Cap and Rebate

As a health care bill has exhausted both Americans and bi-partisanship simultaneously in the States- we hope 2010 turns its attention towards energy matters. More specifically, a Cap and Trade bill as mentioned by President Obama and the Democrats is scheduled to take front stage on the political arena. The bill, if passed, would affect the CleanTech sector largely as it would encourage the development of cleaner generation, efficiency plays and would affect energy prices in the largest fossil fuel market in the world.

While Cap and Trade’s prospects are currently shaky at best- a new bill introduced this December may circumvent both the flaws of C&T as well as the partisan warfare already surrounding it. Senators Maria Cantwell (D) and Susan Collins (R) introduced a Cap and Rebate bill- where 75% of the proceeds will be returned to the American people, with 25% going to fund clean energy research and development, efficiency programs and related regional assistance to reduce fossil fuel intensity. The average American family would receive $1,1oo throughout the year, with 80% of Americans receiving a net increase in funds accounting for increased energy expenses.

Why is this bill better? It puts energy use decisions in the hands of the public- who can choose to use their funds to increase the efficiency of their homes and businesses, reduce consumption or to procure renewable energy directly. Giving consumers both the direct price signal (increased prices) as well as the proceeds is very important both economically and politically. The bill avoids a carbon trading scheme involving the investment banks- who are politically cancerous at the moment. Carbon offsets are not permitted- avoiding any possible fraud or gaming of the system. And most importantly, it will reduce carbon emissions 20% by 2020 and 83% by 2050.

It is estimated that $16-$46 billion could be funneled to clean technologies (the 25% portion) by 2020.  The investment by both the government mandated fund as well as from the American public ($48-$138B) could have amazing effects for companies in the relevant clean energy and efficiency sectors!