Cap and trade, by definition, is an anchor of the climate and energy bill under current debate in Congress. The cap and trade definition is elusive to most people not directly involved in utilities, petrochemicals or the manufacturing business. To understand cap and trade, think of it as a system intended to create and regulate Co2, the principal greenhouse gas.
Article Resource: Cap and trade definition threatens passage of climate change bill
Cap and trade definition
The cap and trade definition in the climate and energy bill proposes the government sets a limit on the amount of carbon that could be released to the atmosphere by all of the companies. US companies can release certain amounts of carbon with permits that are given. If companies use less carbon, they can sell unused carbon on the open market. Companies with carbon emissions that exceed their permits must purchase them from cleaner companies offering their leftovers for sale.
National energy policy and cap and trade
Cap and trade is a controversial provision that threatens to derail the climate and energy bill if it doesn't change. When Democrats view cap and trade as a fair way to regulate pollution, Republicans say that this cap and trade is just a tax on business that will kill jobs. With the advent of the oil spill within the Gulf of Mexico and its impact it could have on national energy policy, cap and trade has become a political hot potato. So much so that President Obama avoided mentioning the term in his Oval Office speech about national energy policy Tuesday covering the oil spill, energy legislation and the government’s role in regulating greenhouse gases.
Carbon emissions limit
In the Senate and House version of the bill, carbon emissions targets are identical. PBS reports that regulated industries must reduce their carbon emissions by 17 percent (when it is being in contrast to 2005 levels) by 2020 and 83 percent by 2050. The Senate version has added a “dividend,” which can also be called a rebate, approach returning some of the revenue generated by trading the pollution permits back to consumers in the form of energy rebates. Those industries contain electric utilities, petrochemical refiners, manufacturing and heavy industry. Each has a very strict deadline for entering the carbon market: utilities start at the beginning of 2013, while natural gas providers and heavy industry enter in 2016.
Cap and trade arguments
Cap and trade legislation has generated bitter disagreements between Democrats and Republicans over the climate and energy bill and national energy policy. CBS News reports that cap and trade makes the future of the climate and energy bill uncertain because it will make energy more expensive. The parties disagree on how expense this will be. The U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year.
Costs of cap and trade
The cost of cap and trade per American household would be an extra $1,761 a year. John Boehner has estimated the additional tax bill would be at $366 billion a year, or $3,100 a year per family. Personal income tax revenues bring in around $1.37 trillion a year. A $200 billion additional tax would be just like a 15 percent personal tax increase a year.
Cap and trade with benefits
Cap and trade is about priorities. Some see the issue only in black and white: either reduce the rate of global warming, or protect a fragile economy. Cap and trade can't be that simple. Ecomil.com reports that climate and energy legislation can reduce carbon dioxide by more than 80 percent of 2005 emission levels by 2050 and substantially reduce the rate of global warming. The system plans to create billions of dollars for the government to spend on roads, national parks and personal checks to offset household energy costs.
Trying to catch up with China
What many fear about cap and trade is that if companies and corporations are financially punished for their pollution emissions, consumers will pay the price. Energy doesn’t respond to supply and demand. Utility companies can drive up prices to cover rising production costs. In the mean time, countries like China are really investing in clean energy industries of the future, while Americans sit around arguing about things like cap and trade. No solution is ever perfect, given that any House or Senate bill is full of public giveaways to win votes. Well at least it's a good start.
Find more data on this topic
PBS
pbs.org/frontlineworld/stories/carbonwatch/2010/06/the-american-power-act-cap-and-trade-20.html
CBS News
cbsnews.com/8301-504383_162-5314040-504383.html
ecomil.com
ecomii.com/ecopedia/cap-and-trade
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