How Will the Climate Bill Affect the Economy (and the Climate)?

How Will the Climate Bill Affect the Economy (and the Climate)?

Hearings on the Waxman-Markey draft climate change bill opened on Capitol Hill this week, days after the U.S. Environmental Protection Agency proposed that rising greenhouse gas emissions fueling climate change pose a risk to public health and well-being.

A few days ago, the EPA unveiled its own analysis of the controversial bill [PDF] with a greenhouse gas cap-and-trade program as its centerpiece. The analysis rebukes claims made in recent days from Republican opponents that a cap-and-trade, or "cap-and-tax," as they've taken to calling it, will cost American households $3,100 a year. (The MIT authors of the study used as the basis for this claim objected to the interpretation.)

According to the EPA analysis, the Waxman-Markey bill would cost U.S. households between $98 and $140 if the revenue from auctioning off carbon permits in a cap-and-trade were returned to consumers. Electricity rates would rise 22 percent in 2030.

The overall goal behind Waxman-Markey is to drive down greenhouse gas emissions in the U.S. 20 percent below 2005 levels by 2020, and by about 80 percent by 2050 in order to avoid the worst impacts from climate change.

Renewable energy penetration would grow by 150 percent over the next 20 years or faster because of the bill's renewable energy standard, the analysis predicts. Carbon capture and storage would go online by 2015.

The analysis pegs the price of carbon dioxide emissions at between $13 and $17 per ton in 2015. But these prices would increase dramatically by 96 percent is international offsets were excluded from the plan.

The bill, however, notably leaves out details of how many permits will be auctioned off, and what will be done with the proceeds.

The EPA presented the finding at the bill hearings, casting the bill as a "jobs bill," not a "job-killer," but judging by reports, the bill faces an uphill battle from opposition from Republicans, as well as some Democrats, particularly those from states dependent on cheap but dirty coal.

Ironically, as climate change bill supporters and opponents wrangle over its potential benefits and pitfalls, the first wave of workers is attending energy efficiency training programs in the Northeast, Doug Struck from the Daily Climate reports. The programs are funded by proceeds from the Regional Greenhouse Gas Initiative (RGGI), the country's first mandatory cap-and-trade program for energy producers in 10 Northeastern and Mid-Atlantic states.

Wind turbine photos CC-licensed by Flickr users Scott Ableman and Neil-Mack.