Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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
The 7 biggest investment mistakes celebrities make From betting too heavily on real estate to overestimating future earnings, here are 7 of the most common money mistakes that celebrities make. More
Cotton candy, toothpicks, pet gel -- these products are all made from marijuana Legal cannabis, an estimated $5.4 billion industry, is drawing in entrepreneurs with a variety of innovative products -- from skin patches to pain relief gel for pets. More
Coolest hotel bars for business travelers CNNMoney asked two concierge services for high-flying business people what hotel bars they'd recommend in 5 major U.S. cities. Here are their favorite spots. More

Special Offer