April 28, 2009 / 7:15 PM / 8 years ago

Obama emissions plan to cost $1,400 a family: study

4 Min Read

WASHINGTON (Reuters) - The Obama administration's plan to impose a cap-and-trade system to cut U.S. greenhouse gas emissions would result in 1.9 million job losses and cost the average household $1,400 a year by 2020, according to a new study released on Tuesday.

The analysis comes as Congress debates the cost on the U.S. economy of passing legislation that would implement a emissions-reduction plan similar to what the White House wants.

"All consumers and businesses would face steep increases in energy costs, leading to a spike in the cost of goods and services throughout the U.S. economy," said Bruce Josten, executive vice president of government affairs at the U.S. Chamber of Commerce.

The Chamber is one of almost 200 associations that are members of the Coalition for Affordable American Energy, which commissioned the study.

The White House wants to slash U.S. greenhouse gas emissions by 14 percent below 2005 levels by 2020, and then by 83 percent by 2050.

Coal-fired power plants, oil refineries and other industries would have to buy permits from the government for the right to spew those emissions. Less polluting companies could sell their permits to firms that exceeded emissions limits.

The administration wants to raise $646 billion between 2012 and 2019 from auctioning off the permits. The money would be returned to certain households and businesses to help them pay for the higher energy costs that would result.

If a cap-and-trade plan is implemented, by 2020 gasoline prices would rise by 13 percent, or 48 cents a gallon, and electricity costs would jump by 27 percent and natural gas expenses would increase by 39 percent, the study said.

"As those fixed costs rise, disposable income will be displaced by higher energy costs, resulting in falling consumption in other areas," said Jade West with the National Association of Wholesaler Distributors, another coalition member.

Supporters of reducing greenhouse emissions say such legislation could create millions of "clean energy" jobs from building solar, wind and other renewable energy facilities that generate electricity. They also claim that thanks to government incentives, households will undertake energy-savings measures like installing insulation and double-windows, to save on their energy bills.

Several studies have been released that are all over the place on the cost of reducing U.S. greenhouse gases.

A report from the Environmental Protection Agency last week concluded that cap-and-trade legislation being debated by the House Energy and Commerce Committee would cost the average household $98 to $140 a year through 2050. Democratic leaders hope the committee will pass the bill by the end of May.

However, there remains strong opposition in the U.S. Senate to pass climate change legislation, especially while the economy is in a recession. But the chances of passing such a bill has improved after Senator Arlen Specter switched to the Democratic Party on Tuesday.

Still, Representative Chris Van Hollen, who serves as assistant to House Speaker Nancy Pelosi, told "The Hill" newspaper that the House may not vote on a climate change bill this year if it has little chance of clearing the Senate.

Reporting by Tom Doggett; Editing by Marguerita Choy

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