May 18, 2009
Laura Henderson (202) 621-2951

Cap and Trade: They Said It

Policymakers Honest About One Thing—This Bill Will Cost a Whole Lot

PRESIDENT BARACK OBAMA: “Under my plan of a cap and trade system, electricity prices would necessarily skyrocket. . . . Because I’m capping greenhouse gases, coal power plants, natural gas—you name it—whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.” – January, 2008

: “Under a cap-and-trade program, firms would not ultimately bear most of the costs of the allowances but instead would pass them along to their customers in the form of higher prices. Such price increases would stem from the restriction on emissions and would occur regardless of whether the government sold emission allowances or gave them away. Indeed, the price increases would be essential to the success of a cap-and-trade program because they would be the most important mechanism through which businesses and households would be encouraged to make investments and behavioral changes that reduced CO2 emissions.” – April 24, 2008

: “For people whose behavior in energy use doesn’t change, their costs will go up. You can’t achieve these objectives if you don’t change the incentives.” – March 18, 2009

REP. JOHN DINGELL (D-Mich.): “Nobody in this country realizes that cap and trade is a tax, and it’s a great big one.” – April 24, 2009

REP. CHARLIE RANGEL (D-NY): “Whether you call it a tax, everyone agrees that it’s going to increase the cost to the consumer.” – May 14, 2009

: “Under a cap and trade program, consumers would ultimately bear most of the costs of emission reductions.” – May, 2009

More from IER on energy tax legislation:

Press Release: Finger-Wagging Lawmakers Should Look in the Mirror
Study: Cap and Trade Primer
Blog: Understanding Renewable Electricity Mandates

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.


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