Compromises among House Democrats will lower the price slightly for a major climate and energy bill being marked up this week in the Energy and Commerce Committee, U.S. EPA said in a preliminary analysis released today.
EPA's analysis says that major changes to the legislation made during closed-door talks between committee leaders with moderate and conservative Democrats produced a less-aggressive 2020 limit on greenhouse gas emissions, free allowances to local distribution companies that service electric utilities, greater use of international and domestic offsets, and additional incentives for carbon capture and storage.
As a result, EPA said, H.R. 2454 "would likely result in lower allowance prices, a smaller impact on energy bills, and a smaller impact on household consumption" when compared with an earlier study of the legislation when in draft form. The agency did not put dollar figures on its new assessment, but it cited the previous analysis that found allowance prices of $13 to $17 in 2015, as well as a $98 to $140 per year cost from the legislation for individual households.
House Democrats agreed last week to change the draft bill's 2020 emission limit to 17 percent below 2005 levels, compared with an original 20 percent target. EPA determined that the new limits would drop allowance prices by 3 percent. While household energy bills would still go up from the bill, EPA said it would lower the overall impact.
New language that allows industry to purchase domestic and international offsets, including environmentally friendly forestry and farming practices, also will change the legislation's economics. For example, EPA said allowances prices would fall 7 percent per year due to a change giving industry a more friendly formula for funding offset projects. The prices could drop "significantly further" because of a compromise allowing more international projects into the mix.
EPA did determine that allowance prices may see a slight increase because of Democrats' decision to give away 30 percent of the emission allowances for free to the state-regulated local distribution companies "because it will lessen somewhat the incentive for consumers to conserve electricity." But EPA said the allowance price increase "will be overpowered" because of the less aggressive emission caps and use of domestic and international offsets.
Lastly, EPA projects greater deployment of carbon capture and storage technologies between 2020 and 2025 because of new incentives for the electric utility industry.
The agency's latest study of the bill came during the second day of an Energy and Commerce Committee markup that is expected to run through the week.
The first two hours of today's session has been dominated by debate on just one amendment that would create a new energy-technology investment bank (see related story). Republicans have assailed the measure on multiple fronts, including federal studies projecting higher energy bills.
"The costs are going to be astronomical," said Rep. Joe Barton of Texas, the committee's top Republican, during yesterday's opening statements.
Click here for the House Democrats' climate and energy bill.
Click here to read EPA's analysis.
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