Cap and Trade...
The monster 1200-page Waxman-Markey Cap and Trade bill (American Clean Energy and Security Act of 2009) passed by the House attempts to reduce the amount of carbon emitted into the atmosphere from American cars, power plants and factories. It is now before the Senate.

Here are some important features of the cap-and-trade system as proposed in the bill:

• Starting in 2012, industries would be required to reduce their emissions to specific targets through the middle of the century. The cap-and-trade system comes completely into force by 2016.
• The bill aims to cut emissions by 17% below the 2005 level by 2020 and 42% by 2030. By 2050, emissions are expected to drop by 80% below the 2005 level.
• The bill requires companies to buy permits to be allowed to emit carbon dioxide and other polluting gases. If a company cuts its emissions by more than the statutory limit, then it can sell the extra permits. Conversely, a company needing extra permits can purchase those.
• If a company’s emissions exceed its permits, it would be fined two times the value of the permits it should have purchased.

Comment...
The bottom line: In my opinion cap-and-trade will increase the cost of energy for Americans yet fail to impact climate change--its stated purpose..

The cap-and-trade bill is too complicated with too many moving parts. But that should be of no surprise since 880 lobbyists are registered to lobby on climate change and their fingerprints are all over Waxman-Markey.

Cap-and-trade will enrich a new class of financial traders and speculators costing American consumers billions, possibly trillions of dollars. It's worse than a tax because only 15% of the proceeds from auctioned permits go into our national treasury. And the kicker? We'll never even know if cap and trade worked.

If, instead, the United States had a national mandate to replace coal generation with natural gas and nuclear energy, plus if we replaced our commuter cars with battery-powered electric cars, we would drastically reduce our dependence on foreign oil and also reduce CO2 emissions beyond cap and trade targets.

— Robert Moen, Founder        
rmoen@energyplanUSA.com

Carbon credit fraud causes more than 5 billion euros damage for European taxpayer
Europol 2009
The European Union Emission Trading System has been the victim of fraudulent traders in the past 18 months. This resulted in losses of approximately 5 billion euros for several national tax revenues. It is estimated that in some countries, up to 90% of the whole market volume was caused by fraudulent activities.

Climate-change bill hits some of the right notes but botches the refrain
Washington Post 2009
The American Clean Energy and Security Act of 2009 represents a crucial step in preserving life as we know it. But there is no question that there are few pieces of legislation that are likely to have a more profound effect on the U.S. economy. It would bring about dramatic changes in the relative prices of energy and goods produced by energy-hungry industries. It would redistribute trillions of dollars in business sales and household income and generate hundreds of billions in government revenue. And it would represent the most dramatic extension of government's regulatory powers into the workings of the economy since the early days of the New Deal.

The other thing to say about it is that it is a badly flawed piece of public policy. It is so broad in its reach and complex in its details that it would be difficult to implement even in Sweden, let alone in a diverse and contentious country like the United States. It would create dozens of new government agencies with broad powers to set standards, dole out rebates and tax subsidies, and pick winning and losing technologies, even as it relies on newly created markets with newly created regulators to set prices and allocate resources. Its elaborate allocation of pollution allowances and offsets reads like a parody of industrial policy authored by the editorial page writers of the Wall Street Journal. The opportunities for waste, fraud and regulatory screwup look enormous.

We need more nuclear power
Wall Street Journal 2009
Independent analyses predict the Waxman-Markey bill will cost millions of domestic jobs as manufacturers relocate plants to countries with less draconian environmental regulations. Meanwhile, the electricity rates under a cap-and-trade system would, as President Barack Obama said in January 2008 "necessarily skyrocket," by some estimates up to $4,300 each year.

The cleanest way for utilities to control CO2 emissions is to increase the supply of carbon-free nuclear energy. This is obvious and simple, but in the thousand-page Waxman-Markey bill nuclear power is hardly mentioned.

The expensive failure of Europe’s emissions trading scheme
MasterResource 2009
The European Union Emissions Trading Scheme (ETS) is currently the largest cap-and-trade scheme in the world. Covering 11,500 installations and countries with a combined population of around 500 million, the scope of the scheme is truly enormous. Before Americans adopt a cap-and-trade scheme of their own, it is vital that they take a serious look at how things have gone in Europe.

