliance costs estimate gas prices would increase by 20 cents a gallon. That translates into $54 billion.

But the industry point paper says that “costs are likely to be significantly higher and will increase as the economy improves and the cost of carbon rises over time.”

Since the bill emerged from the House Energy and Commerce Committee in May, oil refiners have felt shortchanged in comparison to other industrial sectors. The industry would receive just 2 percent of the total free allowances but had sought 5 percent of the total.

Meanwhile, coal producers, who would likely see diminishing demand for their product under the carbon cap, released a study by Charles River Associates that found “significant uncertainty” about what the ultimate costs will be.

The final tally will depend in large measure on the availability of offsets to industries that can’t meet their targets by reducing smokestack emissions alone, the study found.

The subject of offsets and which federal agency has the responsibility of determining what qualifies has emerged as a problem for some environmental groups, too.

Energy and Commerce Committee Chairman Henry Waxman (D-Calif.), the principal sponsor of the bill along with Rep. Edward Markey (D-Mass.), was forced to take the authority away from the EPA and give it to the United States Department of Agriculture to win the support of farm-state Democrats.

Donald Carr of the Environmental Working Group (EWG) said, “Congress has opened a huge loophole that sends billions of dollars to farmers to do nothing more than they are already doing while letting polluters off the hook for reducing their greenhouse gas emissions.”

The legislation apparently allows action farmers have taken since 2001 to qualify as a carbon offsets.

But environmental groups, if disappointed in some late concessions to win votes for the measure, remain broadly supportive of the bill. That includes EWG, Carr said. He called the legislation a “landmark bill.”

Steve Cochran, the Environmental Defense Fund’s national climate director, called the American Clean Energy and Security Act “the most important piece of environmental and energy legislation to be taken up by Congress.”