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Cap And Trade no_planet_b

Published on December 16th, 2009 | by Susan Kraemer

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CBO Scores Senate Climate Bill – Will Save $21 Billion in First 10 Years

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December 16th, 2009 by
 

The newest iteration of the climate bill in congress has just been scored by the non partisan congressional budget office and, as with the previous climate bill (Waxman-Markey in the House) the Senate bill would save money. (It would cut carbon emissions too, potentially saving trillions in items like flood relief not paid out too, etc, but that is not a knowable sum, so the money saved by not destroying our climate doesn’t come into the CBO scoring.)

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In scoring the Clean Energy Jobs and American Power Act, the CBO included the effects of the many counteractions that would result throughout the economy in response to pollution costs entering the equation for the first time.

One example is how much revenue might be lost to the Federal Government because more companies would be likely to replace fossil energy with renewable energy, and thus be eligible to take advantage of the 30% tax credits, reducing taxable income.

Also, a cap and trade market that would be worth about $80 billion by 2012 would allow people as well as companies to trade allowances. Homeowners who could reduce their fossil fuel use would be able to earn money, just like businesses who did the same.

Like Waxman-Markey in the House, the Senate’s Clean Energy Jobs and American Power Act would cap emissions from electricity and from other industrial activities beginning in 2012. About 7,400 facilities would be affected. Mandates would require utilities, manufacturers, and other entities to reduce greenhouse gas emissions through cap-and-trade programs and performance standards.

The Environmental Protection Agency (EPA) would regulate two cap and trade programs, one to reduce the greenhouse gases (GHGs) carbon dioxide,  methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons and nitrogen trifluoride – and a separate cap and trade program to reduce hydrofluorocarbons (HFCs) a new, indirect climate risk. The EPA already runs a cap and trade program to reduce NOx and SOx (that cause acid rain) which cut both chemicals 50% in 20 years.

The costs to polluters would make it more profitable to figure out how to co-produce energy, for example with waste to energy, combined heat and power, and other technologies, or find alternatives for polluting substances. The CBO estimated that HFC pollution alone could be lowered 50% by 2020.

The bill is sponsored by Environment Committee Chairwoman Barbara Boxer. It would require U.S. emissions curbs of 20 percent by 2020 and 83 percent by 2050. The committee approved the bill with no GOP support, after many attempts to get the Republicans to even show up. After Senator Inhofe led a walkout, Senator Boxer reported the bill out of committee.

The bill would increase federal revenues by about $854 billion; and increase direct spending by about $833 billion. In other words, it would not only not add to the Federal deficit, but it would create money; reducing the deficit. About $21 billion between 2010 and 2019. More in each decade for the next four decades.

Related stories:

Cap and Trade 101: Why “Free” Allowances Are OK

Cap and Trade 101: How a “Cap” Ensures Carbon Reductions

76% of Cap and Trade Bill Allowances Benefit People Not Polluters

Waxman-Markey Cap and Trade Will Pay For Itself, CBO Finds

Image: Flikr user niOS

Source: Congressional Budget Office

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About the Author

writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate, and GreenProphet. She has also been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.



  • http://mydealofday.com/ dealaday

    I’ll have to read the language but if that 85% MLR requirement applies to private plans in the exchange almost all the doomsday scenarios become moot, it makes it almost impossible to continue the current predatory model of shoving people who make claims off the role while seeking out customers ho are less likely. Doing so just elevates the risk of rebates.

    This provision was in the Tri Committee and HELP bills but was effectively eliminated in non SFC and the Speaker/Majority Leader verisions.It’s reinsertion by the Team of 10 is potentially huge and the for-profit insurers their worst nightmare. So people shouldn’t write off Franken until the actually read the languag.

  • http://mydealofday.com/ dealaday

    I’ll have to read the language but if that 85% MLR requirement applies to private plans in the exchange almost all the doomsday scenarios become moot, it makes it almost impossible to continue the current predatory model of shoving people who make claims off the role while seeking out customers ho are less likely. Doing so just elevates the risk of rebates.

    This provision was in the Tri Committee and HELP bills but was effectively eliminated in non SFC and the Speaker/Majority Leader verisions.It’s reinsertion by the Team of 10 is potentially huge and the for-profit insurers their worst nightmare. So people shouldn’t write off Franken until the actually read the languag.

