Climate plans could cost families $1,600

UPDATED:

Federal proposals to curb carbon emissions will cost American households $1,600 a year, the chief budget analyst for Congress said Thursday.

Any measure that curbs greenhouse gasses by capping emissions and issuing permits for allowable carbon dioxide — called a cap and trade system — would invariably be passed on to consumers in higher costs, said Douglas W. Elmendorf, director of the Congressional Budget Office.

The CBO analysis released Thursday updates research of previous cap and trade proposals and estimates that a 15 percent reduction in greenhouse gasses would cost American families between $700 and $2,200 a year in increased energy and consumer goods prices. The average cost to families would be $1,600, according to the analysis.

The debate over how much a cap and trade plan would cost families has continued on Capitol Hill as lawmakers push for broad limits on greenhouse gas emissions.

Industry leaders have lobbied Congress over the last few weeks seeking free carbon permits under the proposed cap and trade system, although Mr. Elmendorf said firms would pass on higher costs to consumers regardless of how carbon allowances are distributed.

“Those firms would not ultimately bear most of the costs of the allowances,” Mr. Elmendorf said in his testimony before the Senate Finance Committee. “Instead, they would pass those costs along to their customers (and their customers’ customers) in the form of higher prices. Such price increases would stem from the restriction on emissions and in most circumstances would occur regardless of whether the government sold the allowances or gave them away.”

Republican and Democrat lawmakers have split on the analysis of a 2007 MIT study of the costs of a cap and trade plan, but most analyses have settled that the costs of curbing greenhouse gas emissions would be passed along to consumers.