WASHINGTON (Dow Jones)--The leading congressional proposal to control greenhouse-gas emissions could be implemented without significantly harming the nation's economic growth over the next two decades, an analysis published Friday by the Bush administration found.
But the analysis also gives ammunition to critics of the proposal, by predicting that gas prices and electric rates will rise more rapidly if the proposal becomes law rather than if no caps on carbon-dioxide emissions are set.
The analysis, published Friday by the Environmental Protection Agency, has been eagerly awaited by business groups and environmentalists for months and is likely to be cited in the weeks ahead as Congress wades deeper into the debate over how to curb greenhouse gas emissions.
It represents the first time the Bush administration has quantified the costs associated with legislation sponsored by Senators Joseph Lieberman, an independent from Connecticut, and John Warner, R-Va., to cap emissions of carbon dioxide, the main gas behind global warming.
A Senate floor vote on the Lieberman-Warner bill is expected to occur within a few months. The bill would cap greenhouse gas emissions from power plants, factories, oil refineries and other polluters. Companies that exceed the limits would to buy credits from other companies that more than meet them.
The three major presidential candidates - Democrats Barack Obama and Hillary Clinton, and Republican John McCain - have all backed proposals to cap carbon-dioxide emissions and allow for trading of credits, though they differ on how such a system should be structured. The analysis comes as supporters and opponents of climate-change legislation are trumpeting any data that will bolster their cause. It follows recent warnings from the Bush administration about potential economic hardships that such caps might inflict on the economy.
Earlier this week, the EPA's administrator, Stephen Johnson, testified before Congress that if his agency determines greenhouse gas emissions endanger health or welfare, it could have to impose costly new permitting requirements on a range of relatively small emitters of CO2, including "large apartment buildings, schools, hospitals and retail stores."
As a result of those dire warnings, the agency's relatively positive findings about the Lieberman-Warner bill were immediately seized upon by groups and politicians that support it. "This is the start of the modeling wars," Tony Kreindler, a spokesman for the Environmental Defense Fund, said.
The chairwoman of the Senate Committee on Environment and Public Works, Barbara Boxer, D.-Calif., said in a written statement that "even they [Bush administration officials] could not stop the truth from coming out about the benefits of action."
The EPA did not respond to phone and email messages seeking comment on the analysis. According to the analysis, if the United States were to implement the Lieberman-Warner bill, U.S. gross domestic product would grow by 80% from 2010 to 2030, one percentage point less than its growth in the absence of the bill.
That scenario is based on some assumptions that even supporters of the Lieberman-Warner bill acknowledge are ambitious. For example, it assumes there will be "substantial growth in nuclear power," according to the document, despite widespread opposition from many environmentalists to nuclear power.
However, supporters of the legislation noted that the analysis doesn't account for the effects of a sweeping energy bill, passed by Congress in December. The bill mandates the biggest increase in automobile fuel economy standards in decades and sets tough new efficiency-requirements on light bulbs.
Those changes are expected to significantly cut energy consumption, making the Lieberman-Warner bill's goals more attainable, the bill's supporters say. The analysis does provide talking points for opponents of the legislation.
It finds, for example, that the proposal would cause electric prices to increase 44% in 2030 and gasoline prices to rise by 53 cents per gallon by that year. Such increases would be borne disproportionately by those least able to afford it, critics of the bill say, including the elderly, the poor, and those on fixed incomes.
"The more you raise utility prices and the price of gasoline, the harder the impact will be on the lowest earner in the American economy," said Scott Segal, director of the Electric Reliability Coordinating Council, a Washington-based group that represents power companies. "It's more regressive than any tax you can think of."
The agency's analysis will not be the administration's last word on the costs associated with the Lieberman-Warner bill; the Energy Information Administration, an arm of the U.S. Energy Department, is conducting its own analysis of the legislation, and is expected to report its findings in April.
-Stephen Power, The Wall Street Journal; 202-862-9269
(END) Dow Jones Newswires