The first thing to note is that the scheme has cost European consumers a fortune. There was a total bill of $123 billion between the introduction of the scheme in January 2005 and the end of 2008. That is $245 for every man, woman, and child across an area where average incomes are considerably lower than they are in the United States. That bill is expected to rise in the years to come. And the people who pay the heaviest price are those least able to bear it.

By contrast, energy companies make big windfall profits. Scarce allowances are given to them for free, but the need to hold them still pushes up their production costs. Even in the most competitive market, they will charge customers for free allocations. This is a policy that takes money from the poor and gives it to big companies. But even if the allowances are auctioned, it is still a regressive tax.

Other half of Waxman-Markey: examination of non-cap-and-trade provisions
Institute for Energy Research 2009

• Mandate that utilities provide 20 percent of electricity from qualified renewables by 2020, up from about 2.8 percent today
• Establish a new $1 billion annual tax on electricity from coal and natural gas-fired power plants
• Micromanage energy efficiency standards for lighting and appliances
• Create a Clean Energy Deployment Administration (CEDA) with $7.5 billion in Treasury “Green Bonds”
• Continue to allow EPA to regulate greenhouse gases using criteria other than global climate change
• Replace local and state building codes with a federal building code
• Create a federal grant program to help electric utilities plant trees

Weak medicine
Economist 2009
Compromise has enfeebled America’s cap-and-trade bill. A carbon tax would be better.

The weakening of this bill illustrates one of the central problems with cap-and-trade systems. They are complex, obscure and therefore susceptible to horse-trading. A chunk of allowances can be handed out to one lobby, a sliver to another, and soon the system’s effectiveness has been sliced away. The corresponding attraction of a carbon tax, which this newspaper has always supported, is its simplicity. The government sets the rate. Everybody can see what it is. Voters get transparency. Businesses get certainty. And the government gets a large chunk of revenue—not to be sniffed at in these difficult times.

Cap-and-trade's unlikely critics: its creators
Wall Street Journal 2009
In the 1960s, a University of Wisconsin graduate student named Thomas Crocker came up with a novel solution for environmental problems: cap emissions of pollutants and then let firms trade permits that allow them to pollute within those limits.

But now Mr. Crocker, a retired economist, and other pioneers of the concept are doubtful about its chances of success. They are tiptoeing away from an idea they devised decades ago, doubting it can work on the grand scale now envisioned.

Mr. Crocker sees two modern-day problems in using a cap-and-trade system to address the global greenhouse-gas issue. The first is that carbon emissions are a global problem with myriad sources. Cap-and-trade, he says, is better suited for discrete, local pollution problems. "It is not clear to me how you would enforce a permit system internationally," he says. "There are no institutions right now that have that power.

The climate-industrial complex
Wall Street Journal 2009
Some business leaders are cozying up with politicians and scientists to demand swift, drastic action on global warming.

This is a new twist on a very old practice: companies using public policy to line their own pockets. The tight relationship between the groups echoes the relationship among weapons makers, researchers and the U.S. military during the Cold War. President Dwight Eisenhower famously warned about the might of the "military-industrial complex." He worried that "there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties."

This is certainly true of climate change. We are told that very expensive carbon regulations are the only way to respond to global warming, despite ample evidence that this approach does not pass a basic cost-benefit test. We must ask whether a "climate-industrial complex" is emerging, pressing taxpayers to fork over money to please those who stand to gain.

A bad bill for cap-and-trade
Forbes 2009
During the markup of the Waxman-Markey climate change bill, congressmen gave away valuable emissions permits at no cost to favored industries. Though these handouts have temporarily bought political support for cap-and-trade--which is effectively an energy rationing system--Americans will see little, if any, environmental or economic return.

The European Union used a similar tactic of payoffs-via-permits to gain support for its carbon trading market. After nearly five years, this system has yet to deliver reductions in greenhouse-gas levels there, despite saddling European households with higher energy costs. A U.S. system will likely pan out the same way. The bill is a "green" Trojan horse that would deliver little, if any, climate benefits while instituting regulations that would greatly expand government's control over our lives.

U.S. emissions to fall 3.1% by 2020, even if Congress fails to act
Reliable Plant 2009
The United States economy’s overall carbon footprint will shrink by 3.1 percent by 2020 from where it was in 2005 even if Congress completely fails to implement any new measures to address climate change in coming months, according to leading research firm New Energy Finance. This will be driven in part by the recession, but more importantly through ongoing improvements in technology and government policies to promote renewable energy and automobile efficiency.