President Barack Obama delivers his State of the Union address on Capitol Hill in Washington, Wednesday, Jan. 27, 2010. Vice President Joe Biden and House Speaker Nancy Pelosi are seen in the background. (AP Photo/Tim Sloan, Pool)
Under cap-and-trade, utilities, oil refineries and factories would be required to reduce their emissions of greenhouse gases over the next 40 years. Companies would have to obtain permits for each ton of carbon dioxide they emit and those permits would be traded on a regulated exchange.
Obama did not mention the words cap-and-trade in his annual State of the Union speech to Congress. The market mechanism to cut pollution blamed for warming the planet was included in the bill the House of Representatives passed in June.
Obama said he wanted to pass a comprehensive energy and climate bill in the Senate that included incentives for clean energy and nuclear and offshore oil drilling.
"This year, I am eager to help advance the bipartisan effort in the Senate," Obama said.
In an effort to win votes from Republicans, like Senator John McCain, he said the country must build a new generation of clean nuclear plants.
Senators John Kerry, a Democrat, Lindsey Graham, a Republican, and Joe Lieberman, an independent, are working on a compromise climate bill that would include more incentives for nuclear and offshore oil drilling.
Obama acknowledged that some believe caps on emissions would raise energy prices, while others doubt the science of global warming.
"But even if you doubt the evidence, providing incentives for energy efficiency and clean energy are the right thing to do for our future because the nation that leads the clean energy economy will be the nation that leads the global economy," he said.
Obama said the country needs to make tough decisions on issues like climate and clean energy because countries like China and India are not waiting. "They are making serious investments in clean energy because they want those jobs."
He said investing in research on clean energy could create jobs.
"But to create more of these clean energy jobs, we need more production, more efficiency, more incentives," he said. "That means building a new generation of safe, clean nuclear power plants in this country."