House Passes Cap and Trade

http://news.yahoo.com/s/ap/20090626/...s_climate_bill

What is there to say? The rate at which the Dimocrats and a handful of RHINOs are propelling our nation toward third-world status is staggering, and should this bill pass the Senate, our economy will be further decimated--perhaps beyond repair. There is optimism that the bill will fail in the Senate. Let us hope it is well-founded. I like to think that Nancy, Harry, and Barry, along with all their comrades, are digging their own graves. Who would trust them with power again after all this? Then I remember that the majority of Americans are little more than stupid lemmings.

Idiots.

Complete idiots.

As to the Senate, those ivory tower fools are even bigger morons than the house. US economy flushed down the toilet for a trivial affect on CO2 emissions that will have even more trivial effect on global temperatures, even if the theory were true. Which I remain highly skeptical is so.

Idiots.

More people know about the autopsy report of Michael Jackson than were aware of the largest single tax increase in U.S. history.

Let's all move to Poland.

(I just e-mail my nimrod rep and said some unkind words.... closing with 'You suck'.)

*DISCLAIMER* I am not for this bill. Let me get that out right now before I get jumped on. That being said, I thought I would share some insight on the bill from the point of view of someone who interprets environmental regulations for a living (that would be me). I spend every day at work being paid by energy companies to help them navigate the jungle of EPA and state laws that govern their industry. In fact, my company prides itself on being "the premier environmental and public affairs consultant to the energy industry". My clients include oil and gas producers, transmission companies, and distributors.

Now, I haven't read the entire bill text (much like most of congress, I'm sure). I have read enough to get a good feel for the main points:

1) Requires large utilities to produce an increasing percentage of their electricity from renewable sources (wind, solar, biomass, etc).

Because of the Energy Independence and Security act of 2007 along with advancements in renewable technologies, this is already predicted to happen (see graph). Around 30 states already have enacted Renewable Portfolio Standards, requiring a certain percentage of electric generation to come from renewable sources by 2020. The current bill requires:

*6 percent of electricity to come from renewables by 2012
*20 percent of electricity to come from renewables by 2020

This is pretty much in line with what is already going on around the county.

http://images2b.snapfish.com/2323232...%3B32%3Anu0mrj


2) "Cap and Trade" of greenhouse gases (GHGs).

What this breaks down to is that sources will have to limit their output of greenhouse gases, get a permit for their emissions, and will have the ability to "bank" or purchase emission credits. This is the same concept that has been used for wetlands since the 80s under Section 404 of the Clean Water Act. If you are going to emit more than your permitted limit of GHGs, you must purchase credits. If you are going to emit less, you can either "bank" your credits for future use, or sell them to companies that are over-emitting.

The GHGs that will be regulated under the new act include carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, hydrofluorocarbons, perfluorocarbons, and nitrogen trifluoride. Of these, methane, nitrous oxide, hydrofluorocarbons, and perfluorocarbons are *already* regulated. Due to a 2007 Supreme Court finding, the EPA recently published a finding indicating that GHGs "threaten the public health and welfare of current and future generations". This finding sets the framework for future regulation under the Clean Air Act. The wheels were set in motion on this issue years ago.

3) Investments in energy technology

Basically equals money going to private companies in the form of loans and grants to fund research and development of renewable and energy-efficient technology. I don't have a lot of perspective on this, as I don't deal with the R&D side much.

4) Stricter regulations on coal plants

I don't deal with a lot of coal, since natural gas and oil are king here, but I do know this - while coal currently dominates the market for electricity production, it's decline has been predicted for a while now. It is estimated that less than 20% of new electricity plants will be coal driven, with natural gas taking over.


While I agree that this bill is unnecessary and couldn't come at a worse time, I'm skeptical of some of the assumptions that this will drive energy prices through the roof due to the limitations it places on the industry. There is *very little* in this bill that is new or novel - most of the regulations are already in place in one way or another. Every year there is some new regulation or amendment that forces industry to change something about their process or pollutant controls. It does not appear that this bill will have any more impact in industry than the large numbers of EPA regulations that go into effect every year.

Businesses deal with rising costs by cutting expenses and/or passing them on to consumers.

Cutting profit is the *last* thing to be considered.

