Obama's Cap and Trade Would Generate $645 Billion in "Climate Revenue"
Photo via Wired
In what the New York Times calls a 'greenhouse gas gamble,' Obama designed his newly unveiled budget to include revenue from a carbon cap and trade system he expects to be in place by 2012—and he's got high expectations. Obama's administration projects that $645 billion in cap and trade revenue from the likes of oil and electric companies would flow in over the next ten years. And wait 'til you see where the money would go . . .Clean energy and low income families. Those are the most notable outlets for the expected revenue from the cap and trade. Yes, the cap and trade law favored by Obama would pump $15 billion a year into clean energy projects, according to the Washington Post (that's a $150 billion 10 year investment in clean energy projects, for anyone who's counting.) Another $60 billion a year will go towards tax credits for low and middle income families.
Peter Orszag, Obama's budget director, also projects that the cap and trade system could pick up steam, and be generating up to $300 billion a year by 2020.
The cap and trade system puts a 'cap' on the amount of greenhouse gas a company can emit—when the company goes over the cap, they must purchase pollution allowances or credits from companies that stay below the cap, thus rewarding energy efficiency and clean energy using companies. Obama believes the plan will reduce emissions 80% by 2050.
Of course, the cap and trade is a double edged sword when it comes to tax relief—since it would make operations more expensive for the likes of oil and electric companies, those costs would be probably be passed down to the consumer. And guess who gets hit the hardest by a bigger electric bill? Yup, low income families. So on that front, the billions going to tax relief might end up acting as a sort of equalizer.
Obama's cap and trade proposal has created an intense backlash from many Republicans and rust belt state Democrats; both worry that the cap would hurt industry in strained economic times. But Obama is optimistic—he wants to have the bill passed this year and up and running by 2012 to start collecting what will hopefully come to be widely known as "climate revenue."