More Cap and Tax

From DUSTIN BLEIZEFFER Casper Star-Tribune 8/20/09 [hyperlinks added]
The cap-and-trade legislation before Congress can achieve a 17 percent carbon reduction for a cost of about $83 per household per year, according to recent analysis by the U.S. Energy Information Administration.

However, congressional leaders from carbon-intensive states such as Wyoming remain adamantly opposed to the Waxman-Markey bill, insisting that the real costs of curbing greenhouse gas emissions would further bankrupt the nation.

“There’s nothing good about it,” said U.S. Sen. John Barrasso, R-Wyo. “I’m going to do everything to make sure it doesn’t pass.”

U.S. Sen. Mike Enzi, R-Wyo., said the bill is “the biggest hidden tax in America.”

“It’s a Ponzi scheme because we’re just going to print certificates for CO2 and not take care of any CO2,” Enzi said. “It’s just another way to make money.”

Enzi and Barrasso spoke at the Petroleum Association of Wyoming’s annual meeting in Casper on Wednesday. The senators focused on health care and energy legislation before Congress.

The U.S. House in June passed the American Clean Energy and Security Act, also known as the Waxman-Markey cap-and-trade bill. Since then, the Senate has stalled on the measure while carbon-heavy industries organize to kill it.

The senators’ comments were well-received by members of PAW, an oil and gas trade association. One member said the oil and gas industry was largely left out of the conversation as the Waxman-Markey bill was being drafted.

Barrasso told members he is certain the bill will come out of committee in the Senate and said he and other opponents would propose through amendments “ways to improve the bill,” including concerns by the oil and gas industry.

On several occasions, Barrasso encouraged PAW members to talk to their industry friends in other states to implore their senators to oppose or improve the bill.

“If you have people in Nevada who can work with (Senate Majority Leader Harry Reid, D-Nev.), that would be helpful,” Barrasso said.

Cap and trade

The cap-and-trade strategy allows the government to set incrementally lower limits on CO2 emissions. The House version of the Waxman-Markey bill sets out to reduce the nation’s 2005 carbon emission level 17 percent by 2020, for example.

Those who emit CO2 could either reduce their emissions to meet the targets, or they could trade and buy emission credits from those who can come in under the targets.

Several economists, including University of Wyoming economics professor Edward Barbier, say the cap-and-trade approach has the broadest political appeal because it’s a market-driven incentive to achieve emission reductions as cheaply and efficiently as possible.

Yet Barrasso and Enzi both said that only works if the world’s other top carbon emitters follow suit. Both said they believe China and India will not follow through with carbon reductions of their own, effectively placing the U.S. at an extreme economic disadvantage.

“I’m very concerned about the Chinese, who are willing to sacrifice their environment for their economy,” Barrasso said.

International efforts

China is the world’s top emitter of greenhouse gases, but the U.S. still emits more per capita. While China’s national government has resisted carbon emission reductions, several provincial governments are making huge strides in this direction.

In fact, many experts say China is investing much more money in alternative energy and carbon capture and sequestration than the United States.

Tyson Slocum, energy program director for the advocacy group Public Citizen, said America’s international leadership role on this issue shouldn’t be underestimated, particularly with the change from the Bush to the Obama administration.

“We don’t want to go forward with strong carbon regulations here and see China an India have no regulations. But it would be more productive if members of Congress – even from carbon-intensive states – come to the table with a plan,” Slocum said in a phone interview.

In his address to the Petroleum Association on Wednesday, Barrasso accused the Obama administration of rushing to get climate legislation in advance of the United Nations’ upcoming climate conference in Copenhagen in December. While supporters see the Waxman-Markey bill as key to bringing China, India and others on board with carbon reductions, Barrasso said he doubts those nations will follow.

The Associated Press reported on Tuesday that China’s top legislature announced it will consider a resolution on climate change this month, under the same pressure as the U.S. to arrive in Copenhagen with hard evidence in hand that the countries are committed to the international effort.

Wyoming coal

Closer to home, Slocum said the Waxman-Markey bill preserves a status quo for the American coal industry for the first 20 years. The electrical utility industry is virtually held harmless, he said.

“This is a compromise involving industry. Groups like mine have criticized it because it essentially does nothing for 20 years. The only real mandates are efficiency requirements,” Slocum said.

An analysis by the U.S. Energy Information Administration suggests that under one scenario the cap on carbon emissions could be achieved for a cost of about $83 per household per year. This, according to the EIA, is possible through free allowances to regulated utilities to help offset costs to their customers through 2025.

But, the EIA also reports, “Average impacts on electricity prices in 2030 are projected to be substantially greater, reflecting both higher allowance prices and the phase-out of the free allocation of allowances to distributors between 2025 and 2030.”

Slocum said he opposes the bill because it doesn’t go far enough in limiting carbon emissions.

People reliant on Wyoming’s coal industry, Slocum said, would actually benefit in the short term because of liberal allowances during the first 20 years. They would benefit in the long term because the bill includes about $1.1 billion per year in electrical surcharges for carbon capture and sequestration technology.

Even Wyoming’s all-Republican congressional delegation has held that that technology is coal’s long-term insurance policy.

“This bill is actually pro-coal,” Slocum said. “It’s about developing carbon capture and storage, which is why it has cap and trade. If Wyoming is worried about the jobs lost through Powder River Basin coal, this bill is all about encouraging coal.”


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