US carbon bill likely to hike energy costs
Congress passes climate change legislation
June 29, 2009
By Chris Kahn New York
In addition to raising energy prices, the climate legislation that is winding through the US Congress would create a parallel financial system with a carbon-based currency.
The House of Representatives on Friday narrowly passed landmark legislation meant to curb greenhouse gas emissions and create an energy-efficient economy, voting 219 to 212.
On Saturday, President Barack Obama urged senators to follow suit.
Everyone from small farmers to nuclear energy firms would be forced to re-evaluate their place in the new order.
Power plants, factories and oil refineries would feel the first impact if the government moves ahead with plans to cut greenhouse gas emissions by 17 percent from 2005 levels in 2020 and by about 80 percent near the end of the century.
The sharply debated bill's fate is unclear in the Senate. A major struggle is expected, with 60 votes needed to overcome a certain Republican filibuster.
How much it will affect other industries is still a matter of intense debate, although the primary winners and losers are already emerging.
The winners
Solar, wind, geothermal and other renewable energy companies, including nuclear, are some of the obvious winners in a carbon economy.
In addition to the billions of federal stimulus dollars they expect to receive, those industries can expect a huge boost in investment as utilities and power companies are forced to cut their carbon emissions.
Florida Power & Light, Arizona Public Service, Southern California Edison and others are already investing in solar farms and other renewable energy projects. They are likely spend even more to increase the mix of carbon-neutral energy sources.
Farmers will find new ways to make money in a carbon economy. Carbon consultants see huge potential in agriculture for managing carbon emissions. Farmers that till their soil differently or apply new environmental techniques can get money by co-operating with a polluter as a carbon "offset".
Owners of forest land will get a lot of interest from the business community.
Louis Blumberg, the director of climate change for the Nature Conservancy's California chapter, envisions a system in which forest owners could make money by agreeing to cut down fewer trees for lumber.
The Nature Conservancy did just that last year with the Conservation Fund, a nonprofit agency that owns about 9 800 hectares of redwood and douglas fir forest northwest of San Francisco.
The groups changed the logging schedule, and the fund expects to receive about $2 million (R16m) from Pacific Gas and Electric, which participates in a regional climate initiative similar to the one that the Waxman-Markey bill would create around the country.
The losers
Anyone who pays an electric bill is likely to feel the impact of climate legislation. Utilities will try to raise rates as they invest in energy sources that are cleaner yet more expensive. Petroleum companies may try to import more refined petrol and heating oil from countries with no carbon law, which will raise costs.
The Congressional Budget Office estimated the bill would lift energy costs for the average household by $175 a year.
The American Petroleum Institute (API) said the bill could cost the average household up to $3 300 by 2020.
"That is more than a few postage stamps," API president Jack Gerard said in a slap at legislator Edward Markey, who has compared new energy costs to a postage stamp a day.
Oil firms have spent record sums of money lobbying Congress as they try to blunt the impact of the bill. - AP
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