Obama still wants cap & trade; here's the bill

Since the President endorsed the cap-and-trade legislation last night in the State of the Union Address, it seems like we should be reminded of the vast costs that will be incurred from this bill. Here's what the CBO has to say about the Senate version (S.1733):

http://cbo.gov/ftpdocs/108xx/doc10864/s1733.pdf

CBO estimates that the aggregate cost of
mandates in the bill would significantly exceed the annual thresholds established in UMRA for intergovernmental and private-sector mandates ($69 million and $139 million in 2009, respectively, adjusted annually for inflation).

The cap-and-trade program for GHG emissions (excluding HFCs) would require covered facilities to submit one allowance per metric ton of carbon dioxide equivalent emitted beginning in 2012. The compliance costs for covered facilities would be the expenditures made in acquiring allowances, the cost of purchasing offset credits, and the cost of directly reducing their emissions of GHGs.

Based on estimates of those costs and accounting for the initial allocation of free allowances, CBO estimates that the annual cost of this requirement would amount to tens of billions of dollars for private-sector entities and hundreds of millions of dollars for public entities.

Public and private entities also would be required to report information on greenhouse gases to a federal registry. Most public entities and some private entities will be required to report similar information under current law, and therefore the public sector would incur minimal additional costs. However, more private sector entities would be required to report information on greenhouse gases to the registry under the bill. Based on information about compliance costs from EPA’s impact analysis of the current reporting requirement, CBO estimates that the cost for private entities could increase by about $30 million per year.

The bill would authorize the Carbon Storage Research Corporation to levy annual assessments on public and private utilities following a referendum by the affected utilities. The funds collected, along with an allocation of emission allowances, would be used to support the development of technologies related to CCS. The bill also would require state regulatory authorities to indicate whether they support or oppose the creation of the corporation. If the referendum is approved, all utilities would be required to pay the assessments. The assessments would be based on the amount of electricity delivered to retail customers, and would generate between $1.0 billion and $1.1 billion annually. CBO estimates the annual cost would total $150 million for public utilities and $850 million for private utilities in the first year the mandate is in effect. CBO estimates that the annual cost of the assessments would increase to a total of $175 million for public utilities and $925 million for private utilities in subsequent years.

The cap-and-trade program for HFCs would require any entity that produces or imports HFCs, or imports a product containing HFCs, to
submit one consumption allowance or destruction offset credit per mtCO2e of HFC beginning in 2012. The direct cost would be equal to the cost of purchasing allowances and offset credits, and the cost of reducing the use of HFCs. The bill also would impose several other requirements for the use of HFCs, including restrictions on HFCs used in refrigeration and labeling and reporting requirements.

Based on the price of consumption allowances established in the bill, CBO estimates that the cost of purchasing allowances would amount to about $600 million in the first year the mandates are in effect and more in subsequent years.

Still think we need it?