No cap-and-trade, no revenue
The possibility of passing cap-and-trade legislation ended for the foreseeable future when the Republican Party took control of the House of Representatives after the 2010 midterm election.
The term ‘cap-and-trade" refers to emissions-reduction scheme wherein the federal government caps the amount of carbon a company may emit. Each company is allotted a number of permits that allows it to emit a specific amount carbon. The individual company must buy additional permits from the federal government, or unused permits from other companies, to go over this cap. Ideally carbon emissions will decline because the free market rewards those who lower their emissions most effectively.
Republicans said cap-and-trade would hurt the economy and destroy jobs, and the opposed the additional costs it would put on the energy industry. So it"s unlikely any sort of cap-and-trade legislation will make its way to the President Obama"s desk in the current Congress. For these reasons we rated Obama"s promise to pass cap-and-trade as Broken and the GOP"s pledge to oppose cap-and-trade as Promise Kept.
In the previous update, we rated this promise Compromise since there existed some hope that funding measures would be included in a renewable energy bill that did not contain a cap-and-trade provision. Yet no bill of this sort has come to pass.
Since the federal government never implemented a nationwide cap-and-trade initiative, there is naturally no revenue that can be garnered from it. As a result, this promise -- to use the funds collected from the auctioning of cap-and-trade permits for environmental and clean energy initiatives -- cannot be fulfilled. Due to the failure of of Congress to pass cap-and-trade we rule this promise as Broken.
Library of Congress - American Clean Energy and Security Act of 2009
The Christian Science Monitor, "Harry Reid: Senate will abandon cap-and-trade energy reform," July 22, 2010.
Cap-and-trade lacks support in Congress
While on the campaign trail, then candidate Barack Obama promised to use revenues generated by auctioning off pollution credits to pursue cleaner sources of energy.
We last reviewed the status of this promise in August 2009, when we rated it In the Works. The House had passed a comprehensive energy bill in June 2009. In the Senate, Sen. John Kerry, D-Mass., and Joe Lieberman, I-Conn., released their own version of a cap-and-trade bill in May 2010.
As the November elections get closer, however, it has become more difficult for Congress to pass controversial legislation, so we wanted to see how things have been moving along on the cap-and-trade front.
As it turns out, cap-and-trade has hit a major roadblock. On July 22, 2010, Democratic leader Harry Reid told reporters that Democrats simply "don"t have the votes" to pass a comprehensive bill that would put caps on greenhouse gas emissions. Instead, Reid, D-Nev., introduced a scaled-down energy bill that would remove the $75 million liability cap on economic damages from an oil spill, increase funding for the Oil Spill Liability Trust Fund and fully fund the Land and Water Conservation Fund. It would also would provide $5 billion in rebates to encourage homeowners to make energy efficiency upgrades and encourage the retrofit of the nation's heavy vehicle fleet to use natural gas, according to the bill summary. The bill does not contain any cap-and-trade provisions.
Talking to reporters August 31, 2010, Reid said that cap-and-trade "doesn"t have the traction that a lot of us wish it had."
So let's recap. Obama said that he will use revenues from cap and trade to support clean energy and environmental restoration. The Democratic leadership has acknowledged that it does not have the votes to pass legislation that includes cap and trade. Still, the whole point of this promise is to use the money generated by cap and trade to invest in energy efficiency improvements, help develop the next clean energy vehicles and provide new funding to restore environmental habitats. The Reid energy bill addresses all of those goals in some way. We'll keep watching, but for now, we rate this a Compromise.
The Hill, Reid puts renewables mandate in play, eyes lame-duck energy bill, by Ben Geman, Aug. 31, 2010
USA Today, Reid introduces pared-down energy bill, by Jessica Durando, July 27, 2010
The Washington Independent, Short Summary of the Clean Energy Jobs and Oil Company Accountability Act, accessed Sept. 22, 2010
The Christian Science Monitor, Stripped down energy bill leaves out 'cap and trade', by Mark Clayton, July 27, 2010
Reuters, US renewable energy bill faces battle in 2010, Sept. 21, 2010
House bill includes money for clean energy
Obama campaign, New Energy for America, accessed Aug. 29, 2009
Energy and Commerce Committee, Summary of the American Clean Energy and Security Act, accessed Aug. 29, 2009