U.S. Climate Bill to Cost $22 Billion a Year by 2020, CBO Says (6/20/09)
Bloomberg
By Simon Lomax
June 20 (Bloomberg) -- A proposed “cap-and-trade” law to cut U.S. greenhouse gas emissions would cost $22 billion a year by 2020, or $175 for every household, the Congressional Budget Office said.
The legislation, which the U.S. House may vote on as early as next week, softens the impact on consumers by giving some industries free carbon dioxide permits, also called allowances, and selling others at auction to raise money for tax relief, CBO said.
Without these measures, the price tag would be $110 billion a year, or $890 per household, CBO said in an analysis prepared for Representative Dave Camp, the Michigan lawmaker who leads the Republicans on the House Ways and Means Committee.
“Higher costs would stem from the fact that most economic activity is based on fossil fuels” that produce greenhouse gases when burned, the CBO analysis said. “In most cases, the firms required to hold the allowances would not bear that cost; rather, they would pass it onto their customers in the form of higher prices.”
Under cap-and-trade, the federal government would put a limit on greenhouse gases from most sectors of the U.S. economy. The cap would be divided into billions of permits, each carrying the right to emit the equivalent of one metric ton of carbon dioxide. Regulated firms would have to acquire enough permits to cover their greenhouse gas emissions and surrender them to the Environmental Protection Agency. Before being surrendered to EPA, the allowances could be bought and sold in a market similar to the emissions-trading system operating in Europe since 2005.
Emissions Limits
By cutting back the supply of these permits each year, the cap-and-trade legislation written by House Democrats Henry Waxman of California and Ed Markey of Massachusetts would by 2020 lower the limit on greenhouse gases to 17 percent less than 2005 levels.
CBO’s analysis of the Waxman-Markey bill was released as Democrats work to resolve a dispute over the bill’s economic impact on U.S. farmers. House Agriculture Committee Chairman Collin Peterson of Minnesota and other Democrats from farm states want changes to the legislation, including more free allowances to non-profit utilities that serve rural parts of the country, before they will support Waxman’s plan to bring the bill to a vote in the 435-member House next week.
In its analysis, CBO said the market value of the cap-and- trade allowances in 2020 would be $91.4 billion, or $28 for each permit.
“The ultimate effects of the cap-and-trade program on U.S. households would depend crucially on policy makers’ decisions about how to allocate that value,” CBO said.
The Waxman-Markey bill would cost the richest U.S. households $240 a year, and the poorest would see a benefit of $40 a year, CBO said.
By Simon Lomax
June 20 (Bloomberg) -- A proposed “cap-and-trade” law to cut U.S. greenhouse gas emissions would cost $22 billion a year by 2020, or $175 for every household, the Congressional Budget Office said.
The legislation, which the U.S. House may vote on as early as next week, softens the impact on consumers by giving some industries free carbon dioxide permits, also called allowances, and selling others at auction to raise money for tax relief, CBO said.
Without these measures, the price tag would be $110 billion a year, or $890 per household, CBO said in an analysis prepared for Representative Dave Camp, the Michigan lawmaker who leads the Republicans on the House Ways and Means Committee.
“Higher costs would stem from the fact that most economic activity is based on fossil fuels” that produce greenhouse gases when burned, the CBO analysis said. “In most cases, the firms required to hold the allowances would not bear that cost; rather, they would pass it onto their customers in the form of higher prices.”
Under cap-and-trade, the federal government would put a limit on greenhouse gases from most sectors of the U.S. economy. The cap would be divided into billions of permits, each carrying the right to emit the equivalent of one metric ton of carbon dioxide. Regulated firms would have to acquire enough permits to cover their greenhouse gas emissions and surrender them to the Environmental Protection Agency. Before being surrendered to EPA, the allowances could be bought and sold in a market similar to the emissions-trading system operating in Europe since 2005.
Emissions Limits
By cutting back the supply of these permits each year, the cap-and-trade legislation written by House Democrats Henry Waxman of California and Ed Markey of Massachusetts would by 2020 lower the limit on greenhouse gases to 17 percent less than 2005 levels.
CBO’s analysis of the Waxman-Markey bill was released as Democrats work to resolve a dispute over the bill’s economic impact on U.S. farmers. House Agriculture Committee Chairman Collin Peterson of Minnesota and other Democrats from farm states want changes to the legislation, including more free allowances to non-profit utilities that serve rural parts of the country, before they will support Waxman’s plan to bring the bill to a vote in the 435-member House next week.
In its analysis, CBO said the market value of the cap-and- trade allowances in 2020 would be $91.4 billion, or $28 for each permit.
“The ultimate effects of the cap-and-trade program on U.S. households would depend crucially on policy makers’ decisions about how to allocate that value,” CBO said.
The Waxman-Markey bill would cost the richest U.S. households $240 a year, and the poorest would see a benefit of $40 a year, CBO said.
Views: 15
Replies to This Discussion
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Permalink Reply by Checkmateking on -
how would the poorest benefit? what does that have to do with cap and tax? just another redistribution scheme
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Permalink Reply by Grillin' - MmmMmm on
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They'll benefit by having their utilities rates go up, their gasoline prices going up, their food prices going up, etc. They'll benefit by coming under the protective wing of King Obama. He'll have to give us more government assistance, more healthcare, probably even a card that allows us to buy gas. Don't you realize, this is one step in a beautiful plan to have government do everything for everyone, and "no one but those nasty rich guys" will have to pay!
Jeesh Check, don't you like all of this? You don't? Well you must be a racist!! hee hee. Change you can count on!!! Yes you can count your change with 5 fingers! That's all that will be left!
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Permalink Reply by Checkmateking on
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I hope I have a little change left in my pocket. So will Russia, India, and China all participate, they will soon surpass America in pollution, if not then all this is nothing but a government scheme to reap huge taxes and further tighten their grip on the working man.
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Permalink Reply by Checkmateking on
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I am not worried about those who benefit from natural gas production, I am worried about the common working man and the massive increases that will be put on the consumer's backs by these ridiculous socialist schemes.
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Permalink Reply by Grillin' - MmmMmm on
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I'm with you there Check! While nat gas prices going through the roof will be great for me and a few others, it will be horrible for others. These programs violate the basic fundamentals on which our country was founded and our capitalist system was built. Socializing programs, government run programs, "spreading it around, you know", was shown to be a failure in many places. I'd rather stay away from that.
And there's also the problem that this new fancy healthcare system will cause all kinds of problems for patients. While there are some deficiencies in our system, it works very well for about 75% of the people. Those people are the ones that will lose when the gov't starts telling doctors what they can and can't do. Its the reason the rich Canadians and Brits come here for their healthcare and pay cash!! Their system sucks and our system is much better!
And cap and trade is nothing more than tax and steal and give it away to the cronies! Who's going to manage this great system...ACORN? Fine group of folks, when they aren't committing felonies. Oh well, we'll see what Barry O is made of with the handling of North Korea and Iran. Hopefully he wore his big boy panties for these folks. I'm guessing his original idea of reaching out and having some dialogue is starting to feel a bit lame. But as a community organizer, that always worked so why not?? Look how nice and organized those communities are now?
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