Poorest Americans, contributing least to climate change, will not be hurt by legislation to rectify

Last November, American voters sent a clear message about the need for change. Climate change, energy independence, efficiency and security are among the critical issues that demand action to ensure America’s long-term wealth and wellbeing. The question is not whether we do this, but how best it can be done.

The House Committee on Energy and Commerce took an historic step forward in addressing these climate and energy issues with the recently approved H.R. 2454, the American Clean Energy and Security Act, commonly referred to as the Waxman-Markey Clean Energy Act. The cap-and-trade system proposed as part of this bill will lower dangerous greenhouse gasses while spurring tremendous investment in new, cleaner technologies. The cost of this investment will be shared by all of us, but this legislation allocates 60 percent of the value created by carbon allowances to protect consumers from any cost increases. In 2012, that value would likely exceed $36 billion.

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Most importantly, the poorest Americans, who contributed least to this problem and are least able to endure any increases in costs, are held harmless. The 15 percent of allowance value devoted to these struggling households guarantees the recoupment of any lost purchasing power, and does not phase out over the 40-year life of the program. The funds created through the auction of these credits could amount to nearly $10 billion in 2012, and are likely to increase over time. Credits would be distributed to low- and moderate-income households through either a tax credit or electronic benefit transfer, guaranteeing complete offset of costs for all of the lowest 20 percent of earners and a sizeable portion of the second-lowest quintile.

 For American households whose income exceeds the qualifying threshold for the tax credit, the bill allocates tremendous resources to electric utility and natural gas local distribution companies. Both of these entities are price-regulated, ensuring that all of the value they receive is redistributed to their consumers. This will prevent higher costs from hitting wealthier households and small businesses.

Low-income households spend considerably more on energy as a percentage of total income than the average household. Any change in costs will be nearly impossible for them to absorb. My district is among the poorest in the United States — it is fourth from the bottom in terms of median household income, just above Mississippi’s 2nd district. The people living in my district rely on low and predictable expenses to maintain a decent standard of living. These are people who must budget every last dollar, and they need to know how much to expect from the energy costs month-to-month.

Our goal in the consideration of this legislation was to lower greenhouse gases, bring sustainable new jobs to America, and aid the consumer, and particularly low- and moderate-income consumers who have contributed the least to the problem. On all counts, I believe we have succeeded, particularly with respect to the low-income piece. This critical component is essential to a fair and balanced policy that achieves the long-term goal of reducing greenhouse gas emissions while keeping struggling consumers free from irreparable economic harm.

Butterfield serves as a chief deputy whip and vice chairman of the House Subcommittee on Energy and Environment.

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