Posted by Matt Dempsey email@example.com (4:00pm ET)
Senator James Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee, joined Senators George V. Voinovich (R-OH) and John Barrasso (R-WY) in saying today that new Energy Information Administration (EIA) analysis reinforces the need for a full analysis of the Lieberman-Warner bill now before the EPW Committee. New analysis from the EIA released this week shows energy costs for consumers and employers will be even more expensive – and burdens on hard-working Americans, the elderly and the poor will be even more severe – if Congress adopts carbon mandates but fails to enact policies to increase domestic energy supplies.
In response to a request from Senators Voinovich, Barrasso and Inhofe sent in mid-September, EIA found that cap-and-trade legislation, without new nuclear power plants and rapid deployment of biomass and clean coal technology, will cause huge increases in electricity and natural gas prices.
Senator Voinovich: “The energy supply crisis in the United States is sending jobs to China, destroying our manufacturing communities and forcing consumers to pay even higher energy bills. If we pass cap-and-trade legislation without increasing energy supplies, our country could face an economic catastrophe, and what’s left of our good-paying jobs could vanish.”Senator Barrasso: There is no incentive in this bill for China and India to follow our lead if we are going to weaken our economy, lose jobs, and penalize companies. Hard-working taxpayers need clean, affordable energy, period. Wyoming has tremendous energy resources which cannot be ignored."
Senator Inhofe: “This finding proves what I have always feared. Imposing limits on carbon emissions without new sources of low-emission energy will result in a crushing financial blow to Americans everywhere, especially to the poor. Yet, in hearing after hearing, it has become clear that the environmental community plans to erect barriers to new nuclear power and increased natural gas supply – which would be essential in meeting our energy needs in an emissions constrained world. It’s the classic bait-and-switch. But this study reveals how costly it will be if we fall prey to that trap.”
In July of this year, EIA analyzed S. 280, the Climate Stewardship and Innovation Act of 2007 and found that the bill – which was introduced by Senator Lieberman – would have devastating economic consequences if enacted. Notably, S. 280 is less stringent than the Lieberman bill now being considered by the Environment and Public Works (EPW) Committee.
EIA’s analysis of S. 280 includes many assumptions, including a substantial increase in nuclear power generation. EIA assumed about 150 new nuclear plants (approximately 150,000 megawatts) will be added within 30 years – a figure the nuclear industry would readily admit is a political and practical impossibility because:
*There has not been a new order to build a nuclear plant in the United States in the last 30 years;
*There is no manufacturing infrastructure nor enough skilled workers to build and operate about 150 new nuclear plants within 30 years; and
*The nuclear industry has pointed out it will be difficult to even build 30 new nuclear plants in that time period.
EIA also assumes an increase in biomass generation and the development of carbon and capture sequestration technology that – due to political, regulatory and financial obstacles – will be extremely difficult to achieve. Even under those optimistic assumptions, the overall costs of the bill would be staggering.
By employing more realistic assumptions, EIA found that “restricting the use of multiple low- or no-emission electricity generation technologies increases the use of natural gas for power generation and raises natural gas prices, electricity prices and CO2 permit prices.”
For example, in the alternative cases examined:
*Higher natural gas use means natural gas prices are 41 to 53 percent higher in 2030 than business as usual projections.
*Electricity prices in 2030 are between 34 to 40 percent higher than business as usual projections.
The senators also requested that EIA model impacts beyond 2030. While EIA is currently unable to process this request, estimating the costs of climate change legislation beyond 2030 is extremely important, as the costs of a mandatory program are likely to be greatest after that point. For example, in testimony before the EPW Committee last week, Dr. Anne Smith of Charles River Associates International said the Lieberman bill would cause welfare losses of $4 to $7 trillion between 2010 and 2050.