Can Someone Explain Cap and Trade? (percentage, credit, buy, sell)

[colleeng47]

I know it just passed, and even though I googled it, it still isn't clear to me. Also, I keep reading the critics who say this will increase costs for businesses, affect the middle class, etc. Can someone explain (in layman's terms) what exactly Cap and Trade means, and how it would affect the average American?

I'd like to hear from both supporters and naysayers.

[evilnewbie]

Cap and trade is basically this... One company pollutes MORE and another company pollutes less in year ONE (and rich people provide the money to make it happen)... the company that pollutes more has to PAY more money and since it pays more money to do the same thing, YOU end up paying MORE for their services and goods... you like electricity? you like water? you like food? All of it, pollutes in a way... so you pay more so that the company can pollute more but only if another company is willing to pollute less... but you pay more in the end for the SAME things (which is EVERY thing)...

Now we move into year 2... the government says pollute less.... so the company that polluted more has to pollute less and tries to find another way to produce whatever they are selling to pollute less... However you will probably pay even MORE than year one... it basically is cost shifting EVERYTHING to you... you have to pay for the company to do what it can to meet demand...

1) Enviromentalist loves it cause it decreases pollution and "validates" their claim that CO2 causes global warming

2) The wealthy people love it cause it makes them more money... you pay MORE and you pay it to them... like Al Gore

3) The companies love it cause it gives them a "reason" to charge you more... remember when oil prices went up... and food prices went up (among other things)... oil prices went down... but did food prices go down? Nope... they love it cause they don't have to stop, they just found out you were willing to PAY more and get the same in return.... so they will basically never go down... so everything WILL cost more for you... and the money goes to #2...

4) The politicians love it and hate it... they love it cause they found new lobbyists who is going to give them lots of money and influence.... they hate it cause the voters won't like paying more to the wealthy people and will blame them and they will lose office...

5) Smaller and larger businesses won't stay (for very long)... They will stay because YOU are willing to pay more but if you are NOT willing to pay more... they move to another country because it costs you more for paper, food, electricity, etc then it will cost THEM more as well... and they move that cost to YOU and if you still won't pay, then they move to another country and ship things to you instead... they don't have to pay more for paper, food, electricity, etc in the other country (like Mexico... or Canada... or Cuba... or just about anywhere)... and they can offer it at reduced prices compared to stuff produced in America (thus killing American businesses)... unless there are "tariffs"..

The middle class will pay more... that house that is worth 300k is now 500k to make... remodel your bathroom will costs a LOT more... buying groceries will cost a LOT more... EVERYTHING will cost a LOT more... however the first 11 years is nothing... the years after that the costs will skyrocket based on Obama's plan... because the first 11 years pollution isn't really reduced significantly...

Meanwhile China, Mexico, and many other third world nations will be VERY business friendly without cap and trade laws... they will in essence BECOME what America is today... incredibly financially powerful... the middle class will hate it cause they make the SAME and they have to pay more, they are wealth-losing while people in other countries are wealth-gaining... the more wealthy people here are more likely to travel to other countries and spend their wealth since they get more over there than here... and with businesses leaving here to there, the stuff over there is going to be of better quality... so you pay more in the end for crappy stuff and less of it... and what happens because of all of this money loss? They predict that it will get 0.3 degrees cooler based on what I consider fraudulent science of global warming...

[Stratford, Ct. Resident]

I know it just passed.

It still has to go through the Senate.

[redbean]

Originally Posted by Stratford, Ct. Resident

It still has to go through the Senate.

Time to pray, and call your senators.

[colleeng47]

I had thought it already passed the House and the Senate. These companies that pollute more than they're allowed to, who do they "pay" this money to? Is it a tax, or fee, or what? And what about this "trade" part of the bill? Isn't there something that says if a company pollutes more, they can "trade" with a company that pollutes less? Very confusing. Who has so little going on in their life that they have time to come up with these schemes?

[evilnewbie]

It hasn't passed the Senate yet, hence why Obama made a big speech to tell them to pass it.

Carbon credit is traded on the stock exchange, the fees pay partly to several parties, the government and those who "invest" in it (i.e. provide the money to make the exchange). There aren't "shareholders" because there really isn't anything to own... you just hopefully make a profit.. you buy at $25 and sell at a higher price and make a killing... if people are "willing" to pay higher prices and hence the companies pay a higher premium, you make even more money... its draw out wealth from people who have to pay for food, water, electricity, etc etc and gives it to the other people... for the government, its like an additional tax on you.... for investors, its profit from your wallet book... basically its like paying two taxes that goes to the government and the other goes to Al Gore's wallet... how do you like a tax that you are force to pay to go into someone's wallet for doing nothing other than being rich? Like I said, its trading but money is always involved... there is no reason for a company to pollute less UNLESS there is money and hence they are offering to trade it for MONEY....

