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Questions and answers about the climate bill
Posted on 29. Jun, 2009 by GMS Editor in Newsflash, ShowOnLatestPanel
By DINA CAPPIELLO and ERIC CARVIN – 3 days ago
Cap-and-trade? Offsets? Pollution credits? The climate bill under consideration in the House tackles global warming with new limits on pollution and a market-based approach to encourage more environmentally friendly business practices. But what exactly do the proposed rules mean, and how would they work?
Some questions and answers about the bill — a top legislative priority for President Barack Obama:
Q: What’s the purpose of this legislation?
A: To reduce the gases linked to global warming and to force sources for power to shift away from fossil fuels, which when burned, release heat-trapping gases, and toward cleaner sources of energy such as wind, solar and geothermal.
Q: How does the bill accomplish this?
A: By placing the first nationwide limits on emissions of heat-trapping gases from major sources like power plants, refineries and factories. This limit effectively puts a price on the pollution, raising the cost for companies to continue to use fuels and electricity sources that contribute to global warming. This gives them an incentive to seek cleaner alternatives.
Q: Is this the “cap-and-trade” idea that’s been in the news?
A: Yes. The first step in a cap-and-trade program sets a limit on the amount of gases that can be released into the atmosphere. That’s the cap. Companies with facilities that are covered by the cap will then receive permits for their share of the pollution — an annual pollution allowance. This bill would initially give the bulk of the permits away for free to help ease costs, but they still will have value because there will be a limited supply. Companies that don’t get a big enough allowance to cover their pollution will either have to find ways to reduce it — which can be expensive — or buy additional permits from companies that have reduced pollution enough to have allowances left over. That’s the trade. Companies will typically pick the cheaper option — reducing pollution, or buying permits. They also have a third choice: They can invest in pollution reductions made elsewhere, such as at farms that capture methane or plant trees. These are known as offsets.
