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The price of carbon emissions allowances under a future US cap and trade scheme would double if domestic emitters couldnt access international offset credits, a government report has concluded.
The study was conducted by the Environmental Protection Agency (EPA), the body likely to be asked to regulate a US cap and trade scheme called for by President Barack Obama. It looked at the first bill to be drafted in Congress since Obamas election, sponsored by Democrats Henry Waxman and Ed Markey. The bill aims to cut US emissions by 20 per cent by 2020, more than Obamas policy requires.
The EPA said a preliminary analysis showed that, if passed, the Waxman-Markey Bill would produce a scheme with a carbon price ranging between $13 and $26 a tonne of CO2 equivalent by 2015 and $17 to $33 by 2020.
The bill allows for the emitters to buy up to two billon tonnes of carbon offsets a year to supplement their own emissions cuts and help limit the financial impact of the scheme. One billion tonnes of these offsets, such as credits from renewable energy and forestry projects, could be generated from action in developing countries.
The EPA estimates that the predicted carbon prices under the scheme would be 96 per cent higher if these international offsets were not allowed. The study also predicted Americans power bills would rise 22 per cent by 2030 and cost households $100 to $140 each year up to 2050.
Bloomberg, Reuters 22/4/09
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