Cap and Trade

[TheMercenary]

Potential Pitfalls of Cap and Trade:

Advocates of the system like it because "the polluter pays." Setting aside for the moment the question of whether it is justifiable to call carbon dioxide a pollutant, [b]companies of course do not simply absorb these extra costs. Instead, they pass them on to their customers who are also, by and large, taxpayers. Not only does the taxpayer carry the cost of any cap and trade scheme, but their money also provides profit for a whole new industry: the new carbon trading sector, the middlemen who make the system work.[b/]

Unlike normal tradable commodities, carbon dioxide emissions can only be estimated, rather than quantified exactly. And it is only international agreements and national law that give these permits a price at all. The result is a system open to misuse, since all parties -- seller, middleman and buyer -- have an incentive and opportunity to manipulate the estimates. Sellers want to show how much they are reducing their emissions, buyers benefit from lower prices as more units come to market, and traders do good business in a buoyant market.

The biggest abuse began right at the start of the ETS when regulators handed out too many free permits. As a result, utilities companies made windfall profits by simply selling on large numbers of unneeded credits and not passing the savings on to their customers in the form of price cuts. Despite the EU's declared goal to dole out permits based on objective criteria, industry lobbying led to an overallocation. When push comes to shove, governments will always protect their national champions. The German government, for example, negotiated an easing of planned caps on emissions from cars to the advantage of manufacturers of higher-powered cars such as Mercedes-Benz and Porsche.

And this is in a bloc where the environmentalists have far more influence than in America. Translated across the Atlantic, any climate change bill will become the subject of the worst kind of pork-barrel politics riddled with loopholes for key industries before it becomes law.

This is already evident in the attitude of a significant number of Democratic Congressmen. Rather than back the bill, as many had assumed, they are looking for changes to protect powerful interests (and their own votes) in their constituencies. States with strong coal mining sectors are particularly vulnerable to cap and trade legislation, and, in the words of Democratic Representative Dennis Cardoza from California "the EPA under President Obama "doesn't get rural America." His Democratic colleague Tim Holden "I have grave concerns about where the administration is going on climate change."

There is another major problem with cap and trade: its lack of predictability. Prices vary considerably. On June 15, the right to emit a tonne of carbon dioxide cost €12.50. Since the inception of the ETS, this price has varied from below €10 to peaks of more than €30. While these fluctuations may encourage businesses to increase energy efficiency -- for which they will in any case receive a direct financial benefit -- it is of no help for long-term investment decisions to permanently reduce carbon emissions. For this, a significantly higher minimum price is needed, perhaps about $140 per tonne, according to a U.K. government-sponsored report from Cambridge university, due to be published shortly.

Given the system's inherent flaws, it comes as little surprise that the ETS didn't quite work as intended. According to European Commission figures, emissions from the 27 member states rose by 1.9% in the first three years of the regime. Following criticism, the caps for the period to 2012 were reduced for the majority of member states, but only to a little lower than actual emissions in 2005, and the evidence is that the recession is having a much more direct impact on emissions than the trading scheme (incidentally putting a lot of low-priced permits on the market).

Despite the system's questionable results, the costs are considerable. In 2006, individual business and sectors had to pay €24.9 billion for over one billion tones' worth of permits. The WorldWatch Institute estimates that the costs of running a trading system designed to meet the EU's Kyoto obligations at about $5 billion. The estimated costs of a trading system to meet the EU's own and far more demanding commitments of a 20% reduction (against a 1990 baseline) by 2020 are around $80 billion annually.

Substantial changes are planned for the European regime, with emissions caps to be set by a single EU body rather than national governments, more than half of permits to be auctioned, and the aviation sector and possibly shipping to be included. Household consumption and private transport cannot be included in the ETS as set up, although the idea of extending the concept to the allocation of personal carbon allowances is popular with some.

But these are only cosmetic changes to an inherently flawed system. The auctioning of permits may avoid overallocation but instead saddle industry with huge upfront costs. The entire scheme will remain vulnerable to political interference and thus likely fail to reduce carbon emissions. The only certainty is that it will hurt the economy and drive up energy costs.

If passed, the U.S. bill will probably commit to the headline figure of a 17% reduction (from a 2005 baseline) in carbon dioxide emissions by 2020. Before signing any bill which would reduce America's competitiveness for little real impact on emissions, President Obama may want to heed the warning of Europe's experience.

http://online.wsj.com/article/SB124587942001349765.html

[TheMercenary]

This sums it up quite nicely.

