How the climate bill hits your wallet

Lawmakers are set to debate a sweeping energy bill Friday. This is how it may affect you.

1 of 8
BACKNEXT
Cutting greenhouse gases
Cutting greenhouse gases
Reducing greenhouse gases is the main aim of the sweeping energy bill that the House passed on Friday.

An 80% reduction is what most scientists say is needed to avoid the worst effects of global warming.

Putting the nation on track to meet this goal by 2050 will cost the average American household $175 a year by 2020, according to the Congressional Budget Office.

Under the plan, known as a cap-and-trade, polluters would have to pay to emit carbon dioxide into the atmosphere, something they currently do for free. Plus, the amount they can emit would decline each year (cap).

Industries would either pay for cleaner technology, or buy pollution permits in a secondary market (trade). Industries most affected include electric utilities, gasoline refiners, chemical makers, and steel and cement companies.

The huge costs in this system - over $100 billion a year - would normally be passed on directly to the consumer. But much of the money generated from the sale of these pollution permits is being returned to households and business as a series of tax credits and other allocations. These credits are what push down the annual household cost to a relatively low $175.

Consumers will mainly see this cost in the form of higher electric bills and gas prices. The impact on the Federal budget is minimal, with one analysis suggesting that it could actually increase revenues a bit.

Opponents of the measure say the costs will be far higher, while supporters say the average household will actually see an increase in spending power because they'll be using less energy.

If the bill passes the House it must then go before the Senate, which probably won't happen until the fall. Most observers say it stands a good chance of passing the House, but will have a more difficult time in the Senate.


NEXT: Tax credits
Last updated June 26 2009: 10:07 PM ET
Email | Print | Share  |  RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
More Galleries
Criminal's muscle car collection auctioned for $2.5 million These valuable classic muscle cars were seized as part of a money laundering plea deal. More
Ferrari 458 Speciale - Raw speed This bare-bones Italian supercar drops pretty much everything not needed for driving fast. More
America's most dangerous jobs America's workplace got safer last year. But these workers were still at a much higher risk of fatal injuries, according to the Bureau of Labor Statistics. More

Special Offer
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.