EPA gives thumbs up to affordable Senate climate bill

The US Environmental Protection Agency (EPA) this week released initial findings from its economic analysis of the potential impact of the climate bill proposed by senators John Kerry and Joe Lieberman, concluding that it would have only a modest impact on household costs.

The EPA said that if enacted, the bill would actually lead to a small reduction in consumer energy costs over the next decade, before driving up prices slightly in the coming decades. It predicted that ultimately the bill would lead to an increase in average household costs of between $79 (£53) and $146 a year by 2050.

The independent analysis, which is required as part of the process designed to deliver a Senate vote on the bill, also suggested that the carbon price imposed through the legislation's emissions cap-and-trade scheme would remain relatively modest.

It predicted that the price of carbon permits would stand at between $16 and $17 a tonne in the first year of the scheme's operation in 2013 before rising to $23 to $24 per tonne by 2020.

The analysis was welcomed by supporters of the legislation, who have long argued that it would have little short-term impact on the economy.

Senator Kerry told reporters that the independent research highlighted how well-designed climate change and energy legislation was "good for American consumers". He also stressed that the analysis failed to account for the economic benefits that would arise from tackling global warming and limiting climate change risks.

However, observers on Capitol Hill said the analysis was unlikely to convince Republicans opposed to the bill who have consistently argued that elements of the legislation constitute an "energy tax" that will harm the US economy.

A similar study is also awaited from the Energy Information Administration, which is regarded as being at a greater distance form the Obama administration's position and as such may prove more effective at winning over opponents to the bill.

The analysis comes as president Obama prepares to meet next Wednesday with key Republican and Democrat senators to discuss how to move forward with the proposed climate bill.