The US EPA at the request of Senator Joe Lieberman and Senator John Warner evaluated S. 2191 the Climate Security Act authored by the two senators. The agency reached various conclusions about the bill and the greenhouse gases that would be reduced and the economic impact. Other studies may reach different conclusions, but here are some of the conclusions regarding the use of offsets, the cost of carbon, and how the bill's limit on international credits would drive up the cost of carbon credits.
- If the use of domestic offsets and international credits is unlimited, then allowance prices fall by 71% compared to the bill as written.
- In this scenario 52% of abatement comes from international credits in 2030, and 45% of abatement comes from international credits in 2050. In terms of compliance obligation (which is limited to15% for international credits in the bill as written) 65% comes from international credits in 2030, and 169% comes from international credits in 2050.
- If the use of domestic offsets is unlimited, and international credits are still limited to 15% of compliance obligation, then allowance prices fall by 26% compared to the bill as written.
- In this scenario 26% of abatement comes from domestic offsets in 2030 and 15% of abatement comes from domestic offsets in 2050. In terms of compliance obligation (which is limited to 15%for domestic offsets in the bill as written) 33% comes from domestic offsets in 2030, and 41% comes from domestic offsets in 2050.
- If international credits are not allowed (or are more expensive than U.S. GHG allowances), and domestic offsets are still limited to 15%, then allowance prices increase by 34% compared to the bill as written.
- If domestic offsets and international credits are not allowed, and the caps must be met solely through emissions reductions in covered sectors, then allowance price increases by93% compared to the bill as written.
