Cap and Trade will fail for three reasons:
1) Energy market mechnisms are not in place to successfully support as currently proposed.
2) Resulting costs are excessively high and cannot be justified during a recession. If the bill is brought back after the economy stabilizes, which most economists are predicting will take 20-40+ months, the scientists who have already debunked AGW, will have become so vocal, the alleged notion of "consensus" will have evaporated at which time ANY MENTION OF A "GREEN" BILL THAT WOULD COST TAXPAYERS WILL BE MET WITH VOTER OPPOSITION.
3) Political horsetrading not going well for the shakedown artists on both sides of the aisle. From a political perspective, the Cap and Trade bill was the Golden Goose for both parties. Virtually identical to a 'tax reform' bill, the Cap and Trade afforded both political parties the opportunity to shake down every PAC and industry in the U.S. seeking favorable exemptions and amendments. Several key Senators have already stated that if they cannot attach amendments to the benefit of political supporters, they will not support the bill. Ergo, getting all the Senators to draw a line in the sand where they'll discontinue further extortion from lobbyists and constituent industries, is nowhere in sight.
Below are discussions of the first two major problems created by Cap and Trade: Shortage of 'carbon-free' energy alternatives, and excessively high cost via 'backdoor' taxes and the creation of government bureaucracies whose vestment lies in the continuation of the taxation rather than the good of the U.S. social or political entity.
(The article is being included in it's entirety as the Google link to the article was killed after 23 hours ...surprise! Cached link is shown)
http://64.233.169.104/search?q=cache:Vn ... cd=2&gl=us
Why Cap-And-Trade Won't Work
Paul Cicio 05.30.08, 6:30 PM ET
Second issue discussed in following post.
Paul Cicio
Thanks to the aggressive timing of greenhouse gas reduction targets in the Warner-Lieberman bill--which the Senate will start to debate Monday--that calls for 2005 carbon emission levels starting in 2012, the U.S. can anticipate a massive switch from coal to natural gas by the power industry.
More critically, the bill, which also calls on companies to reduce their carbon emissions by about 66% by 2050, will drive up both the demand and the price of natural gas (a low-carbon alternative) to unprecedented levels, which will in turn further erode the number of U.S. manufacturing jobs.
Limited natural gas supply capacity will pit power-sector purchases in direct competition with demand from the residential, commercial and farm sectors.
The problem with the bill, which was originally sponsored by Sen. Joseph Lieberman, D-Conn., and Sen. Mark Warner, D-Va., is this: Simply setting a cap on carbon emissions does nothing to remove the barriers to greater natural gas supply. There is nothing in the bill that will stop a potential national crisis--one that is already getting underway--as companies struggle to obey these carbon constraints.
The lack of low-carbon energy alternatives for power generation (at least until new nuclear and coal-fired power plants with carbon capture to reduce emissions become more commonplace) means that natural gas is the default low-carbon energy option. In fact, none of the potential low-carbon energy alternatives except natural gas will be available by 2012, the year the bill first imposes these stringent limits.
Energy efficiency and conservation will be helpful, but those measures will not prevent the crisis that will ensue when companies are forced to decrease their emissions.
Because natural-gas-fired power generation is setting the marginal price for electricity in a growing portion of the country, as natural gas prices go up, so will the price of electricity. Homeowners, farmers and manufacturers could pay exorbitant prices, multiples higher than government forecasts.
It will make little difference, though, to most electric utilities if the price of natural gas goes up. Most state public service commissions readily approve an automatic pass-through for energy costs to the rate payer. That means utility companies won't be affected--but residential, commercial and industrial consumers will. In the simplest terms, your electric bill is sure to grow.
Most U.S. manufacturers compete on a global basis, and will thus be severely cramped by further increases in natural gas prices. Natural gas prices are about 50% higher than a year ago. And because of a smaller supply, these elevated prices have already contributed to the loss of 3.3 million manufacturing jobs. That's 19.2% of all manufacturing jobs since 2000.
The bill actually provides financial incentives for an electric utility to switch from coal to natural gas. If a power generator does make the switch, it won't have to purchase carbon allowances, or it could make a profit by selling allowances to other companies who want to maintain high emissions levels.
But these perverse incentives will significantly increase electric power production from existing natural gas power plants that today are only being used for peaking power.
None of this would be a problem if we had plenty of natural gas production capacity, but U.S. production of the commodity is fragile, despite record well completions. According to Energy Information Administration data, U.S. dry production from 2000 to 2007 is flat, while total demand rose 9.8%. It's surprising but true: Today's domestic natural gas production isn't much different now than it was in the 1970s.
The lack of globally competitive natural gas prices is already causing our country to import larger quantities of our products and displace domestic production. Products like chemicals, fertilizer, steel, aluminum and paper can be made here--and open up well-paid jobs to workers in those industries--or we can increase our import dependency on other countries. Imports from 2003 to 2007 rose a staggering 78.3%, according to an analysis of 16 U.S. Census Bureau industry product categories.
In the end, the Warner-Lieberman bill could mark the final demise of the energy-intensive manufacturing industries that rely upon globally competitive energy to survive.
That's too bad, because these are the same industries that provide the enabling product solutions our country will need to meet the climate challenge in the long term, such as fiberglass insulation, lightweight materials for vehicles, plastic composites for wind turbines, silica for solar panels, fertilizer to expand crop supply and double-pane windows. Demand for these products will develop; it's a question of whether they will be produced domestically or imported.
Setting emission-reduction timetables is, no doubt, a good thing. But what the bill lacks is a mandate to track down cost-effective and reliable supplies of low-carbon energy. Instead, emission-reduction targets will be achieved only at the expense of consumers who will cringe at high electric bills and manufacturers who will send their jobs offshore--along with their excess carbon emissions--to be another country's problem.
Paul Cicio is president of the Industrial Energy Consumers of America.
