Energy sector challenges EPA blessing of Senate climate bill

15 June 2010 23:21  [Source: ICIS news]

WASHINGTON (ICIS news)--The US Environmental Protection Agency (EPA) said on Tuesday that a new Senate climate bill would help reduce US emissions of greenhouse gases without imposing major costs on consumers, but industry officials challenged that estimate.

In its analysis, the EPA said that in conjunction with an as yet uncommitted emissions reduction plan by industrialised nations the “American Power Act” (APA) would cut US greenhouse gases sufficient to keep global temperature increases this century to less than 2 degrees Centigrade (3.6 degrees Fahrenheit).

The American Power Act, sponsored by senators John Kerry (Democrat-Massachusetts) and Joe Lieberman (Independent-Connecticut), would phase in a cap-and-trade emissions mandate over a period of years, beginning first with electric utilities and later incorporating all industries.

Kerry and Lieberman said that their emissions cap plan and the sale of permits would generate funds to compensate lower income families for the higher utility bills that would result, and the emissions permits revenues also would fund alternative energy research.

The EPA study said that the senators’ bill would raise living costs for average families - because higher energy costs would mean increased prices for most manufactured goods - but that those costs would be less than $150 (€123) per family per year over the 20-year life of the legislation.

The EPA analysis is important because many senators, Democrats as well as Republicans, have been reluctant to support the Kerry-Lieberman bill for fear it will raise energy costs significantly for American consumers. 

Opponents of the measure, and even some senators who otherwise might favour climate legislation, especially want to avoid voting for what they consider an energy tax during this election year.

The EPA analysis could provide some political cover for Democrat allies of Kerry and Lieberman, although it was not likely to sway any Republican senators.

But the Institute for Energy Research (IER) charged on Tuesday that the EPA analysis of the Kerry-Lieberman bill was unrealistic and concealed what would be catastrophic energy cost increases for US consumers and industry.

The institute, an energy industry think tank, said that EPA “has a history of systematically underestimating the costs of cap-and-trade legislation”.  It said that an earlier EPA evaluation of the climate bill passed last year by the House was far more optimistic about that measure’s cost savings and environmental benefits than an analysis done by Congress itself.

“We can argue about how high the costs of this legislation will be, but no one denies that the consumer will end up with less money in their pockets after this legislation is signed into law,” said Thomas Pyle, IER president.

Pyle noted that even President Barack Obama has conceded that under a cap-and-trade emissions mandate, US electricity prices would “necessarily skyrocket”.

The institute also said that according to EPA’s own analysis, the energy costs imposed by Kerry-Lieberman would result in global temperatures being only one-fifth of a degree Fahrenheit less than they would be otherwise.

The Kerry-Lieberman bill or parts of it might be combined with other energy and climate legislation that Senate Majority Leader Harry Reid (Democrat-Nevada) is said to be planning for introduction before the Senate’s month-long August recess.

($1 = €0.82)

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