Under the blueprint, an economy-wide cap-and-trade program would take effect in 2012. The goal is to reduce greenhouse gas emissions 14% below 2005 levels by 2020 and 83% below 2005 levels by 2050. The program would be implemented through a system where 100% of emissions allowances would be auctioned.
According to the blueprint, the cap-and-trade climate change program would generate almost $646 billion in new federal revenue by 2019. Over the course of the next 10 years, the program would fund “a clean energy future” with $150 billion, or $15 billion per year. The plan also clearly states, “the balance of the auction revenues will be returned to the people, especially vulnerable families, communities, and businesses to help the transition to a clean energy economy.” The budget proposal also supports carbon capture and storage technology, and along with the $3.4 billion provided in the Recovery Act for low-carbon emission coal power and industrial projects, these funds will help allow the use of America’s extensive domestic coal resource while reducing the impacts on climate change.
The cap-and-trade scheme has drummed up a lot of questions regarding the redistribution of wealth. Readers might recall that during last year’s climate change debate, an amendment to offer rebates to American families killed Senator Barbara Boxer’s (D-CA) climate bill. That move pointed out that those supporting the bill had no intention of returning the money to the American people. It also drew the attention of Southern and Midwestern democrats as the policy would unfairly tax their constituents. Unlike California, those regions have factories and power plants that employ people who contribute to the economy.
Ironically, many of the businesses that tried to appear forward-thinking back when the Bush administration was doing nothing on climate change, may now regret those moves. The Obama cap-and-trade plan will be administered by the EPA and bypasses the U.S. Climate Action Partnership. Readers might also remember (May 2007), when we questioned why certain companies were aligning themselves with this organization. Many of these business leaders urged Congress to adopt a cap-and-trade mechanism believing that they would somehow have a hand in crafting the legislation. Instead, it looks like the utilities may become tax collectors for a tax-and-spend Congress as they pass compliance costs along to their customers. Manufacturers whose factories run on coal-fired electricity will also pass along the carbon tax to consumers.
If the government actually gives the money back to the people, one could argue that the Obama administration is using climate change to transfer wealth as social welfare from coal-rich regions. Otherwise, it’s just another line item in the tax portion of the government’s ledger. The U.S. will soon have a cap-and-trade system shouldered by the middle class when they can least afford it.
Steve Fiscor, Coal Age Editor-In-Chief