The Congressional Budget Office has released its cost estimate of H.R. 2454, the Waxman-Markey American Clean Energy and Security Act, finding that it would reduce budget deficits “about $24 billion over the 2010-2019 period.”
H.R. 2454 would make a number of changes in energy and environmental policies largely aimed at reducing emissions of gases that contribute to global warming. The bill would limit or cap the quantity of certain greenhouse gases (GHGs) emitted from facilities that generate electricity and from other industrial activities over the 2012-2050 period. The Environmental Protection Agency (EPA) would establish two separate regulatory initiatives known as cap-and-trade programs—one covering emissions of most types of GHGs and one covering hydrofluorocarbons (HFCs). EPA would issue allowances to emit those gases under the cap-and-trade programs. Some of those allowances would be auctioned by the federal government, and the remainder would be distributed at no charge. Other major provisions of the legislation would:
- Provide energy tax credits or energy rebates to certain low-income families to offset the impact of higher energy-related prices from the cap-and-trade programs;
- Require certain retail electricity suppliers to satisfy a minimum percentage of their electricity sales with electricity generated by facilities that use qualifying renewable fuels or energy sources;
- Establish a Carbon Storage Research Corporation to support research and development of technologies related to carbon capture and sequestration;
- Increase, by $25 billion, the aggregate amount of loans DOE is authorized to make to automobile manufacturers and component suppliers under the existing Advanced Technology Vehicle Manufacturing Loan Program;
- Establish a Clean Energy Deployment Administration (CEDA) within the Department of Energy (DOE), which would be authorized to provide direct loans, loan guarantees, and letters of credit for clean energy projects;
- Authorize the Department of Transportation (DOT) to provide individuals with vouchers to acquire new vehicles that achieve greater fuel efficiency than the existing qualifying vehicles owned by the individuals; and
- Authorize appropriations for various programs under EPA, DOE, and other agencies.
CBO and the Joint Committee on Taxation (JCT) estimate that over the 2010-2019 period enacting this legislation would:
- Increase federal revenues by about $846 billion; and
- Increase direct spending by about $821 billion.
In total, those changes would reduce budget deficits (or increase future surpluses) by about $24 billion over the 2010-2019 period.
In addition, assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 2454 would increase discretionary spending by about $50 billion over the 2010-2019 period. Most of that funding would stem from spending auction proceeds from various funds established under this legislation.
CBO has determined that the non-tax provisions of H.R. 2454 contain intergovernmental and private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). Several of those mandates would require utilities, manufacturers, and other entities to reduce greenhouse gas emissions through cap-and-trade programs and performance standards. CBO estimates that the cost of mandates in the bill would well exceed the annual thresholds established in UMRA for intergovernmental and private-sector mandates (in 2009, $69 million and $139 million respectively, adjusted annually for inflation).