Boy Does It Looks Like Obama is Getting Ready to Reintroduce the McCain- Lieberman Climate Change Bill
Submitted by EnergyTechStocks.com
First came the well-publicized meeting in Chicago between President-elect Obama and his defeated rival John McCain during which, by all accounts, a spirit of bipartisanship was in the air.
Next came the decision by the Senate Democratic leadership not to strip Joe Lieberman of his chairmanship of a powerful committee, a decision commentators suggested was engineered by the President-elect over the objections of his own party.
Put these two seemingly unconnected events together, add in that Obama just told a climate conference in Los Angeles he has every intention of moving quickly on his plan to sharply reduce carbon dioxide emissions, and what you’ve got is a stage that has been perfectly set by “director” Obama for the swift reintroduction of the McCain-Lieberman climate change bill, or a new bill based on McCain-Lieberman.
“Obama, McCain and Lieberman form the axis of power,” climate change expert, Neal Dikeman, partner at a “cleantech” merchant bank, told EnergyTechStocks.com. Dikeman, who is also co-founder of CarbonFlow, a company that provides complex transaction software for the multi-faceted carbon-trading markets, added in an interview, “It is critical (for investors) to re-read that bill,” formally known as “The Climate Stewardship and Innovation Act of 2005.”
As summarized by the Pew Center on Global Climate Change, the McCain-Lieberman bill introduced in 2003 and again in 2005, “would limit, from 2010 on, the total greenhouse gasses (GHG) emitted by the U.S. electricity generation, transportation, industrial, and commercial sectors to the amount emitted in 2000. The affected sectors would represent approximately 85% of the overall U.S. emissions in the year 2000. The bill would also provide for the trading of GHG emission allowances and reductions.”
EnergyTechStocks has boldfaced that last sentence because it’s the key to why, the moment President Obama signals he wants Congress to pass McCain-Lieberman, every Wall Street analyst and TV talking head is going to be scurrying around trying to figure out what will be the impact.
As EnergyTechStocks.com emphasized earlier this month in a comprehensive four-part series on carbon regulation and trading (see link below), carbon “cap-and-trade” is going to affect not just every holding in investors’ portfolios but every aspect of people’s daily life. One can assume that since McCain-Lieberman’s objective is to “cap” 85% of the sources of carbon emissions, literally almost every human activity requiring an outside energy source will be affected in some way.
Expect the details of McCain-Lieberman – and the political wrangling they will generate as virtually every major American industry, but especially the electric utility industry, literally fights for its life – to generate tens of thousands of media reports just in the first six to 12 months.
Of all the life-or-death details Congress will deliberate (and 40,000 lobbyists will try to influence), probably none will be of more immediate importance to investors than what the annual “caps” will be and whether the tradable carbon “credits” will be given out or “auctioned” to the highest bidder.
The first will determine how much money companies must spend to reduce their carbon “footprint” and whether it’s cheaper to get “under the cap” by buying credits in the open market.
The second will determine whether the federal government effectively imposes a “carbon tax” on corporations. Think of the auction process as a tax by which Uncle Sam could, by some estimates, collect as much as $400 billion in new taxes. If Europe is any guide, Congress may give away the first round of credits, then force companies to pay for a second round in a few years.
Setting up a carbon market will take time, so don’t look for a nationwide carbon trading market to commence in the U.S. before 2013 to 2014. But the impact on corporations and investors will be almost instantaneous, as companies try to determine how and how much money they will need to spend to stay in compliance, and as firms begin learning how to trade carbon on existing markets like the Chicago Climate Exchange.
Given that tomorrow is the Thanksgiving holiday in the U.S., EnergyTechStocks is going to hold off on its second series on carbon trading until next week. Starting Monday, Dec. 3, look for a new round of in-depth coverage designed to prepare not just investors but everyone for this new global financial market that is going to change everything about how people live and invest.
