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April 22, 2009

EPA’s Climate Bill Analysis Puts Carbon Prices at $13-17 Per Ton in 2015

In analyzing the climate bill under consideration in Congress, the U.S. Environmental Protection Agency (EPA) estimates that carbon prices will range from $13 to $17 per ton in 2015, and rise by about 5 percent a year, reaching $17 to $22 per ton by 2020, which is in line with the European Union cap-and-trade program, reported the NYTimes.com’s Green Inc. blog.

The Waxman-Markey energy and climate bill, also known as the American Clean Energy and Security Act of 2009, will significantly reduce energy consumption and carbon emissions, according to the EPA’s review. The EPA focused its analysis on the bill’s proposed cap-and-trade program.

EPA’s analysis comes in the wake of its “endangerment” finding that carbon emissions are threat to human health.

Also, just days after the EPA made its endangerment ruling, several countries are establishing their own binding carbon emissions standards.

Lisa P. Jackson, administrator for the EPA, said at a recent hearing that the EPA’s economic modeling indicates that the investment Americans would make to implement the cap-and-trade program would be modest compared to the benefits of a comprehensive energy and climate policy.

According to the WSJ’s Environmental Capital blog, the EPA said the plan would cost households less than $150 a year, ranging between $98 and $140 annually through 2050.

The EPA’s analysis suggests that under the plan, the share of low-carbon and zero-carbon energy sources, including renewables like wind and solar, together with nuclear and carbon capture plants, would rise to 26 percent of the nation’s energy mix by 2030, and could reach 46 percent by 2050, according to the blog. Without the policy, that share would remain at a steady 14 percent, estimated the EPA.

The cap-and-trade program will need to include a mechanism that allows companies to offset their carbon emissions by investing in reductions outside the United States, according to the Green Inc. blog.

However, some environmental groups such as Greenpeace said by awarding tradable credits to countries that reduce deforestation could result in plunging carbon prices worldwide and worsen global warming. But the EPA believes if international carbon offsets are eliminated, it would double the cost of pollution permits, said the Environmental Capital blog.

The House energy committee plans to hold a series of hearings on the proposed bill, and plans to have the legislation ready by Memorial day.

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