A recent report from the Energy Information Administration (EIA) – part of the US Department of Energy (DoE) – says that the cost to each US household of using a market-based approach to limit greenhouse gases would be just $78 per year from 2006 to 2025. This is expected to reduce the GDP in 2025 by about 0.2%, according to the report, a finding at odds with the views of the Bush Administration which claimed the huge economic burden of such measures as a key factor in rejecting the Kyoto Protocol.

The report was requested by Senator Jeff Bingaman in the wake of December’s National Commission on Energy Policy (NCEP) release of its bipartisan strategy on energy, which included recommendations for a mandatory carbon programme including an emissions trading scheme and a goal for reducing emissions per unit of economic output by 2.4% per year starting in 2010. The EIA report has found the NCEP plan would not impose significant economic burdens and is expected to bolster efforts to enact climate change legislation.

The report also predicts that such measures would result in a 5% increase in power prices relative to forecast levels, while use of coal would fall compared with current projections.

Nonetheless, NCEP also adopted recommendations to promote clean-coal technology, including a call for $4 billion in incentives over a decade to support the use of integrated gasification combined cycle (IGCC) technology and a further $3 billion to demonstrate carbon sequestration over the same period.