Key points of the climate-energy bill before Congress
Lawmakers craft a bill that will move the US to a far cleaner energy policy.
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The total abatement cost would be $22 billion in 2015, rising to $31 billion in 2020 and $64 billion in 2030, the EPA reported in April. This would slightly curb average annual US economic growth from 2.71 percent to 2.69 percent. The cost per household is estimated at $98 to $140 per year.
But the final cost of the bill was set still lower by the House Energy and Commerce Committee compromise, which mandates a 17 percent (instead of 20 percent) emissions cut by 2020.
That change, the EPA says, would “likely result in lower allowance prices, a smaller impact on energy bills, and a smaller impact on household consumption.”
Critics say it will cost far more.
But, says Natural Resources Defense Council economist Laurie Johnson, by the time abatement costs reach $64 billion a year in 2030, the US economy will have grown more than $9 trillion – about 150 times the amount spent on CO2 abatement.
Who pays the most?
As a candidate, President Obama proposed auctioning all carbon emission allowances – none given away – to avoid a windfall for polluters.
But to win congressional support, some 85 percent of the allowances would be given away (just 15 percent auctioned), according ClearView Energy Partners, an energy economics firm, a change decried by some environmental groups. Still, most of the freebies must be used specifically to blunt the impact of rising energy prices on households and energy-intensive industries. By 2020, the bill would increase the percentage of auctioned allowances to 90 percent.
In 2012, when the cap kicks in, electric utilities would get 44 percent of carbon allowances, according to Kevin Book, an analyst at ClearView. Again, the bill requires utilities to pass the benefit along to consumers.
Some 15 percent of the value of allowances would go to low- and moderate-income households to defray higher energy costs.
Energy-intensive industries like steel, cement, pulp, and paper would get 2 percent of allowances to soften competition from foreign rivals that don’t have to meet an emissions requirement.
The House bill is expected to pass. What happens in the Senate, where Republicans may be able to filibuster a companion bill, is an open question.