  • Susan Kraemer

    @RT “So they’re going to tax the utilities, then give it back to you to pay your utility bills- what a crewed up idea”

    No, here’s why it is a sensible idea.

    You, at your business (or at your home) can’t control whether your electric utility reduces its pollution or switches to clean energy and avoids those fees.

    So why should you pay more if they won’t?

    The pollution fee affects only about 7,000 coal, oil, and cement businesses that emit over 25,000 tons a year of GHGs. This put the pain at the action point.

    And if they want to avoid that fee, they can (should!) just install combined heat & power, waste to energy or similar tech (we write about the many options here all the time) to reduce their emissions so they also earn money from the trade side of the cap and trade.

    By complying with the law to reduce pollution, they make their businesses more profitable. They reduce waste, or add renewable energy.

    @James, no the costs would not be passed down to us. Details:

    http://cleantechnica.com/2009/09/11/76-of-cap-and-trade-bill-allowances-benefit-people-not-polluters/

    This legislation has controls against us suffering for their inaction. By contrast, a carbon tax would pass down the pain. CEJAPA has been designed to keep it within the group that pollutes.

  • Susan Kraemer

    @RT “So they’re going to tax the utilities, then give it back to you to pay your utility bills- what a crewed up idea”

    No, here’s why it is a sensible idea.

    You, at your business (or at your home) can’t control whether your electric utility reduces its pollution or switches to clean energy and avoids those fees.

    So why should you pay more if they won’t?

    The pollution fee affects only about 7,000 coal, oil, and cement businesses that emit over 25,000 tons a year of GHGs. This put the pain at the action point.

    And if they want to avoid that fee, they can (should!) just install combined heat & power, waste to energy or similar tech (we write about the many options here all the time) to reduce their emissions so they also earn money from the trade side of the cap and trade.

    By complying with the law to reduce pollution, they make their businesses more profitable. They reduce waste, or add renewable energy.

    @James, no the costs would not be passed down to us. Details:

    http://cleantechnica.com/2009/09/11/76-of-cap-and-trade-bill-allowances-benefit-people-not-polluters/

    This legislation has controls against us suffering for their inaction. By contrast, a carbon tax would pass down the pain. CEJAPA has been designed to keep it within the group that pollutes.

  • James

    That is $854 billion in taxes paid by individuals since businesses pass the taxes onto us. If the government would not spend anything, then we could have $854 billion off of the deficit instead of a paltry $21 billion.

    Tax and spend in the name of the environment. Just another way to raise taxes by our congress.

  • James

    That is $854 billion in taxes paid by individuals since businesses pass the taxes onto us. If the government would not spend anything, then we could have $854 billion off of the deficit instead of a paltry $21 billion.

    Tax and spend in the name of the environment. Just another way to raise taxes by our congress.

  • RT

    Use your brain here – where do you think that $854 BILLION in revenue to the government is coming from? It’s coming from the cap & TAX on businesses. Do you think these businesses are going to just eat that tax? No! each of us is going to pay it through higher costs. So they’re going to tax the utilities, then give it back to you to pay your utility bills – what a crewed up idea that is! Meanwhile, the companies that make the things we buy will not get this rebate, resulting in increased costs for them, and you guessed it, for all of us. Ultimately, we’ll send what few manufacturing jobs we haven’t already run out of this country packing to lower cost areas of the world.

  • RT

    Use your brain here – where do you think that $854 BILLION in revenue to the government is coming from? It’s coming from the cap & TAX on businesses. Do you think these businesses are going to just eat that tax? No! each of us is going to pay it through higher costs. So they’re going to tax the utilities, then give it back to you to pay your utility bills – what a crewed up idea that is! Meanwhile, the companies that make the things we buy will not get this rebate, resulting in increased costs for them, and you guessed it, for all of us. Ultimately, we’ll send what few manufacturing jobs we haven’t already run out of this country packing to lower cost areas of the world.

  • Susan Kraemer
  • Susan Kraemer

    The EPA estimated the average annual household cost of ACES (identical Waxman-Markey bill to range from $84 to $110 in 2020; because there’s provisions in both to spend about 80% of the proceeds on consumer protection.

  • Peter

    How much will this cost the consumer?

  • Peter

    How much will this cost the consumer?

  • Susan Kraemer
  • Susan Kraemer

    The EPA estimated the average annual household cost of ACES (identical Waxman-Markey bill to range from $84 to $110 in 2020; because there’s provisions in both to spend about 80% of the proceeds on consumer protection.

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