1) lawmakers set an allowed cap on overall greenhouse gas emissions;
2) the federal government regulates each emitter (coal suppliers and burners, oil importers and sellers, utilities and refineries, etc. )
3) Emitters could buy credits to emit more from non-emitters
This CBO report distinguishes between a cap-and-trade system which sells “allowed amounts of emissions” or assigns them without cost. Selling “allowed amounts of emissions” to businesses creates revenues to balance burdens on consumers, via reduced taxes or a balanced budget. Assigned and free “allowed amounts” likely gives more profit to energy producers without protecting consumers.
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US CBO Sees Carbon Cap Driving Up Costs For Poorer Households
Maya Jackson Randall, April 26, 2007 (Dow Jones Newswire)
The nonpartisan Congressional Budget Office (CBO); consumers, especially lower-income consumers; Federal policy-makers involved in developing legislation to limit greenhouse gas emissions
The CBO finds that lower-income consumers would take a bigger cost hit from carbon capping.
There are more pending legislative proposals on how to cap emissions than 2008 candidates for president right now. That’s a LOT of proposals.
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Capitol Hill is where the legislative action is, but the discussion on how to limit emissions without causing economic burden and inhibit growth is national, no, make that international.
- Emissions capping adds cost to the burning of fossil fuels to create energy. Even the brightest scenarios have much fossil fuel still being used to create electricity and power vehicles for the foreseeable future. This means higher energy prices. Energy prices are not easily avoided by those with lower incomes. They usually consume less energy for optional activities (water skiing) and more for necessary ones (commuting to work).
- Higher energy costs likely mean some reduction in optional consumption and, thus, some reduced economic activity in energy fields and job losses in that sector.
- The most likely emissions limiting legislation right now looks to be a cap-and-trade system. Costs would be directed at business but would inevitably be passed on to consumers.
“All consumers would face higher prices for electricity and gasoline, but those hikes would take up a greater portion of poorer households' income…”