Obama’s Budget Assumes Big Revenue from Cap-and-Trade
The 2010 budget outline unveiled by President Obama this morning projects $646 billion in revenue from a cap-and-trade system to limit carbon emissions by 2019. Environmentalists will cheer, but a fierce debate looms large.
According to the proposal, beginning in 2012, the administration expects to bring in about $80 billion per year from the program, which requires greenhouse gas-emitting companies to buy carbon allowances and permits them to sell excess allowances in a carbon market to other companies that pollute more. Most environmentalists prefer cap-and-trade, which is already in place in Europe, to a carbon tax, because cap-and-trade allows the government to control, and slowly reduce, the overall emissions in the country. The idea is opposed, however, by many industry leaders and congressional Republicans, including Sen. James Inhofe (R-Okla.), the ranking member of the Senate Environment and Public Works Comittee and climate change skeptic.
Inhofe’s Democratic counterpart on the committee, Chairman Barbara Boxer (D-Calif.), is a proponent of the system. But Obama’s proposal runs counter to some of her hopes for cap-and-trade.
For starters, the budget pledges to use the revenue generated by selling allowances for two purposes: $15 billion per year for “clean energy technologies” and over $60 billion a year for “making work pay” — tax credits for lower-income families and funds to offset higher energy costs resulting from the policy. Compare these goals to Boxer’s much more ambitious proposal for cap-and-trade revenue spending announced earlier this month:
- Keep consumers whole as our nation transitions to clean energy;
- Invest in clean energy technologies and energy efficiency measures;
- Assist states, localities and tribes in addressing and adapting to global warming impacts;
- Assist workers, businesses and communities, including manufacturing states, in the transition to a clean energy economy;
- Support efforts to conserve wildlife and natural systems threatened by global warming; and
-Work with the international community, including faith leaders, to provide support to developing nations in responding and adapting to global warming. In addition to other benefits, these actions will help avoid the threats to international stability and national security posed by global warming.
Boxer also hoped to start debating climate legislation late this year, in advance of the Copenhagen international climate conference in December, and it was generally assumed that an energy bill would precede a climate one. But with Obama’s budget announcement, it seems inevitable that Congress will begin discussing cap-and-trade sooner than expected.
Look for this to be the central climate legislation battle in the coming months.