Obama counting on cap-and-trade

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By Tom LoBianco

President Obama is banking on $300 billion to come in by 2022 from a cap-and-trade plan to reduce greenhouse gases, according to a source with knowledge of the president's proposed budget.

Mr. Obama expects money from the climate-change proposal to start rolling in by 2012, and that amount would come in over the subsequent 10 years as companies purchase carbon offsets, according to the source.

The budget's assumption of money from a revenue stream that does not yet exist provides a concrete indication that Mr. Obama expects a cap-and-trade system to be in place soon although Congress still must shape, write, debate and decide on a timetable for legislation that likely will be divisive even among Democrats.

"As someone who is very involved in the legislative debates on this, it's just very premature to be having any number like that," said Jeff Holmstead, Environmental Protection Agency assistant administrator during the Bush administration.

"I do think it will be eye-opening to a lot of people to find out that cap-and-trade is really about raising taxes," said Mr. Holmstead, who now works with the energy lobbying firm of Bracewell and Giuliani.

Cap-and-trade plans work by having the government sell to private enterprises the right to emit a certain amount of carbon dioxide or other gases. Those emission rights can then be bought by companies that wish to emit more from companies that can emit less than their targets.

A White House spokesman did not immediately return calls for comment Tuesday, although Obama spokesman Robert Gibbs confirmed to Reuters news agency that money from a cap-and-trade plan would be part of the president's budget.

Mr. Obama would not be the first president to assume in his budget a nonexistent revenue stream. President Bush included in several of his budgets the expected fees from his proposal to drill in the Alaska's Arctic National Wildlife Refuge, though those plans never materialized during his presidency, thus neither did the money.

Members of the House and Senate have yet to introduce climate-change legislation, although House Energy and Commerce Committee Chairman Henry A. Waxman, California Democrat, has said he plans to have a cap-and-trade bill passed out of his committee by Memorial Day.

Senate Majority Leader Harry Reid, Nevada Democrat, has said he expects to tackle global warming later in the summer, although Senate Environment and Public Works Committee Chairman Barbara Boxer, California Democrat, has said she doesn't expect to pass a climate-change bill until next winter.

Mr. Obama promised during the campaign to reduce carbon-dioxide emissions by 80 percent by 2050 and Democratic leaders on Capitol Hill have said a cap-and-trade system is more likely to pass both the Senate and the House than other plans, such as a carbon tax.

A spokesman for Mr. Reid said his office would wait to comment until the budget is introduced Thursday.

A spokeswoman for Mr. Waxman said the lawmaker could not immediately be reached for comment.