Last week, in response to the U.S. Supreme Court, the EPA determined that carbon dioxide and other tailpipe emissions are harmful to the health and wellbeing of our people. There is no question that we have to regulate carbon pollution; the only question is how we do so.
I believe the best approach is through legislation that places a market-based cap on these kinds of emissions. Today key members of my administration are testifying in Congress on a bill that seeks to enact exactly this kind of market-based approach. My hope is that this will be the vehicle through which we put this policy in effect.
Here’s how a market-based cap would work:
We would set a cap on all of the carbon dioxide and other greenhouse gases that our economy is allowed to produce in total, combining the emissions from cars and trucks, coal-fired power plants, energy-intensive industries, and other sources.
By setting a cap, carbon pollution would become like a commodity. It would have a value as a limited resource. To determine that value, much like any other traded commodity, we’d create a market where companies could buy and sell the right to produce a certain amount. In this way, a company can determine for itself whether it makes sense to spend the money to become cleaner or more efficient, or to spend the money on a certain amount of allowable pollution.
Over time, as the cap on greenhouse gases is lowered, the commodity would become scarcer – and the price would go up. Year by year, companies and consumers would have greater incentive to invest in clean energy and energy efficiency, as the price of the status quo became more expensive.
By closing the carbon loophole through this kind of market-based cap, we can address in a systematic way all the facets of the energy crisis: lowering our dependence on foreign oil, reducing our use of fossil fuels, and promoting new industries right here in America.
And as we pursue solutions through the public and private sectors, we also need to remember that every American has a role to play. You know, when I suggested during the campaign that one small step Americans could take would be to keep their tires inflated, it became political fodder for the other side.
But I do not accept the conventional wisdom that suggests that the American people are unable or unwilling to participate in a national effort to transform the way we use energy – that the only thing folks are capable of doing is paying their taxes. I disagree. The American people are ready to be part of this mission.
For example, if each of us replaced just one ordinary incandescent light bulb with one compact fluorescent, that could save enough energy to light 3 million homes. And that’s just one small step.
Finally, this is a global problem, and it will require a global coalition to solve it. Our climate knows no boundaries; the decisions of any nation will affect every nation. Next week, I will be gathering leaders of major economies from around the world to talk about how we can work together to address this energy crisis.