Cap and Trade; Big government is on a roll.

The "climate change" bill or "cap and trade" legislation that recently passed the house will establish emissions standards for major industrial operations like utilities and manufacturers. Companies will have to purchase emissions credits to cover any excess over and above those standards. Revenue from the sale of credits will go partially to subsidize energy costs for the poor.

Here's the dilemma. If the program's stated intent is successful, and ten or twenty years from now we actually have an energy source that is comparable in cost, or even slightly higher than fossil fuels, with zero carbon emissions, subsidy money goes away. No emissions means no need to buy credits. No credits. No revenue. Something else will have to be taxed because politicians are not going to take back an entitlement, once it's been established.

This is not just bad policy from a free market standpoint. It's another opportunity for the government to create a pool of money for it to control. Just as TARP has become a revolving line of credit for the "too big to fail", the new energy subsidies will be permanent, even if their initial source of revenue goes away.

The new strategy for implementing big government is not to necessarily take control of individual industries. It's much more efficient to take control of the overall cash flow through the system. The tools are targeted taxes and credits, geographical monopoly licenses, government loans and equity purchases, creating a federal "risk manager" and subsidies for things like health insurance, housing, food and energy. Businesses become more and more dependent on the government to engage in trade and consumers become more dependent on the government for the most basic of necessities. Big government makes itself the biggest of the "too big to fail".

The Soviet Union tried this strategy. It didn't work out too well in the long run. China has fared a bit better. I guess that's where big government proponents get their inspiration. It remains to be seen whether Americans can be corralled as effectively as the Chinese. This is not a competition between capitalism and socialism. Capitalism has been taken off the table. This is a demonstration of global socialism. Perhaps something we have to witness play out before we can get back on the right road.

http://www.examiner.com/x-1087-Denve...t-is-on-a-roll

[Alluvial]

Its seems as though the cost is hard to pin down. MIT did a study in 2007 on cap-and-trade. Note that their scenario is different from Waxman-Markey somewhat.

Here is a link to the MIT study (big pdf). One scientist who worked on that study has said that his estimate is $800 per year, per household.

Originally Posted by John Reilly

The present value cost per average current household through 2050, as corrected, is about $800. Again, this estimate includes the direct effects of higher energy prices, the cost of measures to reduce energy use, the higher price of goods that are produced using energy, and impacts on wages and returns on capital. The cost per household will of course vary from our hypothetical average family depending on the household’s circumstances, though the burden on lower income households can be offset through the use of auction revenues.

From here.

[TheMercenary]

$800 per...?

[Alluvial]

Averaged over the years 2015 to 2050, annual cost for a family of four (original estimate was $340, changed to $800):

From data in the report we can calculate the economic cost in each year (percentage loss times the base welfare level in each year), and divide this by the US population, and then multiply this amount by four to estimate the cost for a representative family of four. We further apply an economic discount rate of 4% to get the Net Present Value (NPV) cost in each year in the future. Doing this we find that the NPV cost per family of four starts at about $75 in 2015, rises to nearly $510 by 2025, and then falls to $205 by 2050. We can calculate the average annual NPV cost per family by summing over all years and dividing by the number of years, and this shows the average annual net present value cost to be about $340 - only a part of which would be actual energy bill increases.

From here.

[sugarpop]

And the wind turbines I mentioned, I agree. But that isn't even being debating in the energy plan. It is all about big energy corporations. They need to think in a different way about it, and not worry if big energy gets upset.

And the reason I said that is because even the people of this country seem bent on discrediting anything different or new, and keeping those jerks in power and in control over the rest of us, in addition to those assholes in Washington. Other countries are really doing something about moving in that direction. We aren't.

[Alluvial]

I think part of that is the many factions we have here - all pulling in different directions. It's difficult to arrive at agreement. Americans have a difficult time seeing the 'big picture' as it were.

[classicman]

Speaker Nancy Pelosi’s Global Warming Bill (HR 2454)

The bill is being criticized as the largest tax increase in United States History, so needless to say it has the full backing of the White House.

The legislation, which no member of Congress even claims to have read, imposes limits on carbon dioxide and other green house gas emissions from power plants, factories and refineries. The original legislation also included a tax on bovine flatulence (cow farts) which was removed to gain the apparently necessary support of Democrats from agricultural districts.

