The climate bill currently under consideration in the U.S. House of Representatives tackles global warming with new limits on pollution and a market-based approach to encourage more environmentally-friendly business practices. With all the new rules and reallocation of money, this bill essentially equates to a stimulus package for businesses involved with energy creation or preservation.
The legislation is intended to reduce the gases linked to global warming and to force sources of energy to shift away from fossil fuels, which when burned, release heat-trapping gases, and toward cleaner sources of energy such as wind, solar and geothermal. This means that any company currently producing solar panels, wind mills, or geothermal pumps will surely get a boost in revenue if this bill passes.
The idea is to try to reduce the overall level of pollution, regardless of whether a particular factory reduces emissions or not using a cap and trade system. This system is another way for included businesses to make money because if one business already does not pollute, they can sell credits to a business that does. Eventually all polluting businesses will have to reduce their pollution and the market will reach an equilibrium, but before then, there will be a market for capping and trading.
In addition to energy producers, businesses that help with energy efficiency will also see a boost with the Waxman-Markey bill. In fact, these companies will probably see it first as measures to boost energy efficiency in buildings and appliances are the low-hanging fruit that does not require major infrastructure changes or new technologies. Other changes are decades off and probably will come when the cap gets more stringent and permits get more expensive.
Even if this law does not pass another one like it may pass before the end of the 2009 calendar year. The Obama administration clearly thinks something has to be done about preventing pollution and reducing our dependencies on foreign sources of of energy. While this plan ignores nuclear energy, a future bill may include this as a more comprehensive way to look at our country’s energy policy. Regardless, there are clear winners here in the energy sector.