EIA says costs of climate bill modest at first

A soon-to-be released report from the nonpartisan Energy Information Administration (EIA) offers qualified support for backers of the House climate change bill, but it also contains scarier scenarios for opponents to highlight.

The EIA, the division of the Energy Department that tracks and analyzes energy data, found that impacts on energy costs would be relatively modest, at least in the near term. The move by bill sponsors to give away pollution allowances rather than selling them appears to be a good one; the EIA credits the free distribution of credits with keeping energy costs from rising precipitously, according to a draft copy of the report reviewed by The Hill.

Electric bills would increase only 3 to 4 percent by 2020 under a carbon cap imposed by the bill. Gas prices, meanwhile, would increase by 23 cents a gallon by 2020 and 36 cents a gallon by 2030, compared to where prices would be without the constraints of climate legislation, according to the EIA.

The climate bill requires a 17 percent reduction in covered emissions by 2020 and an 83 percent cut by 2050, relative to a 2005 baseline.

Supporters of climate legislation said the EIA study showed that Congress can curb greenhouse gas emissions without destroying consumers’ pocketbooks.

“The EIA study is more good news that shows that the American Clean Energy Security Act is affordable and effective,”  said Jeremy Symons of the National Wildlife Federation.

The administration’s report is the third from a governmental agency that found the impact on energy prices under the climate bill may be relatively modest, at least initially. The Environmental Protection Agency and the Congressional Budget Office also found energy prices would increase under climate legislation, but not as high as critics have suggested.

Some business-funded studies have painted a darker picture. A CRA International study commissioned by the Black Chamber of Commerce said the climate bill could reduce an average household’s budget by as much as $1,600 a year.

Longer term, EIA’s analysis also gets a bit bleaker. Once the period during which pollution allowances are distributed free of charge ends, energy prices would increase at a faster clip, the EIA found. The impact will be largest on electric bills.

By 2030, electricity costs could be 20 percent higher than they would be if utilities did not have to comply with a carbon cap. And costs could be higher in the short term as well, if a carbon offset program that can help utilities meet their emissions targets is delayed.