With rash of hearings, bailouts, investigations and other such activities on Capital Hill, you may not have realized that legislation to help curb climate change is making its way through the U.S. House of Representatives. The U.S., following Europe’s lead, wants to put a price on pollution, particularly carbon dioxide. The hope is that making polluters pay for carbon emissions will encourage them to invest in cleaner energy.
Of course that is the simplified argument. The truth is there is a big expense tied to eliminating coal and other fossil fuels from our biggest polluters, the utility companies. Switching to clean alternatives, while desirable for many, is expensive and time consuming. The concern for consumers is that the energy companies will pass those costs on to us in the form of higher rates. More expensive energy is a tough pill to swallow for Americans already bruised by a tough recession and job losses.
Because of the Environmental Protection Agency’s declaration that carbon dioxide is a threat to human health, change is coming. Either the EPA will make the rules or Congress. That is why it pays to be an educated consumer on this matter. The more you know, the better the national debate.
There are two main proposals out there that could spare the consumer some of the pain. One is Cap-and-Trade, where by the amount of carbon pollution a business can emit is capped at a certain level. The companies that don’t have the technology to stay under the cap, can purchase permits to pay for their excess carbon emissions. The permits could be purchased on the open market from companies whose emissions fall below the carbon quota.
Are you still with me? The big question with Cap-and-Trade: does the U.S. government sell all of the permits at auction (raising over $1 billion in the process, or does it give some away for free to help the Utilities transition to cleaner energy and to prevent a huge run up in energy costs for consumers?
Another plan that has been getting some attention is a Cap-and-Dividend. In this scenario the consumers that do the most to lower their consumption would receive some of the cash (a dividend) collected by the sale of carbon permits. Some feel it is the best way to incentivize both consumers and business. Others find it a logistical nightmare to implement. There are other ideas out there, but right now, the traction is with Cap-and-Trade. You would do yourself a service by investigating the pros and cons of this policy so that you can be an informed voice as the debate gets louder. -Mary Caraccioli