This legislation marks the culmination and hopefully the beginning of the end of Global warming hysteria in Washington. While the hysterics over global warming/climate change appeared at first to be undisputed and undisputable over time scientists all over the world have emerged to challenge the validity of the claims made by people like Al Gore. However the fanatics still attempt to stifle any and all dissent, such as the suppressed report by Alan Carlin, a senior researcher at the Environmental Protection Agency.

Proponents of climate change legislation claim as President Obama did in his campaign that they wish to lessen our dependence on foreign energy sources. Meanwhile they oppose drilling in the United States to tap the resources we have in this country. Today’s legislation however takes the next step. It enshrines in it a measure that will effectively make drilling for domestic energy more expensive so that conservatives cannot push for domestic drilling as a viable alternative to solving the “energy crisis.” The legislation places a larger tax on domestic gasoline than it does on foreign gasoline. According to a story at Bloomberg News the same amount of gas produced domestically will have $1.00 in carbon costs imposed on it, and meanwhile foreign gas will have ten cents less in carbon costs in it.

Today’s environmental movement behind global warming hysteria is a direct descendant of the movement that defeated the possibility of nuclear power in the United States 30 years ago. In a typical fashion these environmental activists have declared the debate closed and will accept no further questions on the subject. They prattle on about sustainable living with ingenious ideas like the no flush toilet. They brag about living “off the grid” in houses with solar panels without giving a second thought to how the glass, steel and tiles of those solar panels require the very factories and refineries that they wish to see shut down. These people have no idea how the industrial world works. Our lives depend on what fossil fuels can do for us. Our lives depend on the manufacturing of plastic, steel glass, paper plants and pharmaceutical plants. The environmentalists want our lives to depend on what windmills can do for us. That’s right windmills which can’t even produce enough energy to manufacture more windmills are supposed to give us everything else we depend on to live our lives.

This legislation is not about the what is best for the Earth it is about raising taxes and imposing the agenda of the far left environmental movement, and that agenda is no about waht is best for humanity, it is about defeating humanity as we know it.

[classicman]

The 98-page report, co-authored by EPA analyst Alan Carlin, pushed back on the prospect of regulating gases like carbon dioxide as a way to reduce global warming. Carlin's report argued that the information the EPA was using was out of date, and that even as atmospheric carbon dioxide levels have increased, global temperatures have declined.

"He came out with the truth. They don't want the truth at the EPA," Sen. James Inhofe, R-Okla, a global warming skeptic, saying he's ordered an investigation. "We're going to expose it."

According to internal e-mails that have been made public by the Competitive Enterprise Institute, Carlin's boss told him in March that his material would not be incorporated into a broader EPA finding and ordered Carlin to stop working on the climate change issue. The draft EPA finding released in April lists six greenhouse gases, including carbon dioxide, that the EPA says threaten public health and welfare.

An EPA official told FOXNews.com on Monday that Carlin, who is an economist -- not a scientist -- included "no original research" in his report. The official said that Carlin "has not been muzzled in the agency at all," but stressed that his report was entirely "unsolicited."
(Apparently he is also a physicist)

"It was something that he did on his own," the official said. "Though he was not qualified, his manager indulged him and allowed him on agency time to draft up ... a set of comments."

Despite the EPA official's remarks, Carlin told FOXNews.com on Monday that his boss, National Center for Environmental Economics Director Al McGartland, appeared to be pressured into reassigning him.

Carlin said he doesn't know whether the White House intervened to suppress his report but claimed it's clear "they would not be happy about it if they knew about it," and that McGartland seemed to be feeling pressure from somewhere up the chain of command.

Carlin said McGartland told him he had to pull him off the climate change issue.

"It was reassigning you or losing my job, and I didn't want to lose my job," Carlin said, paraphrasing what he claimed were McGartland's comments to him. "My inference (was) that he was receiving some sort of higher-level pressure."

Carlin said he personally does not think there is a need to regulate carbon dioxide, since "global temperatures are going down." He said his report expressed a "good bit of doubt" on the connection between the two.

Specifically, the report noted that global temperatures were on a downward trend over the past 11 years, that scientists do not necessarily believe that storms will become more frequent or more intense due to global warming, and that the theory that temperatures will cause Greenland ice to rapidly melt has been "greatly diminished."

Carlin, in a March 16 e-mail, argued that his comments are "valid, significant" and would be critical to the EPA finding.

McGartland, though, wrote back the next day saying he had decided not to forward his comments.

"The administrator and the administration has decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision," he wrote, according to the e-mails released by CEI. "I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office."

Reps. James Sensenbrenner, R-Wis., and Darrell Issa, R-Calif., also wrote a letter last week to EPA Administrator Lisa Jackson urging the agency to reopen its comment period on the finding. The EPA has since denied the request.

