Waxman-Markey bill would add $846 billion in taxes, CBO says

A US House bill which would introduce a domestic cap-and-trade program to begin controlling global carbon emissions would cost $846 billion in new taxes, the Congressional Budget Office said on June 5.


The bill’s net contribution to the federal budget would be about $24 billion because it also would increase direct federal spending by $821 billion, CBO said in its analysis of HR 2454, the 2009 American Clean Energy and Security which the House Energy and Commerce Committee approved on May 21 by 33 to 25 votes.


“In addition, assuming appropriation of the necessary amounts, CBO estimates that implementing HR 2454 would increase discretionary spending by about $50 billion over the 2010-19 period,” it indicated. “Most of that funding would stem from spending auction proceeds for various funds  authorized under this legislation.”


It also said that mandates under the bill would exceed thresholds under the Unfunded Mandates Reform Act by $139 million for private sector entities and $69 million for intergovernmental outlays in 2009.


CBO’s study confirmed that the bill, cosponsored by Reps. Henry A. Waxman (D-Calif.), chairman of the Energy and Commerce Committee, and Edward J. Markey (D-Mass.), chairman of the committee’s Energy and Environment Subcommittee, would be “massively costly,” American Petroleum Institute President Jack N. Gerard said on June 8.


“The $846 billion price tag on emission allowances, borne disproportionately by oil consumers, will drive up costs of producing and refining gasoline, diesel and other fuel products while doing nothing to protect fuel consumers, including American families, trucking, the airlines, the construction industry, and many other businesses that rely on oil to make or transport products,” he said in a statement.


‘A job-killer’


Gerard said that based on allowance costs in CBO’s study, impacts could be as much as 77 cents/gal for gasoline, 83 cents/gal for jet fuel, and 88 cents/gal for diesel fuel. “This is what happens when market-based regulation is abandoned in favor of picking winners and losers. Putting most of the burden on one sector also helps explain why this legislation promises to be a job-killer,” he maintained.


But Waxman said as he opened a June 9 hearing on the bill’s offsets that it uses more than half of its allowances to protect consumers from higher energy prices with programs for electricity, natural gas, and heating oil users; for low and moderate-income families, and to provide rebates to consumers.


HR 2545 also invests in developing and deploying energy efficiency programs and clean energy technology, which will create jobs, he continued. It also provides transition assistance to US industries to assure that they stay globally competitive, he said.


“The committee has worked hard on this allocation plan to ensure that it is fair. It does what a good energy bill needs to do: It balances the interest of different parts of the country, and of different stakeholders, and accomplishes much of what is important to everyone. It will go a long way to moving the country into a clean energy future,” Waxman said.


But the committee’s ranking minority member, Rep. Joe Barton (R-Tex.), said in his opening statement that it’s not possible to design an allocation for an economy as complex as that of the United States. “You really can’t make it fair,” he declared.


May undermine goal


A group of larger US independent producers, meanwhile, warned on June 8 that the bill includes provisions which undermine its goal of reducing greenhouse gases by possibly discouraging natural gas use. “Specifically, the allowance allocation formula in the bill could eliminate the incentive to burn fuels with a lower carbon content for power generation,” said Rod Lowman, president of America’s Natural Gas Alliance, which represents 25 upstream independents producing more than 40% of total US gas supplies annually.


HR 2545 would initially distribute for free 50% of its utility allowances based on the utility’s average annual carbon dioxide emissions from retail electricity sales, Lowman continued in a letter to the committee and subcommittee’s chairmen and ranking minority members. This provides a disincentive for utilities to buy their electricity from generators who use gas or other cleaner fuels, he suggested.


“We believe allowance allocations should instead reward utilities that acquire their power from fossil fuel generators that have the lowest CO2 emissions per megawatt hour and are also the most efficient (e.g., require the least amount of energy to produce electricity),” said Lowman.


“The allocation policy for allowances should complement the bill’s environmental goals, not cancel out the distinction between high and low carbon fossil fuels for generating electricity. Such an approach to us seems counterproductive,” he said.


Contact Nick Snow at nicks@pennwell.com


Related Articles

Court approves ExxonMobil’s environmental settlement with New Jersey

08/26/2015 A New Jersey Superior Court judge approved a $225-million environmental settlement between the state and ExxonMobil Corp. to resolve environmental ...

Fossil fuel interests, others are fighting alternatives, Obama says

08/25/2015 Fossil fuel interests, conservative think tanks, and groups funded by billionaires Charles and David Koch are fiercely fighting a growing wave of a...

Erin Energy enters next phase of onshore Kenya exploration

08/24/2015 Houston independent Erin Energy Corp. has entered into the next phase of onshore exploration in Kenya after being given government approval to ente...

US reportedly will begin limited crude oil swaps with Mexico

08/24/2015 The Obama administration will begin to allow limited US crude oil swaps with Mexico, multiple news organizations reported. The US Department of Com...

US House leaders press BP for answers on Whiting refinery outage

08/24/2015 Leaders in the US House of Representatives are demanding answers from BP PLC regarding the early August unplanned and still ongoing shutdown of a m...

New ozone limits unnecessary, 370 state business groups declare

08/24/2015 The US Environmental Protection Agency's proposal to reduce ozone limits is both costly and unnecessary, 370 state business groups from across the ...

Watching Government: Preparing for an avalanche

08/24/2015 Late summer may not seem like an appropriate time to prepare for avalanches in Washington at first. The nation's capital feels deserted as Congress...

EPA proposes methane emissions requirements for oil, gas industry

08/24/2015 The US Environmental Protection Agency has proposed requirements aimed at reducing emissions of methane and volatile organic compounds (VOC) from a...

Politics of abundance

08/24/2015 Attention returns to the antique US ban on exports of crude oil with reports that limited shipments to Mexico have been approved. The oil and gas i...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected