EPA Previews Carbon Caps' Impact

By STEPHEN POWER
WASHINGTON -- A proposal in Congress to cut U.S. greenhouse-gas emissions by putting a price on carbon could raise prices for electricity by 22% and natural gas by 17% in 2030, according to a study by the Environmental Protection Agency.

But the impact on consumers would be modest, provided the government returns the bulk of the money raised by a carbon cap-and-trade system to households, the analysis showed.
If that happens, the analysis showed the average American household would pay an extra $98 to $140 a year -- 27 cents to 38 cents a day -- to cut greenhouse-gas emissions as proposed by the bill, which the House will begin debating in earnest Wednesday.
The EPA published the analysis on its Web site Tuesday, just as House Energy and Commerce Committee Chairman Henry Waxman (D., Calif.) and Rep. Edward Markey (D., Mass.) were opening the first of four days of hearings on their measure, which calls for cutting U.S. emissions 20% below 2005 levels by 2020 and roughly 80% by 2050.
The EPA analysis represents the first published examination by any government agency of the Waxman-Markey bill.
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The EPA analysis cautions that there are "a range of uncertainties" surrounding the Waxman-Markey measure that "could significantly affect the results."
In a sign of the difficulties that Democrats could face in passing climate legislation, a senior member of Mr. Waxman's panel, Rep. Rick Boucher (D., Va.,) said in an interview Tuesday that the chairman's proposal to cut emissions 20% by 2020 is "a stretch" and "absolutely could not be achieved," unless it was amended to give companies more credit for so-called offset projects that aim to cut emissions through undertakings like preventing deforestation.

Mr. Boucher, whose district is rich in coal, said he is preparing recommendations on ways to amend the bill to attract the support of lawmakers and industry groups with similar concerns.
The EPA analysis, which was requested by Reps. Waxman and Markey, focused mainly on the effectiveness and projected costs of the lawmakers' proposed cap on emissions. Citing time limitations, the EPA said it didn't try to assess the impacts of other provisions in the bill, such as those that would mandate energy efficiency improvements by appliances and buildings, or some of the energy-related provision in the recently passed economic stimulus legislation.—Ian Talley contributed to this article.
Write to Stephen Power at stephen.power@wsj.com