Title II creates an economy-wide, comprehensive GHG cap and trade system. (When Sen. Graham said cap and trade is dead, he apparently meant only the term and not the program.) The Power Act's cap and trade provisions are immensely complex and thus it is very difficult on a first pass to meaningfully summarize this Title. Here is an overview - a more detailed analysis of all relevant subtitles will follow in a few days.

To begin with, the Power Act will substantially increase energy costs, perhaps 8 - 10% or more per year for each year between 2013 and 2030. Title II sets a shrinking cap on CO2 emissions - which are, after all, only a surrogate for energy consumption - that will by 2020 require the US to emit no more than 83% of the CO2 emitted in 2005. By 2050, the US must emit no more than 17% of the CO2 emitted in 2005. The Power Act empowers the federal government to throw billions and billions of dollars into subsidies for "alternative energy" projects. However, the Power Act's drafters do not rely on new technology to meet the self-imposed energy consumption cap. Instead, they ensure compliance by raising energy costs so substantially that the average consumer cuts his or her energy consumption by the requisite amount (17% by 2020, 83% by 2050).

Consequently, the Power Act will increase costs and lead to job losses across the board as businesses, farmers, trucking companies, landlords, utilities, and gasoline refiners, among others, pass along the higher costs of energy to consumers, and consumers devote more of their disposable income to energy-related expenses. The potential cost increases will likely run into the trillions of dollars over the next ten to fifteen years. High energy costs generally correlate with a reduction in economic activity. Therefore, there is good reason to believe the Power Act will, at least in the short term, depress US economic performance to a significant but uncertain extent.

It is clear that investment banks and carbon traders will do extremely well under the Power Act. The Power Act sets up a comprehensive trading system that will allow carbon traders to profit from selling and speculating in emissions allowances and derivatives. Although there are "transparency" requirements in the Power Act, it is difficult to understand how a complex trading system that transfers wealth from all energy consumers to a small group of politically connected financial institutions and individuals serves the Power Act's stated goals. Producers of solar, wind, nuclear, and other forms of non-fossil fuel energy should also benefit. The Power Act essentially increases the public subsidy for these energy sources. Given that fossil fuels are effectively subsidized under current federal transportation, defense, and energy policy and funding, the Power Act's provisions can reasonably be seen to level the playing field somewhat.

The Power Act is designed to substantially reduce the use of coal and it certainly will do so if Title II is enacted in its current form. Also, manufacturing companies that compete with foreign companies operating in jurisdicitions without energy consumption caps (e.g. China, India, Brazil, Mexico, Indonesia) will face significant competitive pressure if Title II of the Power Act is enacted in its current form.

Although the Power Act allows the government to move money (using tradeable emissions allowances) in a creative fashion to reward certain constituencies and businesses for their political support, but the average consumer will not and can not benefit from these mechanisms. The point of the Power Act is to reduce the demand for energy by increasing price. Because the demand for energy is classically inelastic, price increases must be very, very large to reduce consumption. It appears the Power Act's drafters have accounted for this fact by designing the law to ensure energy costs rise so much and so fast that the average consumer will have little choice but to pay much more and use much less.