Obama budget omits cap-and-trade revenues – official

By Reuters Staff
February 1, 2010

By Jeff Mason

WASHINGTON, Feb 1 (Reuters) – The White House has dropped projected revenues from a “cap-and-trade” mechanism to fight climate change from its new budget, an administration official said, bowing to the possibility that the U.S. Congress may not pass it.

Last year the Obama administration forecast revenues of $646 billion in the years 2012-2019 from an emissions trading program that formed the crux of its proposal to fight global warming.

The legislation that contains that proposal is now stalled in the U.S. Senate and cap-and-trade, which sets limits on greenhouse gas emissions and allows companies to trade permits to pollute, may be cut from a final bill if one is passed.

“The $646 billion revenue projection is no longer in the budget,” the administration official told Reuters.

“Unlike last year, we do not show an assumed amount of cap-and-trade revenue since the exact nature of the legislation remains in flux,” the official said.

The trading system had been the keystone to President Barack Obama’s plan to reduce emissions blamed for global warming. He did not mention cap-and-trade last week in his State of the Union address, but did call for Congress to pass a comprehensive climate bill.

Some interpreted his omission of cap-and-trade as a signal that he would not actively pursue wide-ranging climate legislation this year. White House aides, however, still are working to advance legislation among lawmakers.

The official said the administration would insist any climate legislation be paid for without adding to the deficit.

“We assume neither a specific spending and revenue level — but stand by the same principle that the policy as a whole must be deficit-neutral,” he said.

The $646 billion figure a year ago was based on a presumption that a U.S. law to limit emissions would be in place by 2012. A climate law is crucial to Obama’s efforts to get international momentum behind efforts to fight global warming and craft a follow-up pact to the Kyoto Protocol.

The Obama administration formally embraced the Copenhagen Accord on global warming, which the president helped negotiate, last week.

The Obama administration is also pushing the Environmental Protection Agency to move toward regulating greenhouse gases in an effort to push companies to support climate legislation.

The budget includes more than $6 billion in funding for clean energy technologies, aimed at helping cutting dangerous emissions. Most of that money is focused on research, development and demonstration projects, the White House said.

The House of Representatives already has passed a bill with a cap-and-trade component.

A Senate version still is in the works but chances of passage may be hindered by the looming election in November as lawmakers fear the repercussions of supporting a measure that some say would drive up energy costs for consumers.

(Editing by Russell Blinch and Bill Trott)

((For more on the budget, click on [ID:nN30164446]))

((jeff.mason@thomsonreuters.com; +1 202 898 8392; Reuters Messaging: jeff.mason.reuters.com@reuters.net))

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