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The Folly of Cap and Trade

President Obama’s 2010 budget proposal to Congress assumes implementation of a cap and trade scheme to address climate change by placing limits on carbon dioxide emissions. Cap and trade is a government tax and regulatory system where the “cap” would set a maximum amount of carbon to be emitted in the United States by individual generators of carbon dioxide and the “trade” would allow the low carbon emitters to trade carbon credits to those above the cap, resulting in a net, national reduction of CO2.
Reaction to the Obama proposal from Congress has been swift, fierce and bi-partisan. “This is just about economic suicide,” said Rep. Mike Rogers (R-AL), who predicted it would “kill manufacturers.” A coalition of 33 senators, including eight Democrats, sent a letter to Budget Chairman Kent Conrad (D-ND) and Ranking Member Judd Gregg (R-NH) urging them not to include cap and trade under budget reconciliation, a fast-track process which would require only 51 votes to pass, instead of the 60 needed to avoid a full public debate.

Even some environmental groups oppose the idea of cap and trade, charging it would permit increased pollution in some areas while benefitting others and fearing the scheme would have a disproportionately negative economic, environmental and health impact on low income Americans.

How will cap and trade regulations or carbon taxes affect the American public?  Former Reston resident and retired General Electric executive Don D. Dears has written Carbon Folly, a book detailing exactly that.

Dears says the regulations “will impose massive control over the lives of Americans, such as imposing restrictions on the size of our homes, restrictions on air travel, determining the kind of car we may own without paying a penalty, controlling our thermostats to limit usage of air conditioning and even how we cut our lawns.”

Furthermore, he believes it will require an immense bureaucracy to implement, manage and enforce the system. “These regulations will be Orwellian in scope and profoundly change America,” Dears said.

To illustrate the point, he hypothesizes each American being given a plastic card containing their carbon allowance. Each time there was a transaction the card would be debited for the carbon usage resulting from the transaction. Filling the gas tank would debit the card for the CO2 caused by the amount of gasoline purchased. Lamb chops would debit the card for the green house gasses caused by sheep. Buying an airplane ticket would debit the card for the CO2 released by the jet engines.

Preposterous? Not quite. Dears says the scheme was suggested for the United Kingdom under a climate change bill that caused The Daily Mail to report, “One method could be personal carbon-allowances, where everyone is given a fixed amount of carbon to use each year. Each time they travel in a plane, buy petrol, go shopping or eat out would be recorded on a plastic card. The more frugal could sell spare carbon to those who want to indulge themselves. But if you were to run out of your carbon allowance, you could be barred from flying or driving.”

While the cap and trade program proposed by the Obama administration won’t reach such an absurd outcome, Dears notes that gasoline accounts for 20 percent of all U.S. CO2 emissions.  The simplest way to reduce CO2 emissions from gasoline is to restrict the use of gasoline. This could easily be accomplished with rationing. Those who remember their history will remember the A and B stickers displayed on car windshields during WWII. The A sticker entitled the driver to 3 or 4 gallons of gas a week. Three gallons a week might approximate an 80 percent cut in gasoline usage.

“How far can the average person drive each week on 3 gallons?” he asks.

There are no other alternatives currently available that will result in an 80 or even a 50 percent reduction in CO2 emissions from gasoline.

Dears says Americans take electricity for granted. Need light? Flick the light switch. Want food to keep? Put it in a refrigerator. Want air conditioning? Turn on the air conditioning unit. Want Heat? Turn on the furnace whose blower, like these other everyday necessities is run by electricity.

“Factories cannot operate without electricity. No electricity-no jobs,” Dears warns.

Shutting down all coal fired power generation plants would cut CO2 emissions from electricity by the required amount-but would only cut total U.S. emissions by about a third.  Shutting down all coal fired power plants would eliminate half of all electricity generated in the U.S.

“So if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted,” candidate Obama said last year. “No coal plants here in America!” Vice President Biden said during the 2008 campaign.

Absurd? Yes, says Dears, but not if there were ways to generate electricity without using coal. Nuclear power could result in more electricity without emitting CO2. Wind and other renewables could generate a miniscule amount of additional electricity.  But that would take building 350 new nuclear power plants. There is no technology except nuclear that can replace all existing coal fired power plants while cutting CO2 emissions by 80 percent. And CO2 emissions can’t be cut by 80 percent without shutting down the coal fired power plants.

Congress did not include reconciliation instructions in the budget resolution passed earlier this month.  That means a prolonged, and potentially filibustered debate will occur. Dears believes it is one of the most important debates the nation can have.

NOTE:  Mr. Dears will be discussing Carbon Folly and the impact of cap and trade in a forum at the Jo Ann Rose gallery at the Reston Community Center at Lake Anne , Reston, VA, on Thursday, April 30th at 7:00 p.m.  The public is invited and there is neither an admission charge nor an emission charge.

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