WASHINGTON – Reducing greenhouse gases blamed for global warming will mean higher energy costs, but no one can say with certainty how much of a price increase Americans will be facing, senators were told Tuesday as Democrats floated a proposal for huge tax breaks aimed at blunting some of the economic impact.
Meanwhile, the Energy Department said that heat-trapping carbon dioxide releases increased by 1.6 percent last year, with most coming from residential and commercial energy use. The higher emissions in 2007 came from a greater demand for heating and cooling homes and office buildings because of weather. Emissions from transportation and industrial sources remained flat, compared with 2006.
Carbon dioxide, the leading greenhouse gas linked to global warming, declined in 2006, also because of weather-related circumstances.
At a Senate hearing, witnesses described the result of several government studies, using computer models that produce a wide range of estimates on the economic costs of cutting greenhouse gases to avert a dangerous warming of the earth.
While each of the studies predicted continued economic growth, they also said that the rate of growth could either decline significantly or only modestly depending on how efficiently the society shifts away from burning fossil fuels to alternative sources of energy such as solar, wind and nuclear power and to greater energy conservation.
“There will be economic costs. … However, in all cases the U.S. economy grows over time,” said Brian McLean, director of atmospheric programs at the Environmental Protection Agency. The agency produced estimates using five different scenarios and projected a rollback in economic growth of from under 1 percent to as high as 3.8 percent by 2030, and more significant economic penalties by 2050 as a result of Senate climate legislation.
The bill, expected to be brought up for debate on the Senate floor next month, would require mandatory limits on greenhouse gas emissions from power plants, industry and transportation, with an expectation of cutting heat-trapping pollution 71 percent from these sources by mid-century.
An analysis by the federal Energy Information Administration said people’s annual energy costs could increase on average of as little as $30 or as much as 10 times that much by 2020. The projected cost increases per household ranged from $76 a year more to as much as $723 a year more by 2030.
But Larry Parker of the Congressional Research Service told the hearing none of the studies can be relied upon to give predictable cost estimates. “What is the real cost. None of the (computer) models give you that cost,” said Parker.
That left senators concerned.
“My constituents are telling me, what does it mean to my household. … We need to give them some assurance,” said Sen. Lisa Murkowski, R-Alaska, calling the various estimates “mind-numbing.”
The extreme estimates predict “massive disruptions to the economy” and others suggest “little or no costs,” said Sen. Jeff Bingaman, D-N.M., chairman of the Energy and Natural Resources Committee. “Given this wide disparity of findings, it can be difficult to navigate…and understand what the true impacts of legislation will be.”
Sen. Pete Domenici of New Mexico, the committee’s ranking Republican, worried that climate legislation will “result in high energy prices, lower economic growth and little environmental benefits” if other nations also take action to curb greenhouse gases.
To try to blunt the debate over costs and the burden of climate legislation on average Americans, Democrats revised the Senate bill. They proposed huge tax reductions to help people pay higher energy prices as a result of the shift from fossil fuels to other energy sources and carbon dioxide capture. The money would come from auctioning off greenhouse gas emission allowances to utilities and industry.
The revised bill would set aside $800 billion between now and 2050 to provide tax breaks to consumers to help pay for higher energy costs. The details of the tax measure has yet to be developed. The revised measure also would funnel nearly $750 billion to help industry, coal-burning utilities, refineries and other energy companies “transition” away from fossil fuels and carbon reductions.
The cost of dealing with global warming is expected to be the focus of the Senate debate next month.