Cap and Trade Rules
Obama Wants Mandatory Cap and Trade System

February 25, 2009

Watching the Presidents speech to Congress...see larger image President Obama in
his speech to Congress last night announced that he wants a mandatory cap on
greenhouse emissions even though the country is going through a tough economic
time right now. Obama did finally return to his energy campaigns yesterday that
he talked about so passionately in his campaign last year, and he said that a
cap and trade system would help US companies recover from the economic slump as
it would give them a reason to produced alternative energy sources such as wind
turbines and solar panels.

"To truly transform our economy, to protect our security, and save our planet
from the ravages of climate change, we need to ultimately make clean,
renewable energy the profitable kind of energy," Obama said in his address
to Congress. "So I ask this Congress to send me legislation that places
a market-based cap on carbon pollution and drives the production of more
renewable energy in America. That's what we need."

Source: nytimes.com

Obama said the government will invest $15 billion every year to develop these
new energy technologies, as the government revenue from the allowances that
companies would buy would fund the cap and trade system.

Obama acknowledged that it will not be easy, and that it will be an expensive
project, but he said:

But this is America. We don't do what's easy. We do what's necessary to move
this country forward."

He received a standing ovation for his climate change comments, however he did
not talk about whether he wanted to combine the energy and climate change bills
into one big package.

A climate change bill will soon be delivered to the President for him to sign.

It appears as if most are ready to get on board in Congress, however he will
have a fight ahead of him to convince lawmakers whose states have a lot of heavy
industry plants in them.

What is a Cap and Trade system?

It is a method used to control pollution by giving companies economic incentives
to reduce their pollution output

Carbon trading is sometimes seen as a better approach than a direct carbon tax
or direct regulation. By solely aiming at the cap it avoids the consequences
and compromises that often accompany other methods. It can be cheaper, and
politically preferable for existing industries because the initial allocation
of allowances is often allocated with a grandfathering provision where rights
are issued in proportion to historical emissions


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