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Obama Calls for Cap-and-Trade Program


By William L. Watts
MarketWatch
October 8, 2007


Democratic presidential contender Barack Obama on Monday said that if elected he
would establish an economy-wide cap-and-trade program that would sharply cut
greenhouse-gas emissions by 2050.

In a speech prepared for delivery in Portsmouth, N.H., the Illinois senator said
the cap-and-trade plan would be the centerpiece of a wide-ranging set of
measures designed to cut emissions of gases tied to global warming and weaning
the United States off of dependence on oil.

Under a cap-and-trade plan, companies that produce carbon dioxide and other
greenhouse gases receive or buy credits that give them the right to emit a
certain amount. Companies that emit less carbon than their credits allow can
profit by selling any excess credits on the open market, while those that exceed
their emission allowance have to make up the difference or face heavy fines.

Obama's plan would require all credits to be purchased at auction, rather than
allocated by industry -- a move his campaign said would ensure that all
polluters pay for every ton of emissions released.

'Businesses don't own the sky, the public does, and if we want them to stop
polluting it, we have to put a price on all pollution.'

Barack ObamaA plan offered by rival Democrat John Edwards would also establish
a cap-and-trade plan, but would auction some credits while granting others to
existing businesses.

"The market will set the price, but unlike the other cap-and-trade proposals
that have been offered in this race, no business will be allowed to emit any
greenhouses gases for free," Obama said. "Businesses don't own the sky, the
public does, and if we want them to stop polluting it, we have to put a price on
all pollution."

President Bush has resisted calls for setting a cap on emissions, saying such a
move would hurt the economy and put the United States at a disadvantage to
rapidly developing economies.

Under the Obama plan, the government would set annual reduction targets and
would require that overall emissions be reduced to 1990 levels by 2020, and
would be reduced to 80% below 1990 levels by 2050. Edwards and Democratic
frontrunner Hillary Clinton have also called for reducing emissions to that
level by 2050. New Mexico Gov. Bill Richardson, a fellow candidate, has called
for an 80% reduction from 1990 levels by 2040, with a 90% reduction by 2050.
Obama's plan would also spend $150 billion over 10 years on the development of
climate-friendly supplies and technologies and sets a goal of reducing overall
oil consumption by 35%, or 10 million barrels, by 2030. It also calls on the
United States to lead a new international partnership to combat global warming.

Obama, a freshman U.S. senator, cast himself as a Washington outsider who is
more willing than other candidates to pursue needed but politically risky
measures to combat global warming and reduce dependence on fossil fuels.

 

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