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A Primer on Cap and Trade and Policies to Protect Low-Income Consumers

By Chad Stone, Jennifer Kefer & Hannah Shaw

Cap and trade features prominently in any discussion to limit greenhouse gas emissions. Regional agreements already use a system of cap and trade. Putting a price on carbon emissions will increase energy prices and could make poor families poorer and push more households into poverty. If designed properly, however, a system of cap and trade can generate revenue to fund a direct rebate program to low-income households while preserving the necessary higher energy prices. The rebate program must be carefully crafted to reach the most vulnerable households. The House-passed cap-and-trade bill and a Senate proposal do just that.

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