Cap And Trade Bill 2009 HR 2454 Passed, So What Does That Mean?
The Cap and Trade Bill 2009 was passed in the U.S Senate on Friday, but what does that mean for the average American family? This 'green energy revolution climate bill' has already created a lot of debate from both the Republicans and the Democrats, and it will certainly affect America's economic condition.
It was a close vote to get the bill passed even: 219 voted for the bill and 211 voted against it, while only three people abstained from voting.
What is the cap and trade bill?
It aims to reduce greenhouse gas emissions by 17 percent by 2020 and create some 'green' jobs, by putting a limit on the amout of pollution large industrial industries can output, and then if they go above that, they have to buy pollution permits.
If some companies don't need all that they are allocated, they can sell their permits to companies that do.
The Cap and Trade is a policy that protects human heath conditions through the prevention of large amounts of emission from different sources that pollute the environment. These sources have to gather emission allowances and had to comply to a strategy that includes meeting a required reduction in pollution, checking pollution control besides others.
There will be penalities for going above your allocated emission allowance, and the program will monitor things like acid rain, clean air rules, and emissions released into the atmosphere.
Now that the bill has passed, the biggest challenge will come this September when the Senate takes up legislation for the bill.
Much opposition to the bill in the Senate comes from the farm and coal state legislators who fear that such severe restrictions will damage the local economies of many towns and will raise the cost of things like electricity for the average American family.
Some critics say that if they have to import wind and solar electricity from other states, it will become too expensive to light their homes. This feeling is especially strong in the Southeast states.
Dissenting voices will only gain prominence in the Senate, where each state has equal representation.
“The Senate magnifies the significance of rural constituencies,” says Scott Segal of Bracewell and Giuliani, a Washington, D.C., law firm specializing in energy issues.
Last week, the Congressional Budget Office looked at the cost of such a bill in the year 2020 for average families. According to their calculations, based on the current bill that passed on Friday, the net annual economy-wide cost by the year 2020 would be $22 billion.
Companies that would have to adjust and purchase carbon allowances for example, will not absorb that cost themselves, the cost would be passed on to the consumer, and by 2020, according to the budget office, that cost would be about $175 per American household. That number is just the cost however, and does not take in to account the potential cost benefits that would come from reducing carbon emissions. The number equals about 0.2 percent of a family's after-tax income, on average.
Some households would benefit more though, as they might receive energy rebates and tax credits. Some of the poorest households would be most likely to see a rebate of about $40 a year, but the richer households would suffer more and would have to pay more.
Republican critics however, say that the $175 figure is much too low, and that it will actually cost Americans much more. If you live in a state where most of the energy supply comes from coal for example, it will most likely cost you more each year to live.
Farmers are also concerned that it will cost them more, because their business relies on machines like tractors, and animals such as cows, both of which are heavy emissions producers.
Some states stand to benefit from the bill and others to lose from it.
However, the bill still has to go through the Senate and it appears it has some tough competition there.
Two tightly interconnected issues could stop the bill in its tracks in the Senate. The first is mathematical: Currently, Democrats hold 59 seats in the upper house, a solid majority but not enough to sidestep a Republican filibuster that would kill hopes for the bill's passage (60 votes are needed to invoke cloture, which would override a filibuster attempt.)
The second is that the introduction of both a climate and energy bill may be too much at one time, rather than trying to pass two separate bills. Add on top of that the current economic climate, and supporters worry that there are already too many strikes against the bill.
A list of key fence-sitting Democratic senators could include Debbie Stabenow of Michigan, Claire McCaskill of Missouri, Blanche Lincoln of Arkansas and Mark Warner of Virginia. Republicans who in the past have voiced support for energy or climate legislation include George Voinovich of Ohio and Lindsey Graham of South Carolina, if concessions are made to promote nuclear power.
It remains to be seen what will happen however, but for now the bill is on the way to the Senate, and that will be decided in September.