The Waxman-Markey US climate bill: how much will it cost?

As the US climate bill progresses to the next stage – last week were the hearings on the bill, including testimony from Al Gore, and on Tuesday the “mark-up” should start – debate is heating up on whether the bill is a disaster for the American family or a blueprint for more jobs.

Opponents of the bill have slammed it as an energy tax which would destroy jobs. Some have quoted an MIT study they said showed the bill would cost $3,000 for each household in the US. The MIT authors of the study have said this is a gross misinterpretation of their research, which found no such thing, and that the real cost was likely to be about $340 per household.

The Institute for Energy Research is saying it will cost very household $6,700. However, two new studies have now been published suggesting that the cost to US households will either be much smaller, or that in fact they will make a net financial gain.

The Union of Concerned Scientists, in a study entitled “Climate 2030: A National Blueprint for a Clean Energy Economy,” found that implementing a suite of climate, energy and transportation policies would allow the United States to meet an emissions-reduction cap of 56 percent below 2005 levels by 2030 and save consumers and businesses $465bn in that year. The average U.S. household would enjoy a net savings of $900 on its energy bills, including $580 on transportation (fuel, vehicle and driving) costs and $320 on electricity, natural gas and heating oil, after investing in home efficiency improvements. Businesses collectively would realize net energy bill savings of $130bn, the scientists said.

A separate analysis from the US Environmental Protection Agency found that the cap on carbon proposed by Reps. Henry Waxman and Ed Markey could be achieved for about $98 to $140 per year per household – or roughly 12 cents per person per day at the lowest end of the range.

“For as little as a dime a day we can solve climate change, invest in a clean energy future, and save billions in imported oil,” said the Environmental Defense Fund’s director of economic policy and analysis Nat Keohane.

EPA’s analysis confirms what all credible economic models have found, which is that we can easily afford to reduce carbon pollution,” he said. “In fact, the most expensive climate policy is not having one at all. In the real future – not the fantasy land that opponents of action live in — continuing along the so-called business as usual path will incur huge costs from leaving climate change and oil addiction unaddressed.

But environmental groups are also worried that the provision in the bill to allow carbon offsetting constituted “a giant loophole”. A coalition of environmental and social justice groups delivered a statement to the offices of Reps Waxman (D-CA) and Markey (D-MA), the sponsors of the bill, saying that this provision could actually result in an increase in US greenhouse gas emissions until 2026.

The coalition said:

The offset provisions in the “American Clean Energy and Security Act 2009” allows U.S. polluters to exceed the federal emissions cap by up to 2 billion tons of carbon dioxide each year by buying offset credits. Two billion tons of carbon dioxide is about 30 percent of annual U.S. emissions; this amount would create the world’s largest single market for carbon offsets.

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