As for who has little going on in their life to come up with this scheme... the wealthy... their old schemes are not giving returns or are being systemically banned... so they have to come up with new ones... what better returns than a tax on YOU that will NEVER go away... if you live, then you pay the wealthy a percentage of your income for doing nothing other than being alive... its ingenious... Its also good for the wealthy for three reasons 1) Its basically a tax, so they get money guaranteed from you every day and they don't have to do anything 2) It eliminates their competition, how is someone going to beat them when money is being siphoned off from the competition? Everybody will be poorer except them and you have to beat the carbon tax in order to beat them (and it isn't easy beating the carbon tax - especially in places like NYC) 3) They make money for doing nothing and from being simply being alive... you want to drink? Its $1 to drink (plus 10 cents to them for the privilege of drinking)... want food? want electricity? want shelter? want anything?

[CouponJack]

Companies will be issued permits by the government which are based on how much carbon dioxide you emit (CO2). (CAP Portion)

If you go over your "permitted amount", you would have to buy more permits from either other companies or goverment at auctions (TRADE portion)

Thus, if your company is energy efficient, you can sell permits to other companies and hopefully make a profit.

This is the basic understanding I have of the plan....

[Allan Trafton]

If your for - more taxes, higher utility bills, lost jobs, inflation, a stronger China and no reduction in global pollution. Then yes support this. Otherwise e-mail and call your senators, tell your friends and let everyone know that we are about to get the shaft. All this so we can feel better about ourselves. This bill will not save the planet. If anything it will increase pollution by moving our industry to developing(heavy polluting) countries. It's no surprise the house ram roded this thru on Frinday. Three hours of debate on a 1600 page bill. What a joke.
They were afraid if the truth got out that the masses would revolt. Everyone should be irate over this. All of us need to get the word out and shut this down, otherwise we are screwed.

[floridasandy]

Originally Posted by colleeng47

I had thought it already passed the House and the Senate. These companies that pollute more than they're allowed to, who do they "pay" this money to? Is it a tax, or fee, or what? And what about this "trade" part of the bill? Isn't there something that says if a company pollutes more, they can "trade" with a company that pollutes less? Very confusing. Who has so little going on in their life that they have time to come up with these schemes?

lobbyists have plenty of free time.

[mwruckman]

Originally Posted by colleeng47

I know it just passed, and even though I googled it, it still isn't clear to me. Also, I keep reading the critics who say this will increase costs for businesses, affect the middle class, etc. Can someone explain (in layman's terms) what exactly Cap and Trade means, and how it would affect the average American?

I'd like to hear from both supporters and naysayers.

Cap and Trade is a system to assign a cost to the emission of carbon into the environment and ultimately reduce the emission of carbon in the form of the greeenhouse gas CO2. The idea is to reduce global CO2 emission to the level that matches the Earth's capacity to recycle it in forms that are not gaseous. This will stablize the amount of CO2 in the atmosphere and hence the climate. I like to think of cap and trade as being like sanitation. Several hundred years ago most people dumped their sewage in the streets, on their crops or in rivers and ponds. This had real impacts on personal comfort, public health and life expectancy. To end these practices the public was taxed to build sewers and sewage treatment plants. You were required by law to use these new facilities and you had to pay for them. If you wanted to you could build private facilities to process and take care of your sewage. Now there is no economic cost involved in CO2 emission and utilities actually benefit from doing so. Why do you think that coal burning accounts for 60% of our electric power generation. Coal is the cheapest power source. We need to encourage either the modification of these coal plants to reduce CO2 emissions or switch to power sources that do not produce CO2 in the first place. In otherwords connect these power plants to a CO2 sewer system or switch to solar, wind, hydro or nuclear pwer. The same logic applies to cars and trucks or trains. The problem is how to pay for this and how to make the cost of current carbon-rich sources reflect the cost to remediate them and cope with the damage climate change will do to the nation in the next century. Coping with this damage may include replanting dead forests in the Pacific NW and Eastern US, building sea walls around some costal cities, replacing cities and towns that have to be abandonned by flooding, building aquaducts to the Southern and SW US or replacing cities and towns abandonned due to lack of water. The idea is to give emitters of CO2 credits or permits to emit this gas. These credits will be less than the amount of CO2 they emit and will decrease over time (the cap part). They will have to use technology or change their process to reduce CO2 emissions. Failing that they will need to buy credits (the trade part) from other companies or organizations that have reduced CO2 emissions and have extra credits. The market will set the value of these credits. Eventually the government will sell all the credits. Failure to comply will be unlawful just like what would happen if you ran a pipe from your toilet to the street and let the sewage flow to a storm drain.