Thursday, May 14, 2009

Cap & Trade: Doing Well While Doing Good

Cap & Trade is good for the U.S. economy, good for U.S. wage earners, and good for the planet.

Phasing out dirty, expensive, energy sources will cost some people money in the short term, but the costs to consumers can be mitigated through efficiency improvements (which are part of "The American Clean Energy and Security Act of 2009") and rebates to low-income households.

The EPA estimates the following
"Average Household Energy Expenditures
(excluding gasoline)":

2015: $1,950
2020: $2,020
2030: $2,200
2040: $2,200
2050: $2,150


"Change in Average Household Energy Expenditures
(excluding gasoline)":

2020: 6.0%
2030: 8.5%
2040: 11.5%
2050: 15.0%

• In 2030 electricity prices increase by 22% in “scenario 2 – WM-Draft” and natural gas prices increase by 17%. In “scenario 3 – WM-Draft Energy Efficiency” electricity prices increase by 20% and natural gas prices (including allowance costs) increase by 13%.
• Actual household energy expenditures increase by a lesser amount due to reduced demand for energy. In 2030 the average household’s energy expenditures (excluding motor gasoline) increase by 9% in scenario 2 – WM-Draft” and by 8% in “scenario 3 – WM-Draft Energy Efficiency.”
• In ADAGE, energy expenditures represent approximately 2% of total consumption in 2020 falling to 1% by 2050 in all scenarios.
• The energy expenditures presented here do not include any potential increase in capital or maintenance cost associated with more energy efficient technologies.

These increased energy costs are not nothing, but they're not wildly unreasonable considering historical fuel price trends.(see: Household Energy Expenditures (pg. 31) section of the EPA's "EPA Preliminary Analysis of the Waxman-Markey Discussion Draft")

Delusional, socialist, redistribution of wealth? No, not really. We'll just be asking polluters to pay for the right to pollute. Something we've been asking other polluters to do for a long time, but usually after the fact through fines, which cost everyone a lot more when you factor in legal fees and reclamation costs, which also don't help consumers or create jobs. And remember, coal (and coal is primarily what we're talking about) dumps a lot more than C02 into the atmosphere -- there's mercury and radioactive isotopes, too. Not to mention all those heaps of fly ash leaching heavy metals into our groundwater, and mountaintop-removal wiping out vast tracts of cherished Appalachian hill country and the wildlife and people that live there.

Incidentally, we've been through this sort of thing before: pack mules gave way to the Erie Canal and riverboats, the Erie Canal gave way to railroads, clipper ships gave way to steamships, coal locomotives gave way to diesel, the horse and buggy gave way to the automobile and the train, the telegraph (and shouting) gave way to the telephone. All of these transitions hurt someone. And cap & trade will hurt someone, too. But there is a big upside with the potential for good union-protected manufacturing jobs -- the kind of jobs that created the middle class after the last depression.

Other countries recognize this, and they are profiting from being getting in early. They will be technology development and export leaders. These leaders include China, as well as the EU. Currently, the U.S. is lagging, even though we were the first to develop and adopt many "green" technologies on a small scale. We just haven't kept up with the investment, and that's sad because since the start of the industrial revolution, we have been technological leaders in energy distribution, manufacturing, transportation and health care.

Now we are slipping behind in all these categories. Something our grandparents, who worked and fought so hard for middle-class prosperity, would be dismayed by. Getting on board with this next industrial revolution will be a great opportunity for this country to restore itself to world-class status not only in technological terms, but in terms of new employment opportunities -- many of which can't be outsourced and don't require a college degree, which I think at least a few among us would be grateful for.

May 22, 2009:
The House Energy and Commerce Committe passed the The American Clean Energy and Security Act of 2009, by a vote of 33 to 25. Well, the Dems gave away 85% of the emissions allowances, and that's a lot revenue squandered, but the bill still puts a cap on greenhouse gas emissions, strongly encourages the implementation of renewable energy sources, and will increase the energy efficiency of commercial and residential structures, and that's good. All these things will lead to new, well-paid (unionized, I hope) jobs manufacturing, installing and maintaining the components of a new economic sector of our economy.

A Washington Post article mentions the following:
The Environmental Protection Agency estimated that the overall impact would be too small to significantly dampen economic growth. But the conservative Heritage Foundation has said it might cost a family $4,300 per year in a few decades.

"The actual paperwork isn't done at the retail level," said David Kreutzer, a climate policy specialist at the Heritage Foundation. "But it's going to jack the cost up, and they will have to pass the costs on to consumers."

Mr. Kreutzer appears to be backing down from that wildly inflated $4,300/year assertion. Probably because it was based on an inflated estimate of costs for future emission allowances -- inflated by a factor of about ten.

Here's a good explanation of how Carbon Cap & Trade will work:
Carbon allowances -- the glue in House energy package


  1. I don't want my electric bill to go up even $10 a month. Can't afford it now.

  2. Thanks for the feedback.

    It's a nasty mess we're in -- wages are going down, relative to inflation (unless you're at or above the top 1% income level), while prices continuously increase. This country is impoverishing itself, I believe, for two major reasons: unfair trade with overseas manufacturers (and sloppy management and bad ethics of managers at home who export our jobs to make a quick buck) -- that is, we import too much stuff that we should be manufacturing ourselves; and the flow of money from the U.S. to oil exporting nations (about $220 billion a year at $60/barrel, 10 million barrels/day)

    I believe you when you write that you can't afford any increases in your electric bill. But please have a look here ( before you give up on the “The American Clean Energy and Security Act.”


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