One of the President’s major priorities is to curb global warming by limiting the greenhouse gas emissions produced by the use of fossil fuels like coal and gas.  That means limiting the use of these forms of energy, and until alternative sources of power are plentiful, costs of energy will rise.
Low- and moderate-income people will be hit hard by increasing energy costs.  The food they buy will cost more because of rising farm and transportation expenses.  Gasoline and home heating costs will go up; in fact, almost every product will be affected by escalating energy costs.  Advocates believe that an essential element of climate change legislation needs to be that it generate revenue used in part to fully protect vulnerable people from these costs.

The President has laid out a comprehensive strategy to address climate change.  Short-term funding and tax incentives were provided in the American Recovery and Reinvestment Act, Public Law 111-5 enacted in February, for investing in renewable energy and increasing energy efficiency through programs like weatherization that also create new “green collar” jobs for workers.  The President’s FY 2010 Budget builds on those investments by calling for increases in appropriations for renewable energy, energy efficiency, research, and technological development.  His budget also outlines a plan for legislation to deal with climate change that includes selling emissions permits and using the money to pay for his proposed investments in renewable energy as well as to provide direct aid to offset the higher costs households will experience.

Congress has begun to consider climate change legislation.  The House Energy and Commerce Committee is working on draft legislation, the American Clean Energy and Security Act, authored by Chairman Henry Waxman (D-CA) and Energy and Environment Subcommittee Chairman Ed Markey (D-MA).  The legislation is based on a ‘cap and trade’ system.  The idea is to set an overall national ‘cap’ on greenhouse gas emissions.  Industries would be issued permits to allow them to emit a specific amount of pollutants.  The ‘trade:’ If companies can reduce their greenhouse gas emissions, they can sell their excess permits to others; if they need more, they can buy from companies that are polluting less. Since the permits have value in the marketplace, the President has proposed auctioning them all to industry, potentially amounting from tens to one hundred billion dollars of revenue annually – enough to fund renewable energy advances and aid to consumers through tax cuts or other means.  Unsurprisingly, industry would rather be given the permits for free.  A key point of contention emerging in Congress is whether lawmakers will allow some of the permits to be given away, and if so, how many.

The Climate Equity Alliance, a partnership of research, advocacy, faith-based, labor, environmental, civil rights, and advocacy organizations including the Coalition on Human Needs believes legislation should strive for 100 percent auction of emissions permits and the resulting revenue should be used to protect low and moderate-income consumers and maximize investments in clean energy solutions that create good jobs in the United States.  The Alliance supports direct assistance to people with limited income by offsetting the full impact of climate change legislation on their budgets.  Relief from rising energy costs could be provided through proven existing methods like tax credits, electronic benefit transfers (such as food stamps, now called the Supplemental Nutrition Assistance Program), or through agencies like the Social Security Administration.  Local utility companies’ rationale for receiving permits for free is that it would hold down consumers’ utility bills.  Providing consumer relief through lower utility bills is a flawed approach because it would not help consumers cope with other price increases driven by rising energy costs, and it would undercut incentives to conserve energy by keeping household utility costs artificially low.

The Climate Equity Alliance supports using some of the revenue from auctioning permits to maximize the job creation potential and economic opportunity for low and moderate income Americans by improving energy efficiency and developing renewable energy sources.  Improving energy use in subsidized housing and retrofitting public buildings is just one example of creating green jobs.  The Alliance is working to ensure that these jobs are available to local workers from low-income and other underrepresented populations.

The challenges to passing climate change legislation are many.  Divisions do not follow along the usual political party lines.  Rather, they tend to break down by region and by industrial sectors.  Those Members of Congress from coal-producing states, for example, want less stringent caps on emissions and longer timelines to give the industry greater opportunity to develop cleaner technologies.  Auto manufacturers want 5 percent of the revenues from auctioning permits to help develop greener technologies.  Some Members of Congress support setting aside 15 percent of permits for free distribution to industries like paper, aluminum and steel that are subject to international competition.  If permits are given away and regulation is inadequate, some are concerned that it could result in massive windfall profits for polluters, with far fewer revenues to help consumers and make green investments.

The cap and trade system in the House draft bill is set to start in 2012.  While most in Congress favor a cap and trade system, an alternative approach is a carbon tax on emissions put forth by Ways and Means Chairman Charles Rangel (D-NY) whose Committee is also working on climate change legislation.  The Senate plans to await the outcome of legislation in the House before acting.

To learn more about protecting low-income families while creating solutions to climate change see the Climate Equity Alliance’s, Principles for Addressing the Needs of Low and Moderate Income Workers, Families and Communities within Global Warming Legislation.

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