Monday, June 29, 2009

Cap and Trade

The "American Clean Energy and Security Act” is HR 2454, also know as the Waxman-Markley energy bill, or simply as "ACES" was passed by the House on Friday (219-212). The bill includes a cap-and-trade global warming reduction plan designed to reduce carbon dioxide emissions in the U.S. The current goal is a reduction of 17% by 2020 and this will be accomplished by requiring “polluters” to buy permits to emit a certain amount of carbon dioxide. The bill sets an overall cap on such permits but allows them to be sold. The cap grows tighter over time reducing what can be emitted in total and hopefully pushing up emissions prices and prodding industry to release less carbon dioxide by utilizing cleaner energy sources or increasing efficiency of the existing ones. Other provisions include new renewable energy requirements for utilities, studies and incentives for carbon capture technologies, energy efficiency incentives and penalties for homes and buildings, and grants for green jobs.

A cap and trade system will cost the American consumer more for power, transportation and many goods. There will be profits to be made in a cap and trade system, which will hold the profits and who will bear the costs remains to be seen. It is anticipated that there would be a net cost of the program despite the creation of some green jobs and the creation of wealth for market makers. What are we willing to give up in terms of comforts, services, possessions and other goals to accommodate a targeted reduction in carbon dioxide release? There is a price to reduce our emissions of greenhouse gases. Hopefully, there will be benefits and the unintended consequences will not overwhelm the goals of the bill.

On Friday, June 25, 2009 in an opinion piece in the Wall Street Journal, Kimberley A. Strassel reported that Australia failed to pass their “Cap and Trade” bill and that the number of skeptics is swelling. It is unclear if they are skeptics on whether the earth is warming, the modeling of the earth’s climate and environment, or skeptics about the postulated impacts that global warming might have. As the previous review of global warming research showed some research suggests that climate change may have some anthropogenic (human) causes, but other research does not support that theory. Certainly, anthropogenic activity has contributed 4% of the 386 parts per million (0.039%) carbon dioxide in the atmosphere. However, the consequences of climate change that have been cited as reasons for government action are not born out by the facts.

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