Obama’s ‘Cap and Trade’ Plan Likely Will Raise Energy Prices, Says Senate Energy Chairman
April 29, 2009 - 6:35 PMPresident Barack Obama's "cap and trade" plan is designed to reduce greenhouse gas emissions that allegedly contribute to global warming. Sen. Jeff Bingaman (D-N.M.), chairman of the Energy and Natural Resources Committee, told CNSNews.com that to attain that reduction, it is "likely true" that energy costs for Americans will go up.
“I think the system is designed to reduce greenhouse gas emissions, and I think that it is likely true that, in order to put in place an effective reduction in greenhouse gas emissions, you’re going to see higher costs for energy going forward,” Bingaman told CNSNews.com.
“That’s not because of the design of the system, that’s just the reality that utilities [utility companies] will be making decisions which will require additional investment – and we’re trying to encourage them to make those decisions,” he said.
In general, under cap and trade, companies that make energy through coal, oil, natural gas, hydroelectric, and other means, are limited – capped – in how much carbon they can emit in their production process. If they exceed the cap, they can buy, i.e., trade, more carbon permits. The money the companies pay for those permits will go to the federal government and be redistributed.
The Climate Equity Alliance, which is comprised of more than a dozen organizations, ranging from the NAACP (National Association for the Advancement of Colored People) to ACORN (Association of Community Organizations for Reform Now), told CNSNews.com that cap and trade is designed to increase energy costs so that consumers invest in alternative (or green) energy sources.
The alliance further said that cap and trade is like a distribution of wealth program, which would take the revenue earned by the federal government through the auctioning of carbon emission permits – cap and trade – and give it to lower-income families to offset the higher energy costs.
Bingaman, however, said it is not yet “clear” what the government is going to do with the revenue made from auctioning carbon permits.
“Well, I don’t think it’s clear what – I think that’s one of the parts of the debate that we need to have – is what happens to any revenue that is generated from the auctioning off of allowances – and I think there are various proposals that call for different ways to distribute that wealth,” he said.
When asked if he had an idea about how the revenue should be distributed, Bingaman said, “Well, I think there’s a general consensus we ought to return as much of it as possible to rate payers, but beyond that I don’t think there’s any specifics agreed upon.”