How a cap and trade bill will affect you


The main goal of the proposed cap and trade bill is to reduce the level of harmful greenhouse gas emissions.

To achieve this objective, Congress has crafted a plan to place a cap (or limit) on the amount of greenhouse gas that can be emitted into the atmosphere by large scale companies. These companies are required to have an emissions permit for each ton of CO2 released.

The bill will also offer trade incentives for companies to reduce emissions below the maximum level they were limited to in the purchased permit. The companies that emit less than required can sell the left over amounts to other companies that cannot meet the reduction limit. The main source of government profit from the cap and trade bill would derive from auctioning off emissions permits.

An additional purpose of this bill is to decrease the demand for "dirty" energy, and instead use profits to stimulate the path towards a "greener" energy market. It's common knowledge that with decreased demand, prices must fall to lure in customers. This rule doesn't apply in the case of cap and trade.

Originally published