WASHINGTON – The long-term economic costs of a climate bill being considered in Congress would be “comparatively modest” in light of expected overall economic growth over the next 40 years, according to a congressional report released Friday.
The nonpartisan greenhouse gases, would cause the economy, or GDP, to be a quarter to three-quarters of 1 percent lower in 2020 than it otherwise would be.estimated that the bill, which would impose a “cap and trade” system to reduce
The economic impact would increase in later years as emissions reductions are tightened further and a system of providing free emission allowances is phased out.
By 2050, when Natural Resources Committee.would have to be 80 percent lower, the hit on the GDP would be 1 percent to possibly as much as 3.5 percent, compared to what it is projected to be without action on , said the CBO in a report provided to the Senate Energy and
“By way of comparison … real inflation-adjusted GDP will be roughly two-and-a-half times as large in 2050 as it is today, so those changes would be comparatively modest,” the CBO report said.
It said the long-term cost to American households would be less than the overall economic impact.
The report estimates the purchasing power of the average household would be reduced by $90, or one-tenth of 1 percent, in 2012, when the emission reduction requirements would go into effect and by $925, or eight-tenths of 1 percent, in 2050. Over that period, the average cost to households would be $455 a year.
The bill passed by the House this summer calls for a 17 percent reduction in greenhouse gases by 2020 and an 83 percent reduction by 2050, all starting from 2005 levels. It would accomplish the pollution reductions by imposing a cap on greenhouse gas emissions, primarily carbon dioxide from the burning of fossil fuels.
There have been a wide range of economic cost estimates attributed to the House-passed climate bill.
Several government studies have concluded that costs to households would be relatively low in 2020. The Environmental Protection Agency projected costs at $84, while the Energy Information Administration put it at $134. Meanwhile, a number of studies done at the request of business groups have projected a much more severe impact, from $985 to as much as $1,539 in 2020.
Republicans have characterized the climate legislation as a huge tax because it will increase energy costs. Democrats who support the bill acknowledged the cost of energy will increase but contend the impact on consumers can be mitigated by increased energy efficiency and other measures included in the legislation.