Blogs » Politcs Plus » Cap-and-trade:Another view


Throughout the last presidential campaign, candidate Obama said he would tackle climate change by imposing caps on greenhouse emissions. He proposes lowering those emissions 14% below 2005 levels and 83% below by 2050. How will he pay for it? His plan calls for auctioning the rights to emit those gasses. His plan states he will raise $646 billion and he plans to use a portion of that, to ease the burden of initial costs, imposed on the poor. Since congress is now serious about the climate; it prompted Environmental Defense Fund’s, Mark Brownstein to say “Now we are playing with bullets.”

The March 16, 2009 edition of Business Week covered this issue by calling it “The Tug-of-war over cap and trade.”The article states that while there are fierce opponents of emission limits, such as the U. S. Chamber of Commerce, much of the business is supportive. John W. Rove, CEO of Exelon, said “The Obama Administration is close to right on the climate plan.”The arguments are mostly on the details; not the idea.

A workable cap and trade would give the emitters a certainty about future energy cost, helping them make better investment decisions. A market price on carbon would boost energy efficiency and renewable energy efforts. Naturally, nuclear energy would benefit the most. James E. Rodgers, CEO of Duke Energy said “I have great hope for the ‘green’ stimulus, but it won’t reach its potential unless there is a price for carbon.”

Obama proposes that the companies buy an allowance of anywhere from $13-$20 per ton of carbon emitted. The companies all agreed that this cost would be passed to its customer. These cost would amount to higher gasoline prices of about 12 cents a gallon and about a 7% increase in customers electricity rate. Let’s do the math.

Wikeanswers tells us, 12,000 miles is the average miles a person drives a year….Say a car gets 15 mpg that would be 800 gallons….800 gallon times 12 cents a gallon = $96 …A two car family, it would be $192….If a family averages $300 a month on electricity; that would equal to $3,600 a year, going to $3,852 with the increase…So that is $192 more for gasoline and $252 for electricity…That’s $444 a year or $37 a month…Keep in mind, the companies’ goal would be to lower emissions, paying less, and maybe they would reduce the customer’s bill. The initial investment is always large but the long range reduction of carbon and lower bills must be taken into consideration. The 25 coal-centric states would be hit the hardest. Michael G. Morris, CEO of American Electric Power, said “It is a clear transfer of wealth, to the two coasts.”The U. S. Chamber of Commerce is targeting Democratic Senators from coal-rich states saying “It is now a very expensive tax used to transfer wealth. It has nothing to do with climate change.”The Obama team will continue to point ot,that their cap-and-trade plans returns much of the money raised by permit sales, to the consumer in the form of lower taxes.

I agree this legislation should require 60 votes, and I think it will ,because a White House-led push to move global warming legislation in the Senate without having to deal with an expected GOP filibuster has drawn opposition from 28 senators, including six Democrats and several moderate Republicans.