While two prominent lawmakers have said they found room to agree on comprehensive climate change legislation in the Senate, the potential cost of a House climate change bill (HR 2454) still has some senators shaking their heads.

“We believe that investment and innovation, rather than taxes and regulation, is the way to go to address this,” Sen. Sam Brownback (R-KS) said Wednesday during a Senate Energy and Natural Resources Committee hearing on the economic effects of HR 2454. “You should go on a different model than this, and one that I don’t think involves near the speculation nor the market manipulation that this panel is talking about. You’re talking about a massive market manipulation here on a grand scale that has significant impact…particularly on the Midwest and the South in this country.”

Implementation of HR 2454 could add 20% to electricity bills by 2030, according to an analysis of the legislation performed by the Energy Information Administration (EIA). The study’s basic reference case foresees electricity prices of 12 cents/kWh by 2030, 20% higher than current EIA projections. Other scenarios used in the EIA study pointed to 11.1-17.8 cents/kWh electricity prices by 2030.

The House climate change bill would reduce gross domestic product below what it would otherwise have been by as much as 0.75% in 2020 and by as much as 3.5% in 2050, according to a recent Congressional Budget Office (CBO) study (see Daily GPI, Sept. 22). The bill, which seeks to cut greenhouse gas emissions by 83% in 2050, would take a toll on oil and gas producers, the CBO study said. A separate study by Congressional Research Service (CRS) dismissed many of the cost studies for the House cap-and-trade bill.

In testimony Wednesday officials from CBO, EIA, EPA and CRS said forecasting the long-term economic impact of legislation “is tenuous at best.”

“Assessing the economic impacts of climate change in that quantitative way is very, very difficult,” said CBO Director Douglas Elmendorf. “Our view is that over the next few decades the economic losses from policies to avert climate change would exceed the economic gains in terms of climate change. At some point over the longer term those lines may cross as the expected cost and the risk of climate change rise, but we’re just not able to quantify those and the crystal ball really just does get too hazy for us to want to be attaching exact dollar values to that.”

Sens. Lindsey Graham (R-SC) and John Kerry (D-MA) have outlined a framework for reaching agreement on comprehensive climate change legislation in the Senate, which would include provisions on promoting nuclear generation and expanding oil and natural gas development (see Daily GPI, Oct. 14). Kerry is co-sponsor of the Senate climate change bill, which is pending in the Environment and Public Works Committee (see Daily GPI, Oct. 1).

Some energy analysts have said it’s unlikely that there will be time for the House and Senate to conduct a conference on the bill, vote on it and send it to the president by year-end.

The final climate change package should be modeled on the emissions trading program that has been developed in Europe, according to Sen. Jeff Bingaman (D-NM), chairman of the committee.

“My impression is that the greenhouse gas emissions trading program in Europe has shown that emissions trading can be successful at reducing emissions without having a disastrous effect on the economy. While it’s true that the European emissions trading program experienced significant volatility in its initial experimental phase, they have learned from their trial period and they’ve made important improvements to that system. We need to learn from the experience they’ve had,” Bingaman said.

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