Congressional budget experts say a climate and energy bill now stalled in the Senate would reduce the federal deficit by about $19 billion over the next decade.
The report by the nonpartisan Congressional Budget Office was the second positive analysis of the bill by a government agency in a month, but is likely to carry more weight than a similar report issued by the Environmental Protection Agency. The CBO is the entity responsible for providing Congress with nonpartisan analyses of economic and budget issues, and lawmakers rely on it for guidance.
The CBO report was immediately hailed by the bill's sponsors, who are struggling to move the climate measure through a divided Congress. Lawmakers have quietly begun considering a more modest approach that would target the electricity sector, in case the more sweeping measure fails.
"There is no more room for excuses — this must be our year to pass comprehensive climate and energy legislation and begin to send a price signal on carbon," said Sen. John Kerry, D-Mass., the bill's chief author.
Many senators have told him and Sen. Joe Lieberman, I-Conn., the bill's co-sponsor, that they flatly oppose legislation that adds even a penny to the federal deficit, Kerry said. "So we hope they look anew at this initiative which reduces it," he said.
In its report Wednesday, the CBO said the energy bill would increase federal revenues by about $751 billion from 2011 to 2020, mostly though the sale of carbon credits in so-called a cap-and-trade plan to be applied to utilities and other sectors of the economy.
The measure would increase spending by about nearly $732 billion, mostly from refunds to utility bills and tax credits, as well as investment in various energy provisions including research and development, the report said.
The Senate bill would tax carbon dioxide emissions produced by coal-fired power plants and other large polluters as a way to reduce pollution blamed for global warming. The legislation has been panned by many Republicans as a "national energy tax." No GOP senator has signed on as a co-sponsor.
An analysis by the EPA last month concluded that the Senate bill, dubbed the American Power Act, would cost households an average of $79 to $146 per year. Kerry and Lieberman said they believe Americans are willing to pay less than a dollar a day to curb global warming, reduce oil imports and create energy-related jobs.
The legislation aims to cut emissions of carbon dioxide and other heat-trapping greenhouse gases by 17 percent by 2020 and by more than 80 percent by 2050.
Even as the CBO was conducting its analysis, Kerry and other lawmakers have begun considering the more modest approach that would limit the carbon tax to the electricity sector.
Some White House officials have begun to speak favorably about such a "utility-only" approach, which they believe could be more attractive to Republicans. At a White House meeting last week, a bipartisan group of senators discussed an emissions cap that would be limited to stationary sources, which would primarily mean power plants and refineries.
No decisions have been reached, although Senate Majority Leader Harry Reid, D-Nev., is aiming to bring energy legislation to the Senate floor before the August recess.