How the Global Warming Bill Will Affect Your Wallet

Free allowances. Here's what's upsetting Greenpeace and some other environmental groups: Instead of auctioning off of all the permits to pollute, Waxman-Markey would give many away free, thus decreasing the amount of revenue that could be returned to Americans. The CBO calculates that from 2010 to 2019, Waxman-Markey will give the government $693 billion to spend in the form of free allowances. Most of these allowances go to states, natural gas distributors, and federal agencies. But these freebies might not be so bad for consumers, as they could ease the burden on energy utilities, thus decreasing the $1,600 CBO estimate of how much Americans would spend in annual energy costs. Robert Stavins of Harvard University calculated that 53 percent of the total allowances are being spent on consumers for purposes like home heating.

[See Finding the Pork In the Obama Stimulus Bill.]

Here are some of the other provisions of the bill that allocate money not directly related to consumers.

Rebates for "trade sensitive" industries. Waxman-Markey also gives breaks to businesses worried that the bill will reduce their competitiveness with other countries. As a result, the bill now includes rebates for "trade sensitive" industries, which will be worth up to 5 percent of the allowances. According to the legislation's text, the EPA must publish a list of industries that will qualify for a rebate by no later than June 30, 2011. How trade-sensitive an industry is will be determined by the EPA based on the industry's reliance on imports. Businesses that fall into this category will get a rebate from the federal government to ease the cost of polluting less. One worry is that businesses will have the incentive to become more trade-sensitive in order to get the rebate.

Offsets. Critics of the bill claim that its biggest loophole comes in the form of 2 billion tons of "offset" emissions—30 percent of total emissions in the U.S. This is the amount of emissions that are not capped, but that polluters can merely offset through other Earth-friendly methods—say, by planting trees. But a report from the Government Accountability Office found that projections on how much carbon is saved by these offsets are "inherently uncertain," and that this uncertainty poses a challenge to the credibility of carbon offsets. In other words: A business could claim an offset in order to get around the cap.