The basic idea behind cap-and-trade is simple: Experts assess how much pollution can be safely put into the environment, then shares (sometimes called permits or allowances) equaling that amount are given or auctioned by the government to those who have historically emitted the pollutant.
Polluters then must return to the government enough permits to cover their emissions every year. If they fall short of permits, emitters can buy them from those who have a surplus. The number of permits available decreases annually until a “safe” level of emissions level is reached.
The bill would direct 2 billion free allowances to domestic and international conservation, known as “offsets,” which would allow companies to buy emissions permits by effectively paying farmers here and abroad to preserve trees and employ environmental planting practices.
The legislation would require utilities that provide more than 4 million megawatt hours of electricity a year to buy a certain amount of electricity from renewable sources.
The amount starts at just 6 percent in 2012 and gradually increases to 20 percent in 2020, although utilities could meet up to 8 percent of the mandate through reduced energy usage by their customers.
Renewable energy accounts for about 8.5 percent of domestic electricity generation, but the House bill’s renewable mandate would not recognize all of that as renewable. Hydropower, for example, which makes up a large chunk of current electricity generation, is not all counted as renewable toward the new mandate.
The last major issue holding up the bill was resolved Thursday when Mrs. Pelosi agreed to an amendment that would require the president to impose trade tariffs on trade partners that do not limit their carbon-dioxide emissions by 2020. Earlier, House leaders compromised with farm-state lawmakers by, among other things, easing rules on corn-based ethanol production and putting the permit program under the Agriculture Department rather than the Environmental Protection Agency.
The bill would have far reaching effects on energy users at all levels of the economy, from giant manufacturers to utilities to individuals.
For instance, the government would impose new buildings standards and require some household items to use less energy than they do now. These items include backyard spas, lamps located above art work, drinking-water dispensers and light bulbs in outdoor light fixtures.
The bill would, in effect, force companies to phase out inefficient products of these kinds and replace them with more efficient - and more expensive - versions. Light bulbs, now sometimes less than a dollar, would in the future cost much more.
The bill would also make changes to the government’s Energy Star program, which recognizes dishwashers, refrigerators and other appliances that save energy. The tougher standards would mean these “energy saving” products would cost more than regular products and it would take longer for consumers to recoup the extra costs through savings on their energy bill, critics say.
“It doesn’t do any good to have high-price, energy-efficient products if people will just pay to have their old appliances fixed,” said Kevin Messner, vice president of government relations for the Association of Home Appliance Manufacturers.
By Andrew P. Napolitano
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