The centerpiece of the energy and climate change-related section of President Obama’s proposed budget is a cap-and-trade system that is meant to realize the dual goals of reducing greenhouse gas emissions and providing revenue to fund other clean energy projects. (Cap and trade systems are a way to control pollution in an area, like a country, by allowing the carbon emitters, or “polluters,” a certain limit to their emissions; if they pollute less than their limit, they are granted certain credits that they can sell to others to offset their higher emissions.)
According to the budget document, the program would be implemented “through a 100% auction to ensure that the biggest polluters do not enjoy windfall profits,” and predicts that revenue from the auction would provide $150 billion in funding for clean energy projects over a 10-year period, beginning in 2012. Additional revenues, which were estimated at between $50 billion and $300 billion annually by 2020 in a September appearance before Congress by Peter Orszag, now Obama’s budget director, would “be returned to the people, especially vulnerable families, communities, and businesses to help the transition to a clean energy economy,” according to the document. The budget itself estimates those revenues would total $646 million between 2012 and 2019.
An attempt to pass cap-and-trade legislation failed in the last session of Congress, and the proposal is likely to be just as contentious this time around. Senators and Representatives of both parties from states heavily dependent on manufacturing and fossil fuel-based industries are likely to see the bill as a threat to their local economies and are expected to oppose it vigorously, as are those from states with utilities that rely on coal-fired energy plants.
On the upside, in addition to providing a new source of badly-needed revenue for the federal government, it’s been widely predicted that placing a price on carbon emissions will ultimately spur technological innovation and help reduce America’s dependence on imported petroleum.