Energy-Climate Bill Could Boost Electricity Costs 20% by 2030

The climate and energy bill being debated in Congress could boost Americans electric bills by 3 percent to 5 percent by 2020 and by as much as 20 percent by 2030, according to a draft analysis from the U.S. Energy Information Administration publicized Tuesday.

Put another way, the extra costs the bill's cap on carbon emissions would impose on the economy by 2020 could amount to about 0.1 percent to 0.5 percent of gross domestic product, or from $21 to $235 per American household. For 2030, the figures are 0.2 percent to 0.8 percent reduction in GDP.

The report from the Department of Energy's research arm is likely to play into ongoing debate over the American Clean Energy and Security Act of 2009, which seeks to reduce the nation's greenhouse-gas emissions by 17 percent by 2020 and by about 80 percent by 2050.

That would be done through a cap-and-trade system in which various industries would be given some allowances to emit over legal limits, then be forced to curtail emissions or buy offsets to make up the difference (see Come Get 'Em: Gov't Plans to Give Freebies Under Cap-and-Trade).

The version of the bill passed by the house in June also contains mandates for utilities to provide renewable electricity and provisions that would promote the deployment of smart grid and solar energy projects (see a summary of the bill).

Supporters of the bill sponsored by Reps. Henry Waxman, D-Calif., and Edward Markey, D-Mass., have said the imperative to cut back on the country's contribution to global warming far outweigh the costs involved. Those supporters include many in the renewable power, smart grid and energy efficiency industries (see Solar Smart Grid Advocates: Thanks for Passing the Climate Change Bill).

Republican opponents have called the bill a "job-killer," complaining that it will raise costs for industry, business and consumers (see Green Light post). Similar concerns have been echoed by groups such as the U.S. Chamber of Commerce.

Both sides may find support for their arguments in the new EIA draft analysis, notes the New York Times' Green Inc. blog. That's because it contains much uncertainty, given that it relies on assumptions about such things as how the market for carbon offsets, now in its infancy, will grow to meet the needs of companies subject to the bill's emissions limitations.

Previous cost estimates of the bill have ranged widely. The Congressional Budget Office forecast that the cost to American households in 2020 would be about $175, the New York Times reported.

The American Petroleum Institute, an oil industry trade group, claimed the cost to the average family would be about $3,300. The American Council for an Energy Efficient Economy, on the other hand, said that the bill's incentives for improving energy efficiency could save the typical American household about $4,400 by 2030.

Democrats in Congress have said they'd like to see the bill passed this year so that President Barack Obama can take it to Copenhagen this December to work on an international treaty to succeed the Kyoto Protocol.

Some Congressional observers have cast doubt on whether that can be done, given the controversy over the bill and competing issues before Congress, such as proposed health care reform.

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