In 2008, when candidate Barack Obama laid out his plan for a cap-and-trade bill, he said his administration would use revenue from selling pollution credits to pursue cleaner sources of energy.
In his New Energy for America position paper, Obama said "a small portion of the receipts generated by auctioning ... allowances ($15 billion per year) will be used to support the development of clean energy, invest in energy efficiency improvements, and help develop the next generation of biofuels and clean energy vehicles — measures that will help the economy and help meet the emissions reduction targets."
A little background before we dig into Obama's promise: Cap-and-trade has long been discussed as a way to slow climate change. The idea is to set an overall cap on carbon dioxide and other greenhouse gas emissions. To comply, companies such as electric utilities must either upgrade to cleaner technologies or buy credits — also known as allowances — to continue polluting.
Earlier this year, Reps. Henry Waxman and Edward Markey, Democrats from California and Massachusetts, respectively, wrote a bill that would do just that. The duo's goal is to lower carbon pollution by 17 percent by 2020 and 83 percent by 2050. Under their plan, most pollution permits initially would be given out for free. But eventually, companies would have to buy those permits from the government.
But what to do with all that money?
On the campaign trail, Obama said some of the revenues would be reinvested in projects to develop alternative fuels, clean energy vehicles and land conservation. And indeed, the Waxman-Markey bill would achieve some of those goals.
For example, between 2012 and 2015, 10 percent of the allowances would go to states to invest in renewable energy, energy efficiency and pollution reducing transportation projects, according to a summary of the legislation. After that, states would continue getting the money, but it would decrease over the years.
Between 2012 and 2025, 5 percent of the revenue would be used to preserve tropical rainforests. And from 2012 through 2016, 0.28 percent of of the money would be used to support carbon sequestration efforts by farmers and investments in renewable energy infrastructure.
Obama also said that "all remaining receipts will be used for rebates and other transition relief to ensure that families and communities are not adversely impacted by the transition to a new energy, low carbon economy."
The Waxman-Markey bill addresses that promise as well by creating five programs that would "protect consumers from energy price increases." Those include a plan that would give utilities 32 percent of the revenue until 2025 to help offset the cost of buying pollution permits or upgrading to cleaner technology; the idea is to help the firms avoid passing the extra cost on to consumers. Natural gas utilities and states that use heating oil would get similar funding. Additionally, the bill would give consumers 15 percent of the revenues in the form of tax credits and direct payments.
So Obama is on track to fulfilling his campaign promise. But the bill has only passed the House and is still pending in the Senate. As a result, we rate Obama's promise as In the Works.