Create cap and trade system with interim goals to reduce global warming

Congress debates cap-and-trade in fits and starts

Updated: Wednesday, January 13th, 2010 | By Catharine Richert

It's been a while since we updated President Barack Obama's promise to create a cap-and-trade system -- and there's a lot to report.
 
After Obama included the concept in his budget, House heavyweights Henry Waxman of California and Edward Markey of Massachusetts introduced legislation that would lower carbon pollution by 17 percent by 2020 and 83 percent by 2050. Under their plan, most pollution permits initially would be given out free. But eventually, companies would have to buy those permits from the government.
 
The House passed the legislation 219-212 on June 26, 2009.
 
In the Senate, things got a little more dramatic. Sens. John Kerry of Massachusetts and Barabara Boxer of California did not introduce their cap-and-trade bill until late September. Nevertheless, the legislation was incomplete; a big part of the bill language were omitted, leaving lots of room for negotiation. About a month later, Boxer released more details on her bill and pushed forward on debate despite objections from Republicans. Recognizing the legislation had no legs without GOP support, Kerry backed away from the bill and joined Republican Lindsay Graham and independent Joe Lieberman to draft a bipartisan version. 
 
The idea, of course, was to have a bill passed in time for the landmark climate change meeting in Copenhagen, where world leaders were supposed to hash out an agreement to lower global greenhouse gas emissions. After two weeks of haggling, the final accord turned out to be only a statement of intention to take action on climate change. Without a binding treaty, some of the steam has been taken out of the domestic climate change debate.
 
And then there's health care, an issue that has overshadowed nearly everything else Congress has tried to tackle this year. Lawmakers plan to take up the massive health system overhaul again once Congress is back in session. After that, they'll turn back to cap-and-trade, with Senate leaders likely cobbling together the final version of the upper chamber's climate bill.
 
Clearly, this promise is still In the Works; cap-and-trade represents a major change, so we wouldn't expect this pledge to be fulfilled overnight. For now, we'll follow the issue closely and offer updates throughout 2010.

Sources:The New York Times, A Grudging Accord in Climate Talks, by Andrew C. Revkin and John M. Broder, Dec. 19, 2009 CQ Weekly, 2009 Legislative Summary: Climate Change Mitigation, by Coral Davenport, Jan. 4, 2010

Cap-and-trade is in the budget

Updated: Tuesday, March 3rd, 2009 | By Angie Drobnic Holan

Barack Obama said during the campaign he would attack global warming by setting up a cap-and-trade system.

The idea behind cap-and-trade is that the government sets a limit on how much carbon different companies, such as electric utilities or manufacturers, can emit (the cap). The government then issues permits to companies and allows them to buy and sell the permits as needed so they can conduct business (the trade). If the policy works as planned, overall emissions decline, companies determine for themselves the best way to lower emissions, and the free market rewards those who lower emissions most effectively.

When President Obama released his budget on Feb. 26, 2009, he included the cap-and-trade system as part of his plans. The initiative would reduce greenhouse gas emissions, compared with 2005 levels, by about 14 percent by 2020 and 83 percent by 2050.

The policy would result in "dramatically reduced acid rain at much lower costs than the traditional government regulations and mandates of the past," said Obama's budget outline.

Obama also hopes the program will generate revenues for the government of about $150 billion over 10 years, starting in 2012. That money will go to paying for some of Obama's other initiatives, including helping communities transition to a green economy, according to the budget outline.

Republicans say the cap-and-trade system will result in higher electricity rates and higher prices for consumers. Those increases are a de facto energy tax, they argue.

Obama's budget director, Peter Orszag, said electricity costs may go up but most Americans would see other benefits to offset the higher costs.

"I just reject the theory that the only thing that drives economic performance is the marginal tax rate on wealthy Americans and the only way of being promarket is to funnel billions and billions of dollars of subsidies to corporations," Orszag said in an interview.

So cap-and-trade is in the budget outline. Orszag's remarks signal that the Obama administration intends to aggressively defend the plan in the face of opposition. We move this promise to In the Works.

Sources:Office of Budget and Management, Budget Documents for Fiscal Year 2010 , accessed Feb. 26, 2009 This Week with George Stephanopolous, Interview with Peter Orszag , March 1, 2009