President Barack Obama’s cap-and-trade legislation within his climate plan could end up costing the industry, and consumers much more than the proposed $646 billion over eight years; costs may trickle down to businesses, consumers and eventually markets and exchange traded funds (ETFs).

The latest climate plan proposed by the Obama administration seeks to reduce pollution by setting a limit on carbon emissions and allowing businesses and groups to buy allowances, although exact details have not been released, reports Tom LoBianco for The Washington Times. The $646 billion estimate in costs is now being called “conservative.”

The goal is that any excesses in revenues would be passed along to businesses, consumers and most of all, the middle class tax cuts; $120 billion would be invested in renewable energy projects. Many in Congress have expressed concern against levying increased fees on businesses while the economy is still faltering.

One area that could benefit from such a plan is ETFs that focus on the cap-and-trade system. As demand for these carbon allowances go up, these funds could see some reward.

• iPath Global Carbon ETN (GRN): down 28.2% over three months

Tags: Alternative Energy, ETNs, Green ETFs, GRN, Obama, Sector ETFs, Socially Responsible ETFs