Energy bill nears vote in House, but what's in it for consumers?

McClatchy NewspapersJune 22, 2009 

WASHINGTON — How much will it cost the average American household to reduce the U.S. share of global warming pollution and shift to cleaner sources of energy produced at home?

If Congress passes a law that puts the country on a path to that outcome, the answer on costs will depend on what kind of consumer protections are part of the new policy. The House of Representatives could vote on a bill produced by Reps. Henry Waxman, D-Calif., and Ed Markey, D-Mass., this week or after lawmakers return from their July 4 holiday break.

Backers of action to protect the climate are divided on how to do it in the smartest and cheapest way — and especially on what policies will best protect consumers from a loss of spending power as fossil fuel prices rise.

The question of costs is just one slice of the debate. The broader question is whether the bill goes far enough to reduce the share of global warming pollution from the U.S. — the world's biggest emitter on a per capita basis — and whether this and other U.S. efforts on climate protection will make it more likely that other countries — particularly China, the world's biggest greenhouse gas source — make reductions commitments of their own in international negotiations coming up this December on a global accord.

The bill would reduce U.S. emissions by 17 percent below 2005 levels by 2020 — or about 4 percent below 1990 levels, far short of the 25 percent or more cut by industrialized nations that international scientists recommend. In 2050, the bill would cut emissions by 83 percent below 2005 levels.

The bill's backers say that other parts of the legislation, such as investments to protect forests, would reduce emissions further, and that the Obama administration has gotten a jump on reductions through such separate measures as tighter fuel efficiency and tailpipe emissions standards.

However, some critics said the bill wouldn't reduce emissions of heat-trapping gases because it would let power plants or large factories buy permits to pollute. Some environmental groups said the bill's renewable energy standard, a national requirement for electricity supplies to depend more on renewable energy and efficiency, is too weak. The final negotiations were with rural lawmakers.

If the House passes the bill, the Senate will start putting together its version of climate protection and energy legislation this summer.

The bill would set a mandatory limit on emissions that would be lowered each year. Large sources of emissions such as power plants would have to buy permits for each ton of emissions. Companies could buy and sell the permits as needed, and the market would set the price.

"It's the preferred approach now, it's safe to say, by the private sector and the major environmental groups," said Vicki Arroyo, the executive director of the Georgetown State and Federal Climate Resource Center at Georgetown University.

The Environmental Protection Agency has estimated the allowances prices and figures the total amount would start at $60 billion in 2012 and increase.

"This is the biggest creation and allocation of property rights since the Homestead Act," a distribution of government lands signed by President Abraham Lincoln in 1862, said James Boyce, an economist at the University of Massachusetts.

Instead of territory, the new property is the right to emit greenhouse gases into the atmosphere, and the question is who owns this right, Boyce said. "People do need to pay attention to this, because if they're asleep when this all gets carved up, they're going to be left paying the prices without getting their share of the revenue."

House Republicans claim it would cost households $3,100 a year. Their energy proposal wouldn't limit emissions, but would expand nuclear energy and the use of oil and coal.

The independent Congressional Budget Office reported the cost of mandatory emissions cuts in the bill per household would be much less than the Republicans' estimate — $175 a year in 2020. It also said that households in the lowest 20 percent of income earners would come out ahead by $40.

The CBO considered both the energy costs households would pay and the benefits they'd get from sharing in the value of emissions permits.

The bill includes policies that would distribute about 55 percent of the value from the sale of permits to consumers indirectly through the regulated utilities that distribute electricity and natural gas and the states.

An alternative approach would require the federal government to sell all the permits and return the proceeds to all Americans on a per capita basis.

Proponents of that approach said the safeguards in the bill before the House are inadequate.

The bill divides up the money to many players, and the last-minute negotiations could result in some changes.

The consumer portions of the spending include:

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