updated 6/22/2009 5:44:15 PM ET 2009-06-22T21:44:15

A nonpartisan congressional study projects only modest household cost increases as a result of a Democratic proposal to limit carbon dioxide and other greenhouse gases, contradicting claims by many Republican lawmakers that the climate legislation amounts to a huge energy tax on average Americans.

The Congressional Budget Office report estimates that the proposed limits on greenhouse gases required by the House bill would produce a net additional cost to the economy of $22 billion a year by 2020, or an average cost per household of $175 after various cost-saving measures included in the bill are taken into account.

The poorest households actually would save $40 a year while those in the highest income category would face a net increase of $245 a year, the report estimates.

The findings contrast sharply with cost projections — some as high as $3,100 per household — use by many Republicans including House Republican leader John Boehner of Ohio who repeatedly has blasted the Democrat's climate legislation as economically devastating to average Americans.

"This analysis underscores that this legislation is effective and affordable," Rep. Henry Waxman, D-Calif., one of the climate bill's chief sponsors, said Monday.

Rep. Edward Markey, D-Mass., also a leading co-sponsor, compared the cost to "a postage stamp a day" and not the economic catastrophe suggested by the bill's opponents.

The CBO study was released as House Speaker Nancy Pelosi, D-Calif., struggled to get broader support for the bill from farm-state Democrats, who have been trying to get changes in the legislation to ease the cost burden on farmers and people in rural areas of the country who under the bill may face higher electricity costs than those in urban centers.

Push to get vote this week
These essential compromises have yet to be worked out, leaving in doubt Pelosi's goal to bring the climate legislation up for a vote by week's end before lawmakers depart for the July 4 holiday recess.

The bill, covering nearly 1,000 pages, calls for a 17 percent reduction in carbon dioxide and other greenhouse gases by 2020 from 2005 levels, and an 83 percent reduction by mid-century. Carbon dioxide, produced from burning fossil fuels, especially coal, is the leading manmade greenhouse gas linked to global warming.

The reductions would be made by capping emissions on key polluting sources — coal burning power plants, refineries, factories and from motor vehicles, forcing a shift to cleaner energy and more conservation. The polluters would be provided emission permits with the cap declining each year. Some 85 percent of the permits would be given away, especially to energy intensive sectors of the economy. But others would be sold by the government and proceeds used to help people meet higher energy costs.

The CBO study focuses on costs that would occur in 2020 when the economy would be expected to have adjusted to the change imposed by putting a price on carbon pollution.

Republicans, responding to the study, said the report acknowledges that people will face higher energy costs.

"This analysis shows average American household would pay $770 more per year with costs reaching as high as $1,380 per year," said Rep. Dave Camp of Michigan, the ranking Republican on the Ways and Means Committee who had requested the report. He referred in a statement to "gross" cost figures in the report that do not take into account what the CBO analysis said the bill provides for cost savings and offsets.

Camp's spokesman, Sage Eastman, said the report also "ignores the transitional costs, the negative impact of jobs and earnings during the transitional period" before 2020.

The CBO study said that overall most of the costs of the cap on greenhouse gases "would be offset by income and other benefits provided to households" under the bill.

The overall annual cost of compliance with the emissions reductions before any offsets, credits or rebates was projected by CBO to be $110 billion in 2020, or about $890 per household. But the report said $85 billion "would flow back to U.S. households in the form of direct relief and indirectly through allocations to businesses and governments" with an additional net benefit of $2.7 billion as a result of other provisions.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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