CARBON EMISSIONS: Allowances to emit one ton of greenhouse gases are being handed out for free.
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A massive climate bill has taken its first step forward in the House, its path paved by the giveaway of allowances -- free greenhouse gas emission permits designed to mute the economic impact of a carbon cap-and-trade program.
Free allowances -- each conveying the right to pump a ton of greenhouse gases into the atmosphere -- were the glue that held the sprawling bill together for Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.) and fellow Democrats on the Energy and Commerce Committee last week.
The "cap" of cap and trade would impose steadily tightening limits on greenhouse gas emissions. Companies covered by the bill whose emissions exceeded their caps would have to purchase emission allowances, or buy offsets -- for example, by investing in rainforest preservation. Some allowances could be banked or borrowed to ease transitions. But the decisions would affect firms' choices of fuels, introduction of new technologies, and decisions to hire, fire, expand, shrink or move operations overseas.
The bill's allowances help lessen its economic impact on parts of the country with industries threatened by trade or heavily dependent on coal to generate electricity. Even so, the climate legislation will create major winners and losers. "Some will have zero costs, some will have extremely high costs," said Harvard University economist Robert Stavins. "It's very hard to estimate who will be the most burdened."
Washington state, with its plentiful hydroelectric power, emitted 0.15 ton of carbon dioxide per megawatt of power it produced in 2005. Indiana -- a center of coal-based power generation -- emitted nearly 1 ton of CO2 per megawatt, Stavins noted.
A computer model run by ClearView Energy Partners estimates that greenhouse gas limits will hit three times as hard in West Virginia, Kentucky and North Dakota, for example, as in Washington state, California or Oregon.
Oil refiners and manufacturers of chemicals, paper, cement and metals will be vulnerable. So will companies that face tough U.S. or foreign competition that makes it hard to pass on higher energy prices.
"The firm makes a choice," said Kevin Book, a ClearView partner. "You can adapt. You can accept lower profits to retain customers, or, if you can jack up prices, you will. We don't know what the industrial players will do." Electric power prices would still come under the eyes of public utility commissions.
The different regional burdens required Waxman to parcel out allowances to benefit coal states -- whose economies would feel more pain -- in order to get a majority of Democrats behind the bill. "You can leave it up to Congress to do what it does well, and that is to build a constituency for the program," Stavins said.
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8 Comments
Add CommentThis system will create the need for protectionist policies. Either that or see strategically important industries flee. I fail to see how a country can trade away it's productive capacity and remain viable, let alone prosperous.
Reply | Report Abuse | Link to this"This system will create the need for protectionist policies."
Reply | Report Abuse | Link to thisRight. Just like the Clean Water Act and Clean Air Act did. I see your campaign to turn my the U.S.A into a over polluted Third World Country continues apace.
Should say:
Reply | Report Abuse | Link to thisI see your campaign to turn the U.S.A into a over polluted Third World Country continues apace.
This bill shows why politics doesn't work for environment. Waxman and Marki just gave away the store to their political allies. That is why only a simple carbon tax will work. It doesn't allow the politicians to cheat as easily.
Reply | Report Abuse | Link to thisLast year (2008) U.S. greenhouse gas emissions plumeted. This also happened in 2006 and both times w/o much government prodding. Price works. Everything else is BS and when politicians do it, it is just very expensive BS.
"That is why only a simple carbon tax will work."
Reply | Report Abuse | Link to thisWhere were you guys when this was a serious proposal a few years back? Oh, yeah. Your bunch was denying that their was ever a problem in the first place.
"Last year (2008) U.S. greenhouse gas emissions plumeted."
Just how big of a drop was it and why do you think it will continue to decline even after the economy picks up?
"This also happened in 2006 and both times w/o much government prodding. Price works. "
What price did CO2 emissions have in 2006? It seems to me that you have confused the reduction in economic activity and the concomitant decline in CO2 with some sort of free market principle.
Trent1492:
Reply | Report Abuse | Link to thisYou're arguments only make sense if you begin with the assumption that CO2 is a pollutant, which it isn't.
Pollution is something completely and utterly different from CO2; except in the minds of the Climate-Industrial Complex with $$billion$ to gain by perpetuating the lie.
"You're arguments only make sense if you begin with the assumption that CO2 is a pollutant, which it isn't."
Reply | Report Abuse | Link to thisWhich part of Stephan-Boltzman Law do you think is invalid? Your Noble prize awaits.
"Pollution is something completely and utterly different from CO2;..."
Baseless assertions are not facts.
...except in the minds of the Climate-Industrial Complex with $$billion$ to gain by perpetuating the lie."
So says the guy who swallows with such enthusiasm fossil fuel propaganda. Do you have primary evidence that the world's geophysicists are engaged in a scheme to defraud little old Exxon-Mobile? Thought not.
I would be more supportive of this idea if the government was required to reinvest any revenue they receive back into improving the technology that would reduce emissions. Currently this is only a tax that creates more revenues for the government that they can spend anywhere and they take no responsibility for the success of it.
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