Cap-and-traid is an expense to business. Expect layoffs and rising prices to result.

To add to what Bill said, expect businesses that "pollute" to move their operations and jobs into a country that does not have these requirements. See Mexico, et al.

Are farms excluded? If not - expect to see more farm failures and/or an increase in food prices.

All for what? Oh, yeah - that warm fuzzy feeling of trying to beat the "boogie man" based on flawed scientific theory and policy.

Since livestock is one of the hugest "polluters", when are we going to start the nationwide slaughter? I suggest we start in Washington, DC.

Interesting summary Swae. And well said.

My issues with the bill are many.

Fundamentally, I have a problem with yet another layer of unnecessary regulation. Regulation on the segment that actually produces wealth. The legislative branch are lawyers being directed by academics. Do they not realize that CO2 emissions = energy consumption = cost? The market already self-regulates CO2 to be as efficient as possible. Long term - this is just going to drive industry to the Middle East and Saudi Arabia. And the net effect will likely be increased CO2 emissions, since in those countries energy is so cheap that it's more cost effective to use cheaper but less efficient energy sources. But the legislatures get their demagoguery and power, and the academics get that justification of their life's work and security for future grants from government. Note both of those sectors survive on conversation - and their livelyhood is funded by the very wealth producers that they continue to stack burdens upon.

The argument that initially the regulation will be trivial doesn't hold much water for me. They said the same thing about income tax once too. Government power never contracts - only grows. And wealthy companies are tidy tax targets.

Reliance on renewables have numerous issues. The first being legislating something doesn't make it so. All the water that can be dammed has been. The remaining power sources are unreliable and dependent upon unpredictable weather patterns. Try piping solar power from Arizona to New York and watch how expensive that is - and how tiny the fraction of power you actually get is. Would you build a 1 billion dollar aluminum smelter in the US if you weren't guaranteed 100% power reliability to run your plant? I wouldn't. It may sound trite and overstated that the wind doesn't always blow and the sun doesn't always shine - but both are very real statements. Power distribution and storage are huge issues with these new forms of energy. And just saying YES WE CAN doesn't change the laws of physics. At the pace things were going in the 1970's, we were all supposed to have flying cars and a colony on the moon by now.

As to investments in green energy development - those investments are already off the map today. How much more is really needed?

I'd probably suck it up and say this is a move in the right direction if I thought it actually made a difference. But even if every prediction about global warming is true the impact of this is that instead of some island in the Pacific being swallowed by the sea in 2100, it's swallowed in 2110. Gee. That's worth it. Too bad we're all too poor to help the folks who need help from that. And that's all academic, because the whole thing is a crock of S. anyway, despite all the smug statements out there that this has been settled and all the naysayers have just been mislead by Rush.

Meanwhile, no one has done a good job of answering why the polar ice caps on Mars have melted between the first expeditions in 1960's and today. Or why it's been getting colder and colder these last few years.

All of this solidify's my disgust that the American politician isn't even trying anymore. Bush caught holy Hell for legislating science, rather than letting science drive the legislation. And the complaints were valid (in some cases). Yet no one is calling out Obama for legislation based on the science of 5 years ago that isn't holding up to real data so well these days.



As to how this will affect you at home: Expect your natural gas prices to skyrocket. No one is going to build a coal fired power plant now, which means gas and they're going to be sucking up natural gas futures faster than you can say boo. Expect plastic prices to go up (i.e. the cost of anything made in the USA), because the ethylene industry that feeds it in the US is based on using gas.

Government does not create wealth. Period. Government can either hurt or help free markets through regulation and taxation. Increased regulation (in general) and taxation (majority) hurt capitalism, hurt employers and employees, decrease investment (both foreign and domestic) and cripples innovation.

Sure, forcing coal mines to maintain higher safety standards and similar acts which saved lives is okay. But when politicians attempt to control free enterprise by forcing unwanted initiatives into the market is a recipe for disaster.

Green energy is expensive, unreliable and general not acceptable by the consumer or enterprise. The population wants two things: cheap and clean. The government is giving them expensive, unreliable and clean. This is not how capitalism works and capitalism is at the core of our democracy because true freedom is the freedom to chose, to succeed and to fail.