The Senate's plan for an economywide carbon cap would probably reduce gross domestic product by 0.2 percent from 2013 to 2035, reducing household consumption by about $206 dollars a year, according to an Energy Information Administration analysis released today.

But the impact on consumers would be mitigated, EIA says, by dedicating 12 percent of the allowance revenues to protect people with low incomes and offering a refundable tax credit that would be paid out with unused revenues from the bill.

The 23-page analysis was sought by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.), the authors of the bill, shortly before it was was rolled out on May 12. A lot has changed since, with Graham dropping off the effort completely, and the remaining duo scaling back to an power plant-only plan amid widespread predictions that no carbon cap can pass this year.

The analysis lays out more optimistic and more dire scenarios as well, but each indicates some reduction in gross domestic product. In the most optimistic scenario, GDP would drop 0.1 percent by 2035, while in the worst-case scenario it would drop a full percentage point.

In the best-case scenario, analysts assume that a broad array of new technologies are developed to reduce and eliminate emissions of greenhouse gases. In the worst-case scenario, passage of the law spurs no innovation beyond what is expected to develop without a climate bill.

In the "basic case," EIA found, the impact on jobs would be "fairly small." Employment stays "within 0.1 to 0.2 percent" of the no-climate-bill scenario in all but the worst-case scenario.

In that "basic case," EIA analysts assumed that passage of the bill spawns new innovations in energy technology, such as carbon capture and storage, which are adopted on a large scale. It also assumes that the use of offsets, both domestic and international, is not severely constrained by cost, regulation or problems negotiating agreements with other countries.

The analysis says natural gas will be a key component for electric generation until at least 2027, as the share of generation from coal plants falls under the bill. If nuclear, renewable and fossil fuel plants with carbon capture and sequestration are not developed and deployed in order to meet the emission reductions of the bill and there are limited offsets, gas will play an even greater role reaching 39 percent of the fuel mix by 2035, the analysis says.

The bill would also add significant pressure on the electric industry to add new electric capacity between now and 2035 because of the retirement of coal-fired power plants, EIA says. "The additional capacity requirements in all the APA cases suggest the need for review of siting processes so that they would be able to support a large-scale transformation of the U.S. electricity infrastructure by 2035," the analysis says.

Kerry and Lieberman, without Graham, unveiled their economywide bill in May, but the pair were unable to attract the necessary support from moderate lawmakers to give the bill, dubbed the "American Power Act," a realistic chance of reaching the 60-vote threshold needed to avoid a Republican filibuster. The two senators have since shifted their attention to a scaled-down carbon cap that would limit emissions only from the utility sector.

Senate Majority Leader Harry Reid (D-Nev.) has said that the energy and climate package he plans to bring to the Senate floor by the end of the month will look to limit pollution from power plants, but he has so far given no indication about how the legislation will achieve that.

Big push by Lieberman and Kerry

Kerry and Lieberman have been working overtime in recent days to keep their latest proposal alive. Kerry has held several meetings with the utility sector in a bid to find a compromise that would bring it on board with the scaled-down cap but so far has failed to strike a deal.

Making matters worse for backers of the utility-only approach is that the same moderate senators that they would need to win over are growing increasingly skeptical that such a deal can happen by the time Reid unveils his bill.

"Everybody knows it's not going anywhere," Sen. Judd Gregg (R-N.H.) said yesterday of the utility-only option.

Graham, who had worked with Kerry and Lieberman to craft their original, more sweeping proposal before withdrawing his support at the last minute, believes that regardless of whether Kerry can strike a deal with the utility sector, the plan would still be branded by Republican leadership as a tax increase.

"This is a pretty tough environment to get people to take difficult votes because no matter what you do on the climate side, it's going to be called cap and tax," said the South Carolina Republican, who has said he could support a utility-only cap but likely not this year.

An EPA analysis of the bill released last month found that it would cost households between $80 and $150 annually over the next 40 years. But the report also found that households' energy bills will decrease through 2030 under the legislation.

EIA, EPA and the Congressional Budget Office all studied the House-passed climate bill (H.R. 2454) last year.

On average, EIA found that the House bill would curb household consumption by $83 a year between 2012 and 2030 under a "basic case" scenario in which low-emission technology is developed on schedule and critical offsets are not constrained. EIA's findings last year resembled those of CBO, which projected a cost of $175 per year (2010 dollars), and EPA, which expected a cost of $80 to $111 per year (2005 dollars).