The climate change bill (S 1733) sponsored by Sens. John Kerry (D-Mass.) and Barbara Boxer (D-Calif.) would lead to a net increase in federal revenues of about $21 billion from 2010 to 2019, the Congressional Budget Office found.
According to a December CBO report written at the request of the Senate Environment and Public Works Committee, the bill would generate about $854 billion in federal revenue and would require about $833 billion in direct federal spending.
Both the revenue and the costs come primarily from implementing a cap-and-trade system for greenhouse gases, in which covered entities would be required to obtain an emissions allowance or the equivalent in emissions offsets for every tonne of greenhouse gas emitted, with the revenue spent on programs designed to minimize the costs to electricity ratepayers and increase research and development of low-emissions or emissions-free energy sources. The bill would require a 20 percent reduction in greenhouse gas emissions from 2005 levels by 2020, and 80 percent by 2050.
Those numbers take into account both auctioned allowances and allowances that are allocated to business at no cost.
CBO estimates that the allocation of free allowances would generate about $235 billion in net revenue from 2010 through 2019, and auctioned allowances would generate about $625 billion over the same time period.
The estimates are based on assumptions that greenhouse gas emissions allowances would cost about $17 per tonne in 2011 and that the cost would rise to about $30 per tonne by 2019.
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