Obama's new energy plan: "cap-and-trade"

[wyldwolf]

Presidential candidate Barack Obama hopes to reduce U.S. dependence on foreign oil and combat global warming with a national auction system that would make every company pay for the right to emit smoke and other sources of carbon.

The "cap-and-trade" auction system is based on the idea that the easiest way to reduce the carbon emissions that contribute to global warming is to simply charge a price for pollution. The approach has long been favored by environmentally minded free-market economists who believe that a pollution "price" would reduce emissions more efficiently than complex government regulations.

Under the Obama plan to be formally announced in a speech today, the government would set a national cap on carbon emissions that by 2050 would be reduced gradually to 80 percent of 1990 carbon emissions. The national cap in turn would determine the number of individual carbon allowances available for auction to industry. So the price of a carbon allowance should reach the level necessary to limit emissions to the right level.

Promoters of the approach believe that such an auction system works better than complicated government standards for industry-by-industry emissions limits and the inevitable grandfather clauses to allow some old factories to continue polluting because it is not economical to retrofit them.

Instead, the market makes decisions about which plants install potentially costly control systems to limit carbon emissions, which ones do not, and which ones simply shut down. Companies make individual decisions on what, if any, controls are economical for individual factories based on the price set for carbon allowances by the national auction.

Of course, the approach would impose new costs on industry throughout the economy because companies would either have to make new payments to the government for the carbon allowances or pay for new equipment to reduce their carbon emissions.

Obama's campaign said he would use some of the money raised by the auction for $150 billion in funding over the next years to accelerate development of renewable fuels and energy efficiency initiatives. A press release said he would concentrate on biofuels and biofuel infrastructure, plug-in hybrid vehicles, commercial-scale renewable energy, low-emission coal plants and a new digital electricity grid. The campaign also said it would invest funds in basic research, workforce training for cleaner-energy systems and nuclear energy safety.

Obama's energy plans also would set goals of reducing U.S. dependence on foreign oil by 35 percent by 2030 and generating 25 percent of electricity from renewable resources by 2025.

Among the ways Obama hopes to increase energy efficiency is by eliminating use of traditional incandescent light bulbs by 2014 in favor of fluorescent lights in all homes and businesses.

He also would require automakers to double fuel efficiency of new cars within 18 years and mandate by 2012 that all new cars be flexible-fuel vehicles capable of using biofuels such as ethanol-based E85.

The Obama campaign said it would give the auto industry tax credits to assist with retooling costs.

http://weblogs.baltimoresun.com/news/politics/blog/2007/10/obama_energy_policy.html

Or, perhaps more here:

http://www.ppionline.org/ndol/ndol_ci.cfm?kaid=110&subid=900115&contentid=254448
http://www.ndol.org/ndol_ci.cfm?kaid=131&subid=207&contentid=3859
http://www.newdemsonline.com/ndol_ci.cfm?kaid=131&subid=207&contentid=250326

[cobalt1999]

1. He better address how he'll keep those companies from just moving offshore then.

As if they need more incentive to leave.