Citing the internal e-mails, the Republican congressmen wrote that the EPA was exhibiting an "agency culture set in a predetermined course."

"It documents at least one instance in which the public was denied access to significant scientific literature and raises substantial questions about what additional evidence may have been suppressed," they wrote.

In a written statement, Issa said the administration is "actively seeking to withhold new data in order to justify a political conclusion."

"I'm sure it was very inconvenient for the EPA to consider a study that contradicted the findings it wanted to reach," Sensenbrenner said in a statement, adding that the "repression" of Carlin's report casts doubt on the entire finding.

Carlin said he's concerned that he's seeing "science being decided at the presidential level."

I remember a thread about science being perverted for politics. I do not know if this is the R's complaining about everything or if this is a valid issue. To me though, it does seem as if there is a lot more dissent among scientists about exactly what causes what and even more importantly, how to rectify or lessen whatever effect we as the supposed caretakers of this planet can do.

Politically, I hate the way this bill was slammed through the process without one congressman having read it. Commonplace? perhaps, but isn't that what was wrong in the past? Wasn't this time supposed to be different? It may be the same book with a shiny new cover and a much higher price tag.

[Happy Monkey]

I'm not sure why anyone thinks that an unsolicited report from an unrelated office would be included in any official document, regardless of the subject.

[classicman]

Home > News Release > CEI Releases Global Warming Study Censored by EPA
CEI Releases Global Warming Study Censored by EPA
The Public Shouldn’t Be Kept in the Dark by an Agency Supposedly Committed to Transparency
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by Richard Morrisontwitter
June 25, 2009
Washington, D.C., June 26, 2009—The Competitive Enterprise Institute is today making public an internal study on climate science which was suppressed by the Environmental Protection Agency. Internal EPA email messages, released by CEI earlier in the week, indicate that the report was kept under wraps and its author silenced because of pressure to support the Administration’s agenda of regulating carbon dioxide.

The report finds that EPA, by adopting the United Nations’ 2007 “Fourth Assessment” report, is relying on outdated research and is ignoring major new developments. Those developments include a continued decline in global temperatures, a new consensus that future hurricanes will not be more frequent or intense, and new findings that water vapor will moderate, rather than exacerbate, temperature.

New data also indicate that ocean cycles are probably the most important single factor in explaining temperature fluctuations, though solar cycles may play a role as well, and that reliable satellite data undercut the likelihood of endangerment from greenhouse gases. All of this demonstrates EPA should independently analyze the science, rather than just adopt the conclusions of outside organizations.

The released report is a draft version, prepared under EPA’s unusually short internal review schedule, and thus may contain inaccuracies which were corrected in the final report.

“While we hoped that EPA would release the final report, we’re tired of waiting for this agency to become transparent, even though its Administrator has been talking transparency since she took office. So we are releasing a draft version of the report ourselves, today,” said CEI General Counsel Sam Kazman.

[TheMercenary]

Heh. See the stuff I posted in the Global Warming thread. Same thing. Pretty disgusting what Congress has done to this country through this bill....

[sugarpop]

I'm not sure I trust anything coming from a think tank that is all about free enterprise and limited government, because those people will always side with industry. I am more interested in what actual scientists have to say, and the expedition that went to the North Pole for a couple of years says different...
"Future Earth: Journey to the End of the World," http://www.msnbc.msn.com/id/29840099...v-future_earth

Maybe that's why that report from CEI was left out.

[classicman]

Yeh the guy with a wet finger in the air knows so much more. I mean they are selling those DVD's are they? Not a very objective source based upon the headline.

[classicman]

Today’s environmental movement behind global warming hysteria is a direct descendant of the movement that defeated the possibility of nuclear power in the United States 30 years ago. In a typical fashion these environmental activists have declared the debate closed and will accept no further questions on the subject. They prattle on about sustainable living with ingenious ideas like the no flush toilet. They brag about living “off the grid” in houses with solar panels without giving a second thought to how the glass, steel and tiles of those solar panels require the very factories and refineries that they wish to see shut down. These people have no idea how the industrial world works. Our lives depend on what fossil fuels can do for us. Our lives depend on the manufacturing of plastic, steel glass, paper plants and pharmaceutical plants. The environmentalists want our lives to depend on what windmills can do for us. That’s right windmills which can’t even produce enough energy to manufacture more windmills are supposed to give us everything else we depend on to live our lives.