Whatever Happened to Cap and Trade?

July 17, 2012 -- The third in a series of articles examining the campaign promises Barack Obama made in 2008 and where they stand now.

One of Barack Obama's promises during the 2008 campaign involved "cap and trade," the system environmentalists adored for regulating gases that trap heat in the atmosphere.

Obama promised that to fight global warming, he'd "set a hard cap" on carbon emissions with the goal of reducing them 80 percent by 2050, with 10-year goals along the way. Under a cap and trade system, companies are capped on how much carbon they can emit, but can trade with other companies for more permits if they need them. That way the companies have to pay more to emit more carbon, so in theory they'd find the most cost-effective and carbon-effective way to do business. The system was intended to be a money saver: it didn't matter who reduced their emissions, as long as the reductions happened.

Unfortunately for Obama it didn't work out that way. Sure, he put cap and trade in his first budget, but it got a predictable and immediate negative response from Republicans. A cap-and-trade bill passed the House, but in the Senate it was rocky — a bipartisan effort turned out to be for naught, and it was cast to the wayside. A year after the bill passed the House, the Senate still hadn't made much progress.

Finally the tide turned completely, as Republicans won a majority in the House and gained seats in the Senate, essentially guaranteeing that cap and trade wouldn't become law. Obama said publicly that he couldn't get it done.

The EPA, meanwhile, drew criticism from the GOP for setting up a few regulations with similar aims in mind. Critics called it a backdoor effort to create a cap-and-trade system.

Any hope for a formal cap and trade system is all but lost. "Realistically, the cap-and-trade bills in the House and the Senate are going nowhere," GOP Senator Lindsey Graham, a moderate, said after the midterms. "They're not business-friendly enough, and they don't lead to meaningful energy independence."

Though it's mostly out of Obama's hands now, the president never followed through on his promise, even with powerful majorities in Congress during the first half of his term.