Cap and Trade Rules
How the Budget Resolution Affects Cap-and-Trade Legislation

Helicopter Association International
March 26, 2009

While neither the House or Senate congressional budget
resolution assumes cap-and-trade money will be raised or
spent, and neither resolution contains reconciliation
instructions to address climate change, both resolutions
say Congress can reserve funds for any future bill to
address clean energy or climate change, provided that it
is deficit-neutral.

A global warming plan, cap-and-trade legislation and a
market-based system for trading emissions allowances
were major items in President Obama’s budget proposal
and they are major Democratic initiatives. Obama’s
budget proposal assumed $646 billion in new revenue over
10 years from a plan to cap greenhouse gas emissions and
create a market-based system for trading emissions
allowances. The president’s budget would have spent the
money on renewable-energy research and tax cuts.

How lawmakers address politically sensitive questions in
designing a cap-and-trade system will determine the
revenue that would flow to federal coffers and how that
money will be spent. Obviously, HAI is of the opinion
that should a cap-and-trade program develop that targets
aviation and specifically helicopters, any funds
realized from such a program should be redirected back
to the helicopter industry to aid in the design and
development of a low-altitude infrastructure to support
rotorcraft operations, assist with NextGen and ADS-B
enabling avionics for helicopters, and provide
substantive research funding and reinvestment to enable
the helicopter industry to become more energy efficient.
Draining valuable capital from our industry does not
move the aviation industry to carbon neutrality.
What little is known at this juncture is that Obama has
proposed selling all emissions permits to industry at an
auction. Many lawmakers want to allocate some permits at
no cost to offset the cost of compliance, which would
bring in less revenue. On the spending side, lawmakers
have a variety of ideas on how to allocate the revenue,
such as rebates for electricity bills, assistance to
states and industries, and deficit reduction. Obama
proposed using most of the cap-and-trade revenue to fund
his “Making Work Pay” tax cut, in part to offset the
higher utility bills that would probably result from a
climate-change bill.

HAI reports thirty-three senators, including eight
Democrats, recently signed a letter opposing use of the
reconciliation process to advance the climate-change
plan. The decision in Congress to not push through a
cap-and-trade plan under reconciliation should please
senators who believe complex energy legislation should
move through the regular process. However, at his March
24 news conference, President Obama made it clear that
he would continue to push for a cap-and-trade bill.
The chairman of the House Energy and Commerce Committee,
Congressman Henry A. Waxman (D-California) plans to mark
up a climate change and energy bill by Memorial Day.
However, the Senate is likely to move at a slower pace.
The Senate Energy and Natural Resources Committee begins
work next week on energy legislation that does not
include cap and trade.

This is an issue very much on HAI’s legislative radar,
and HAI will continue to closely track developments in
Washington and work behind the scenes on Capitol Hill
with regard to efforts to draw aviation into the
cap-and-trade plan. Global warming legislation and
cap-and-trade will be the focus of an in-depth article
in the upcoming Spring RotorMagazine, and this will be a
much-read article for our industry.


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