Cap and Trade has taken some severe hits these past few weeks as Democrats confront the reality that the American public currently places climate change well behind the economy. However, a meeting today of senior White House staff with U.S. Climate Action Partnership, or USCAP- whose members include GE, Duke Energy (DUK), and Caterpillar (CAT)- indicates this is not a dead issue.
The participants in the meeting, which reportedly included Rahm Emanuel and CEOs, apparently all agree that a cap and trade program be passed as soon as possible. The USCAP program also includes a feature at odds with President Obama's stated plan- free allowances as opposed to auctioned allowances. No wonder USCAP would like to see this plan passed as soon as possible.
The allowances would allow utilities and major corporations to implement energy savings (driven in large part by the expected higher cost of fossil fuels) and then sell their excess allowances. The price for these allowances would be determined by some kind of board (or, alternatively, by an exchange).
The Obama plan would raise hundreds of billions of dollars to augment the budget. The USCAP plan would therefore provide billions of dollars of potential benefit to the members of USCAP that implement energy savings (and CO2 reduction, in theory). Yet, the USCAP plan also has features to avoid a "dash to (natural) gas".
My view- there is already sufficient incentive for CO2 reduction in the price of fossil fuels. Given that there is a growing consensus that there is no consensus on global warming, it is wiser to wait on taxing consumers to benefit bigger government, or bigger business.
Disclosure: No positions