Congress split on cap-and-trade's impact on jobs

This was originally published on CBSNews.com.

WASHINGTON--Congressional Democrats' proposal to create a trading system for carbon emissions will create jobs and bolster the economy, the Obama administration told Congress on Wednesday.

House Republicans insisted, however, that the proposal, which would charge the largest emitters of carbon dioxide for burning fossil fuels, would result in higher energy and gasoline prices for consumers, as well as a loss of U.S. jobs as carbon emitters moved positions overseas to unregulated markets.

"I believe this is a jobs bill that focuses our country's attention on the global industry of the future, which is the clean energy industry," Environmental Protection Agency Administrator Lisa Jackson said before the House Energy and Commerce Committee.

The far-reaching legislation being drafted by Committee Chairman Henry Waxman (D-Calif.) and Rep. Ed Markey (D-Mass.) would institute a cap-and-trade system in which carbon emitters would be allowed to buy and trade permits for certain levels of emissions. The bill would also establish a renewable electricity standard and an energy efficiency standard.

"In the future, it is very clear we will be living in a carbon-constrained world," said Department of Energy Secretary Steven Chu. "The U.S. must position itself so we can lead that transition."

Republicans on the committee, however, countered that the bill does not provide enough specifics to reach the administration's optimistic conclusions and warned that just the opposite could be true.

"My fear, my belief, is this is an intentional move to deceive us so we're not allowed to do the cost-benefit analysis," said Rep. John Shimkus (R-Ill.).

This bill is the "largest assault on democracy and freedom on this country that I've ever experienced," he said.

Specifically, the bill lacks details on whether the permits would all be auctioned to carbon emitters, or whether some would be automatically granted to some companies to relieve their economic burden during the transition to a cap-and-trade system. Other data has yet to be provided, such as a proposed cost for the permits.

"This proposal puts a bull's eye on the back of working families," said Rep. Fred Upton (R-Mich.). "Just wait until they get their hands on their utility bills that are capped and taxed."

The administration representatives said cost of the carbon permits should be returned to the American people in the form of the rebate.

Additionally, they said, any costs that may be passed onto consumers would presumably be offset from the benefits gained from higher-efficiency homes and appliances.

Working with the information available from the draft bill, the EPA completed a preliminary analysis of the cap-and-trade portion of the bill, concluding that it would accelerate the deployment of clean-energy technology while growing the economy, at relatively little cost to the consumer.

Before including cost-saving measures like the increase of energy-efficient appliances, the analysis concludes the cap-and-trade program would cost the average household $98 to $140 a year. To reach that figure, the EPA assumed about 40 percent of the allowances would be returned to citizens in some form such as rebates.

The number stands in stark contrast to the figure of $3,100 a year floated by Republicans. That figure was based on a report from the Massachusetts Institute of Technology, but its author said it misrepresented his findings.

In addition to higher energy prices, consumers would suffer from job losses, said Shimkus, who pointed to the 35,000 coal-mining jobs lost in Ohio as a result of regulations imposed under the Clean Air Act.

Jackson warned, "The 'no, we can't' crowd will spin out doomsday scenarios about runaway costs."

She pointed out that the Acid Rain Trading Program, which was established in 1990 under the Clean Air Act, delivered huge benefits--to the tune of $120 billion a year--with an annual cost of only $3 billion a year. The acid rain program is a trading system comparable to a carbon cap-and-trade program.

Republicans also questioned whether putting a price on carbon in the United States would have any impact, given that growing carbon producers like China and India are not adopting similar programs.

"If the United States does take the lead, China will follow," Chu said, adding that he had spoken at length personally with Chinese officials on the issue. "They are taking it very seriously because they see the impacts of climate change as well."