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Climate Bill Seen Raising Gasoline Prices

Date: 19-Apr-10
Country: US
Author: Peter Henderson

Point Carbon, a market analysis firm, estimated on Thursday U.S. gasoline prices would rise an average of 27 cents per gallon from 2013 to 2020 if expected U.S. climate legislation led by Senator John Kerry becomes law.

U.S. carbon prices should average about $31 a tonne from 2013 to 2020, said Point Carbon, which projected it would take a couple of years to set up a system should a law be passed. The 27-cent per gallon rise would have been an 11 percent rise on the average 2009 gasoline price of $2.35 per gallon.

A compromise climate bill being drafted by Kerry, a Democrat, and Senators Lindsey Graham, a Republican, and Joe Lieberman, an independent, will be unveiled on April 26, according to a source.

Point Carbon said the expected bill has a slim chance of passing Congress amid opposition from lawmakers in coal and oil states.

"We think the bill has a 30 percent chance of passing this year ... the fact that the bill is not dead, means it is alive," Emilie Mazzacurati, a Point Carbon analyst told reporters at the conference Navigating the American Carbon World.

Industry and Senate sources have said the expected bill will contain a fee on transportation fuels that will be linked to the price of carbon in a program that caps emissions from power plants starting in 2012. Emissions from big manufacturers would capped starting in 2016.

Point Carbon said that the cost of cutting emissions would fall by nearly half if the U.S. focused reductions on the power sector, which has the easiest path to reductions through switching fuel sources.

Carbon prices would be about $18 per tonne if the power sector were required to cut emissions 27 percent below 2005 levels by 2020, which would meet the U.S. target of a 17 percent economy-wide reduction over that period, it said.

(Editing by Lisa Shumaker)

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