|"Negotiations to soften carbon cap and trade legislation’s blow to agriculture, coal, and low-income families could win passage for the bill in the House Friday, reports TheHill.com, but AO finds the move could be at the expense of most consumers.
Americans who are not among the poorest one-fifth of U.S. households may have cause for worry.
H.R. 2454: Eyed by Government as a Revenue Source
H.R. 2454, the Waxman-Markey bill, is intended to reduce U.S. carbon emissions by 17 percent over 2005 emissions by 2020; but carbon emitters may buy themselves something of a reprieve by being able to stock up on emissions allowances, while still being allowed to pass costs on to consumers.
The Congressional Budget Office, which estimates 7,400 facilities will fall under the legislation beginning in 2012, if Congress approves it, has calculated that H.R. 2454 will be a money machine for government:
-Increasing federal revenue by $254 billion over 2010-2014 and $846 billion over 2010-2019
-Increasing direct spending by $241 billion and $821 billion over the respective periods and
-Increasing discretionary spending by $50 billion through 2019
President Obama is counting on cap and trade to generate revenue he needs for his other spending initiatives as discussed in the AOH article, “Cutting Carbon Emissions: Who Pays?” His budget plan assumed that a carbon cap and trade system would be passed and implemented quickly and produce almost $650 billion in revenue from 2012 to 2019. He has pledged to low-income households he will protect them from higher costs with tax credits or rebates (but necessarily subsidized by higher costs on other households).
Making H.R. 2454 Political Palatable to Special Interests
Ironically, the emotional genesis of the measure – to reduce carbon emissions to stave off climate change and its effects, as described by advocates – may not be well served.
So says The Breakthrough Institute. This independent think tank (which supports renewable energy) has come out with a new analysis that shows H.R. 2454 may reduce carbon emissions by only about 2 percent from 2012 to 2020.
The reason, the group says, is all the political maneuvering and shifting of emissions requirements to placate political opponents that appears to be necessary to win support.
In fact, the group estimates that, by 2020, 61 percent of the reductions required by the legislation may exist on paper only – due to provisions that allow emitters to creatively use allowances to skirt reducing emissions in actual practice.
Notably, utilities are coming out in support of the legislation, even in a coal-heavy state like Pennsylvania. The Philadelphia Inquirer quotes an official owning up to power companies’ role in producing 40 percent of carbon emissions and declaring the bill is a “reasonable business approach.”
For utilities and manufacturers, perhaps, since the article points out they can pass along higher costs to consumers. But consumers will see higher energy costs.
The Consumer Pays
Omaha Public Power District described the future under H.R. 2454 in stark terms for its 340,000 electric customers in Nebraska. Click here to see an impactful chart that shows what happens to consumer costs under both an optimistic scenario and a realistic scenario, as assessed by the utility.
-Under the optimistic scenario, consumer costs for these 340,000 electric customers would increase $74 million in 2012 and $410 million in 2030
-Under the realistic scenario, consumer costs for these 340,000 electric customers would increase $238 million in 2012 and $1.3 trillion in 2030
A policy leader with the CATO Institute, who writes WashingtonWatch.com, details the legislation’s costs to consumers nationwide like this:
$3840.82 per person
$7681.63 per couple
$9870.90 per average household
$11522.45 per household of three
$15,363.26 per family of four
Spark for Needed Coal Research
The legislation also gets the government more involved in “clean coal” research, which still faces considerable hurdles as discussed by AOH in “CCS and the Goal of Making Energy Cleaner.” The legislation’s revisions may be in tacit recognition of the reality the world has already recognized: that coal will be needed for decades to come (see AOH, “Coal: World Moves Full Steam Ahead.”)
A Los Angeles Times article this week also acknowledges that coal use will continue unabated under the bill, at least for the next decade."
HR 2454 Cap and Trade tax: $3840.82 per person $11522.45 per household of three
Published: June 25, 2009, 4:36 pm