Jason Furman, the deputy director of the National Economic Council, told a bipartisan group of Senate staffers that he thinks a cap and trade system could generate between $1.3 and $1.9 trillion according to a report in the Wall Street Journal.
That monstrous sum is two to three times larger than the $646 billion that the administration has officially presented in its budget. Furman didn’t throw the number around lightly, according the Journal story. He was pressed by people at the meeting to provide an indication of how much revenue could be generated.
How can the government possibly hit Furman’s targets? The Journal blog Environmental Capital speculates:
- Sell every permit, don’t give any away. The problem here is that it’s been the plan all along.
- Expand the program so it covers the entire economy, not just energy companies. More industries paying for credits, means more revenue. Problem here is that the plan already discusses that.
- More expensive carbon credits. Current budget projections mean that the administration expects between $10 and $14 a permit. At the inflated projection, credits would cost $20-$40 a ton.
If this is true, then coal companies that need loads of permits will be in trouble. This might mean higher energy prices for consumers, though those concerns might be overblown:
As Geoff Styles pointed out recently, the actual energy-price impact on consumers would be quite modest—he figured a $12 permit price would raise electricity bills by about 1 cent a kilowatt hour for coal-fired plants, and gasoline by about 11 cents a gallon. Higher permit prices would mean higher energy costs, but nothing the natural-gas or gasoline spikes didn’t already do to consumers last year.
Additionally, any extra money that comes out of a cap and trade system is supposed to be passed right on to the consumer in the form of a tax break.
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