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Obama Officials Tout House Cap-and-Trade Proposal

Obama administration officials Wednesday touted draft House legislation that would cap and trade greenhouse gas (GHG) emissions, calling it a jobs-creation bill that would not adversely effect the economy and energy prices. However, they had little data to back up their claims.

"It will increase the price at the pump," but the impact of a cap-and-trade system on the cost of living for American people "will be as moderate as possible," said Energy Secretary Steven Chu during a joint committee-subcommittee hearing on the discussion draft of the American Clean Energy and Security Act of 2009. But he did not have actual figures. Chu said he would call on the Energy Information Administration to more closely examine the bill's impact on energy prices.

The 648-page draft measure was proposed by Reps. Henry Waxman (D-CA), chairman of the House Energy and Commerce Committee, and Edward Markey (D-MA), chairman of the Subcommittee on Energy and Environment (see Daily GPI, April 2). Waxman told lawmakers on the panel to brace for quick action on the cap-and-trade legislation. He said he expects to have the controversial bill marked up and voted out to the House floor by the Memorial Day recess. "The pace is going to accelerate over the next four weeks."

Environmental Protection Agency (EPA) Administrator Lisa Jackson conceded that the agency had not done any modeling on job creation, but "common sense" says this will occur. Rep. Ed Whitfield (R-KY), however, cited a Spain study that found that for every green job created, 2.2 jobs were lost.

As for the economic impact of the legislation, "EPA's economic modeling indicates that the investment Americans would make to implement the cap-and-trade program...would be very modest compared to the benefits," Jackson said. In an analysis released Tuesday, the EPA estimated that the bill's average annual cost per household would range between $98 and $140, which Democrats claim is relatively modest compared to the expected benefits.

The analysis further concluded that the price of emission allowances would be less than what was projected for a similar bill in the Senate last year, CQ Today reported. Allowance prices would be between $13 and $17 per ton of emissions in 2015, and $74 to $96 per ton in 2050, the EPA said. This compares to the projected cost of $20 to $50 per ton in 2015 and $160 to $200 per ton in 2050 in the Senate bill.

Jackson conceded that the EPA had to make "quite a few assumptions" with respect to the prices. She noted that the agency will do additional modeling when the House legislation is complete.

But Rep. Joe Barton (R-TX), the ranking member of the House energy panel, said a cap-and-trade system is going to be "very, very expensive," at least $2 trillion over an eight-year period (see Daily GPI, April 22). He acknowledged that he is a "skeptic" about cap-and-trade. Putting "some kind of blind faith in a cap-and-trade system...will deindustrialize the United States in 40 years," he said.

"Some say [that] true energy reform will undermine our economy. They argue that there is a fundamental conflict between economic growth and clean energy. This is a false choice," Waxman countered. Forty years ago the House energy committee passed the original Clean Air Act (CAA), which Waxman said has reduced dangerous air pollutants by 60% or more.

And 20 years ago the House energy panel passed the 1990 amendments to the CAA. "Opponents of the legislation said that stopping acid rain would bankrupt the utility industry. In fact, we cut emissions in half at a fraction of the cost the naysayers predicted," he said. "It is no longer a question of whether we will act to reduce [carbon] emissions," he noted, adding that the EPA answered that question last week when it declared that GHG emissions endangered public health (see Daily GPI, April 20).

Despite the recent action by her agency, EPA's Jackson said she believes legislation, rather than regulation, "is the best way to address the problem of global warming and greenhouse gas emissions."

The EPA's endangerment finding "is the first step in regulating...greenhouse gases via the Clean Air Act," said Jackson, but she added that it was "more efficient to do it via new legislation, like this discussion draft envisions." She noted that the Waxman-Markey bill "does a much better job than the EPA" could do.

"I believe this committee can make history again this year," Jackson said. The "no-we-can't crowd" will spin out "doomsday" scenarios about runaway costs. But she pointed out that efforts to control acid rain, which had a number of detractors at the time, has delivered annual health and welfare benefits of more than $120 billion at an annual cost of $3 billion.

Referring to the reduction targets for GHG emissions, Chu said, "I think they're aggressive but we can meet them." The Waxman-Markey draft language would mandate an 83% reduction in GHG emissions by 2050 and calls for greater use of renewable energy sources in the generation of electricity.

If the United States takes the lead on carbon reduction, Chu believes that China will follow. The two countries account for 50% of the carbon emissions in the world, he said.

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