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Cap And Trade Challenges

By Desiree J. Hanford - February 2009 - Energy Efficiency


Obama’s proposed cap and trade program has already run into a roadblock. Missouri Senator Claire McCaskill, a Democrat, said in early December that she hopes the administration will delay it because the cost of forcing utility companies to switch to so-called clean coal technology or other alternative sources will ultimately be shouldered by consumers who are already financially strapped.

The economy, however, may turn out to be Obama’s biggest roadblock. The country’s real gross domestic product decreased at a rate of 0.5 percent in the third quarter, according to the Bureau of Economic Analysis. With real estate and auto sales expected to remain bleak through 2009, signs of a quick recovery are slim. Obama will have to carefully pick and choose priorities, and newspaper reports have noted that cap and trade may not be on the top of the list.

Some leaders in Congress, as well as former Vice President Al Gore, have suggested that a better way to reduce carbon emissions would be to place a tax on carbon. It doesn’t appear, however, that the White House has any interest in a carbon tax.

But the administration does want to make the federal government the leader in saving electricity, and to that end, Obama’s agenda proposes making existing federal buildings 25 percent more efficient. The target for new federal buildings would be to make them 40 percent more efficient within five years.

In an effort to improve the efficiency of facilities, Obama wants new buildings to be carbon neutral, or to produce zero emissions, by 2030. To achieve that goal, he proposes improving new building energy efficiency by 50 percent during the next 10 years; existing building energy efficiency is targeted for a 25 percent gain. The administration wants utilities to get increased profits for improving energy efficiency instead of from higher energy use.

Finally, the administration also wants to spend $150 billion over a decade on advanced energy technologies. As part of that, Obama’s agenda aims to have 10 percent of electricity come from renewable sources by 2012 and 25 percent by 2025. To meet the goal, the administration would establish a federal Renewable Portfolio Standard that would require the prescribed percentages of electricity to come from “clean, sustainable energy sources” such as solar, wind and geothermal. Obama also wants at least 30 percent of the federal government’s electricity to come from renewable sources by 2020, and he hopes to extend the federal Production Tax Credit for five years to encourage use of renewable technologies.

Many states already have renewable portfolio standards that require electric utility companies to generate a certain amount of electricity from renewable sources, says Pew Center’s Greenwald.





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