Energy Secretary Chu Pledges to Work with Congress on Cap-and-Trade System

March 5, 2009

Email this story Print this post Add your comments

At a Senate Energy and Natural Resources Committee hearing March 5, Department of Energy Secretary Steven Chu promised to work with Congress to implement President Obama’s cap-and-trade system to curb greenhouse gas emissions.

Under the system, a cap on carbon emissions would be imposed on U.S. power plants, oil refineries and other industrial sites, which then could bid at auction on permits to exceed those limits. Plants which decrease emissions could sell their permits to other facilities that pollute more.

Passing Obama’s plan as he envisions is not likely to be a walk in the park.

New Mexico Democratic Senator Jeff Bingaman, chairman of the energy panel, has indicated any Senate climate bill would not likely adhere to the strict auction plan for permits, which he says is too harsh on industry. Bingaman suggests that Congress develop a cap-and-trading emissions system with carbon allowances provided to polluters like cement factories and coal-burning power plants, along with permits that are sold.

Giving away allowances may prove counterproductive, however. In the European Union, the Emissions Trading Scheme, in addition to setting a cap that some say was too high, gave away a first round of emissions permits to polluters. This resulted in a transfer of wealth to the polluters, and eventually caused a glut of permits on the market.

President Obama’s budget proposal calls for significant revenue from cap-and-trade auctions.

Email this story Print this post Add your comments

Advertisers

Enhance Sustainability. Improve Profitability.

Learn how at the SAP Sustainability Resource Center. >>

Unclear about the EPA's new GHG Rule?

Learn how it could affect your business. >>

EPA mandatory emissions reporting starts Jan 1st

CSA Standards can help your organization get ready for compliance. Find out how. >>

Survey Results: Product Environmental Compliance Best Practices

How to achieve compliance at a significantly lower cost. Download the full report. >>

Join the Discussion

Reader Comments

The next to last paragraph, as is often the case in articles like this, mistakenly conflates the issue of the level of the cap with the issue of how the allowances are allocated. It is time for reporters to learn to get this straight. PHase I of the EUETS has been criticized for 2 different things. First, the cap was set too high, which is why the price collapsed. Second, the allowances were given away rather than sold, which transferred a large chunk of wealth to the shareholders of power companies (and gave up some possible efficiency gains). These are two separate issues. The glut did not result from the decision to allocate the allowances for free. It occurred because there were too many allowances relative to the demand. If anything, auctioning allowances would have made the glut worse by resulting in the shut down of some marginal generators.

Bill Shobe | March 6th, 2009

So one just has to wonder if the “revenue” from this cap and trade program will ever payback the $13.5 Billion LOSS President Obama and Secretary Chu just handed the nation by stopping the use of Yucca Mountain as a storage site for nuclear waste and effectively eliminating the last hope of a renewed clean-energy future from advanced nuclear power plants.

Jack Pouchet | March 6th, 2009

Recent Daily News [ see all ]

11/20/2009
11/19/2009
11/18/2009

Charts [ see all ]

European Paper Industry Cuts CO2 Emissions by 42% since 1990

S. America Takes Most Urgent View of Copenhagen Talks

Nike Tops Annual Climate Action Scores

Oceans May Trap more Carbon than Forests

Jobs

View All Jobs >> Post a Job >>

Comments and Discussions

Trade Association on Trade Group on EPA Chemical Regs: ‘If Everything is a Priority, Then Nothing is a Priority’
"Seriously… that..."

Gary Markowitz on Supermarkets Tackle Emissions Reductions, Fuel Efficiency
"Supermarkets waste over 10 percent of their energy through improper..."

peter in ireland on Ontario May Follow California’s Lead on TV Energy Efficiency
"Governor Schwarzenegger is shooting himself in the foot! 1...."

Environmental Leader on S. America Takes Most Urgent View of Copenhagen Talks
"The survey respondents (the PDF report mentions 4,000 respondents in 38..."

Jake on UPS Trying New Hydraulic Hybrid Trucks
"A point of clarification: the Reuters press release referenced herein reports that 20 UPS will purchase..."

Custom Organic Shirts on S. America Takes Most Urgent View of Copenhagen Talks
"90% of North Americans believe it is urgent to get a global climate..."

peter dublin on California City’s Green Building Ordinance Applies to Commercial Buildings
"Why energy efficiebnt regulation on buildings –..."

Environmental Leader