Via the WSJ’s “Environmental Capital” blog: a new CBO study on just how much CO2 will be saved thanks to the Obama Energy Tax:

The Waxman-Markey climate bill (HR 2454 or the American Clean Energy and Security Act) would reduce cumulative emissions by just 0.5% between 2012 and 2020 in the sectors of the U.S. economy regulated under the bill’s cap and trade program, according to the Congressional Budget Office’s analysis of the legislation. The CBO analysis is significant in that it is the first published predictions from a government agency about the likely actual impact on U.S. emissions resulting from the version of Waxman-Markey legislation passed by the Energy and Commerce Committee and now heading towards debate on the House floor. CBO’s analysis confirms earlier analysis by the Breakthrough Institute that revealed the climate legislation would only establish a non-binding emissions target, not a binding cap on emissions in covered sectors. Whereas Breakthrough’s analysis examined the total emissions legally permitted under the legislation (without projecting likely scenarios), CBO’s new analysis utilizes economic models to project what the legislation would actually accomplish under a likely set of assumptions. The reason CBO projects that Waxman-Markey will result in such a low and arguably immeasurable reduction in emissions in supposedly capped sectors of the U.S. economy is because their models predict most regulated firms will purchase emissions offsets rather than reduce their own emissions. The legislation legally permits regulated firms to purchase up to two billion tons of offsets each year in lieu of reducing their own emissions. CBO projects that firms regulated under Waxman-Markey’s cap and trade program would utilize 230 million tons of domestic offsets and 190 million tons of international offsets in 2012 [p. 16]. By 2020, CBO projects firms will be utilizing 300 million tons of offsets from domestic sources and 425 million tons from international sources, for a total of 725 million tons of offsets [p. 16]. That’s enough to offset 61% of the emissions reductions required by the ACES cap-and-trade program in 2020. However, CBO also projects firms will purchase more offsets and emissions allowances than they need to cover their emissions in the early years of the program [p. 15]. This is because emissions permits (allowances and offsets) can be banked indefinitely under the legislation, and CBO predicts firms will purchase relatively cheap permits at the outset of the program, banking them to allow greater emissions in future years. For this reason, only an examination of cumulative emissions permitted by the legislation tells the full story of emissions reductions actually driven by the Waxman-Markey bill. After taking into account the banking of emissions permits, Breakthrough’s calculations [.xslx] reveal that if offsets are utilized at the levels projected by the CBO, Waxman-Markey will cut cumulative emissions in supposedly capped sectors of the economy by just 0.5% through 2020. CBO projects cumulative 2012-2020 emissions in capped sectors would be 55.1 billion metric tons, compared to cumulative emissions of 55.4 billion metric tons under the U.S. Energy Information Administration’s business-as-usual emissions projections.