Since the Waxman-Markey Cap and Trade bill is designed to reduce pollution by paying people who reduce pollution with money from polluters, it comes in for all the usual criticism from the fossil industries. They claim Al Gore something something, there's no global warming, scientists didn't consult me, it was cold yesterday and so on.
However, it also comes in for some anger from the rest of us, who do support the idea of funding a transfer to a renewable energy economy, but worry that we will pay higher costs and believe that the Cap and Trade bill gives too many initial free allowances to polluting industries. But this anger may be unwarranted.
Consumers are shielded from rising energy costs with most of the allowances:
Initially 76% and then 83% of allowances benefit people not polluters
The amount of allowance value directed to consumers or for other public benefit (more renewable energy, efficiency, low-carbon transportation technologies, green-collar job training, and the transition to a low-carbon economy) totals 76 percent of the cumulative allowance pool from 2012 through 2025 and 83 percent from 2012 through 2050. (WRI)
For the poor, subsidies would completely offset any rising cost of fossil energy.
This primarily affects the South, where more people depend on coal-powered electricity, are poorer, and live in rural areas. Congress plans to vary the size of the rebate to reflect other factors such as region of the country or vehicle ownership, providing larger rebates to families living in very cold or very hot climates or in rural counties where people have to drive longer distances.
Because many of the poorest Americans - those who are disabled and the elderly - have no jobs, the allowances for reducing the impact of higher energy costs initially would be in the form of a higher Cost of Living Adjustment to SSI, and for those on food stamps would be transferred electronically to an EBT account without any increase in administrative costs. For the working poor, an expansion in the Earned Income Tax Credit would be used to help offset higher energy costs with virtually no increase in administrative costs or bureaucracy. For the rest of us, it would come as tax rebates and subsidies.
Three accounts would be set up to fund these allowances.
(1) The Strategic Reserve Fund.
(2) The Climate Change Consumer Refund Account.
(3) The Climate Change Worker Adjustment Assistance Fund.
These would use the deposits of funds to pay out subsidies and rebates. The beneficiaries would be not fossil industries but downstream businesses and energy consumers.
Utilities are prevented from passing along costs to customers.
Utilities would be more highly regulated under the bill than now. Business as usual would end. Like utilities in the Renewable Portfolio Standards states do now, they would have to buy more renewable energy like solar and wind. They would not be able to keep on using fossil fuels as they get more expensive, and merely raise prices for their customers. There is a fixed credit or rebate on electricity bills to counteract any rising costs of fossil fuels due to Cap and Trade, funded by the The Climate Change Consumer Refund Account. This would be audited with the results available on the internet.
States would have to use 50% of their emission allowances to provide direct financial assistance to consumers with energy rebates and cost-effective energy efficiency programs to reduce their overall fossil fuel costs.
As our investments as a nation in renewable energy pays off we would all get rebates
Renewable energy is much cheaper than fossil energy once the initial capital investment is paid off, as there are no ongoing fuel costs. Once deposits are made to the Climate Change Consumer Refund Account, the Secretary of the Treasury would provide tax refunds on a per capita basis to each household in the United States, divvying up the the total deposited into the Climate Change Consumer Refund Account.
Only 8% of the free allocations go to polluters
The regulated entities, which are coal fields and point of entry oil and gas pipelines would initially get 8% of the free allocations. The amount increases increases to 23 percent in 2014 then declines again, reaching zero by 2025.