CrackedWorld

After all the out of control spending the Obama Administration has engaged in supposedly to stimulate the economy it seems that he is contradicting his own efforts. His cap and trade program is designed to reduce carbon emissions from the production processes of factories in the United States. It could prove to have negative effects on the progress of economic recovery.

In short Cap-and-trade is a concept where the Government will issue an allowance or Cap of Carbon Credits, which is Al Gore speak for the right to burn carbon, the businesses of America would be charged for the amount of Carbon Credits they project to burn (no pun intended); once a factory uses all its Carbon Credits it would have to buy or trade for more credits to continue doing business or be taxed horrendously for exceeding its Carbon Credit limit. The total amount of Carbon Credits available to be bought  sold or burned is not to exceed the Cap or allowance put forth by the Federal Government, therefore “Capping” the amount of carbon emissions the nation can produce annually.

Thus, in theory, those that can easily reduce emissions will, and this is supposed to achieving the pollution reduction at the lowest cost to the American consumer.

Not so fast says Mike Pence, a Republican Rep. from Indiana, his theory says it will “cost” the American consumer.

“I think, rightly understood, the cap-and-trade legislation represents an economic declaration of war on the Midwest by liberals in Washington.”

Pence says a proposal by congressional Democrats to regulate gases blamed for global warming could cost the average American household more than $3,000 a year in higher energy costs.

Indystar.com

Politicians, particularly from the left, like Cap and Trade because they can claim to tax only the big polluters. In reality, once the government turns pollution into a commodity to be bought and traded, and then requires businesses to purchase this commodity the cost  incurred from  these purchases will be passed on to the consumer (that’s you and me).

From the Wall Street Journal:

Hit hardest would be the “95% of working families” Mr. Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat “unless you use energy.” Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.

The Congressional Budget Office  estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That’s about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

But the greatest inequities are geographic and would be imposed on the parts of the U.S. that rely most on manufacturing or fossil fuels — particularly coal, which generates most power in the Midwest, Southern and Plains states. It’s no coincidence that the liberals most invested in cap and trade — Barbara Boxer, Henry Waxman, Ed Markey — come from California or the Northeast.

Coal provides more than half of U.S. electricity, and 25 states get more than 50% of their electricity from conventional coal-fired generation. In Ohio, it totals 86%, according to the Energy Information Administration. Ratepayers in Indiana (94%), Missouri (85%), New Mexico (80%), Pennsylvania (56%), West Virginia (98%) and Wyoming (95%) are going to get soaked.

Read the whole article here.

Lessons to be learned from European Cap and Trade

BusinessWeek has a break down of the Euro-experiment with these concepts of recent years. They are less than encouraging, as is the case with most of Europe’s  socialistic programs. Here is a snippet of their take on the pitfalls Europe has encountered with Cap and Trade.

Companies are granted a certain number of carbon units (the “cap”) that they can sell on the open market if their CO2 output falls below its assigned level or buy as needed to offset output above the limit.

Problem is, the price of carbon credits in Europe has plummeted by two-thirds since July 2008 because of tumbling commodity prices and contracting industrial output. The more it costs to offset CO2 production, the greater incentive companies have to switch to more environmentally friendly technologies. Yet analysts reckon the current price of less than €10 ($13) per metric ton of CO2, compared with la

Coal Power Plant in Dattein Germany - Image via Wikipedia

st summer’s highs of €30 ($38), just doesn’t provide enough economic impetus to go green. In other words, it’s cheaper to pollute.

“The carbon price volatility has hurt long-term investment in renewables,” says Colette Lewiner, global energy, utilities, and chemicals leader at consultancy Capgemini (CAPP.PA). “When the price is so low, it plays no role in investment decisions concerning lower CO2-generating power plants.”
Reverting to Coal

The steep fall in the price of carbon credits is sending ripples through European industry and power companies. According to New Carbon Finance analyst Olivier Lejeune, last year’s record carbon price led many of Europe’s utilities-which constitute the largest sector covered under the ETS-to switch from highly polluting coal-fired plants to more efficient natural gas facilities. But after emissions costs began to fall, energy companies reverted to coal because it was more economic to buy cheap carbon credits in the market than continue using more environmentally friendly natural gas. “Recently, the use of coal has massively intensified,” Lejeune says.

Other Possible Pitfalls of Cap and Trade

This plan won’t do anything to make Earth more “green,” all it will do is hamstring our economy. Other nations in the world won’t adopt an emissions reduction plan of any kind because they simply don’t care about it. Countries like Russia, India, Brazil, and North Korea will pollute as much as they want. That will drive industry out of America and into countries without emissions taxes.

It will soon become cheaper to buy energy from Mexico than produce it here.

My take on government in general is that if you give them an inch they will take a mile. The Federal Government doesn’t know where to draw the line; they never have.

So where will this stop?

Use your imagination, maybe cap and trade on the number of cigarettes and cigars you are allowed to smoke in a year?

Maybe you’ll be carbon taxed by the mileage on your car based on whats under the hood.

And of course lets not forget their spending budgets are limited by the amount of Tax revenues they take in too and look how that little scheme works; they spend money they don’t have anyway so what happens when they decide they don’t have enough? Will they just raise the limit?

Its a Cracked World and this is just one more reason why.

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