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PAGE 4, AUGUST 3, 2009, THE ISLANDER
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i v 11 Opinions
The A,B,Cs of the Cap and Trade Bill
By David Melvin
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Most of the recent hype these days
centers around the National Health
debacle, which is super critical, but
something that should not be over
looked is the bill commonly referred to
as the Cap & Trade Bill.
Actually, the current administration
has renamed it either the 'Waxman-
Markey House Resolution 2454' or the
'American Clean Energy & Security
Act' or ACES as I will refer to it in this
article.
The bill was started by Rep. Henry
Waxman (D-CA) and Rep. Ed Markey
(D-MA). It was pushed through the
House of Representatives on June 26,
2009.
Not one soul read the bill before
voting on it as it was completed some
time after 3:00 a.m. the same day of
the vote. The rambling bill was over
900 pages.
The bill did pass, however, close to
party lines. The Democrats won by a
less than 2 percent margin with the
Yea votes at 219 and the Nay votes at
212. Only eight Republicans voted in
the affirmative.
Surprisingly even 'Greenpeace' voted
against it as did the American Cham
ber of Commerce and the National
Association of Manufacturers.
Remember the non-performing
'Stimulus Bill? This makes two in a
row which no one bothered to read!
Talk about blind faith!
Prior to retirement, I was in the
power plant and energy construction
business with General Electric and it's
subsidiaries for 32 years, building and
later financing power plants. Recently,
a friend asked me to break down and
explain the elements in the ACES bill,
which I will attempt to do here.
The ACES bill evolved from two
separate concerns.
The first is the 'global warming' hys
teria. This topic is very controversial
at best. There are as many scientists
on either side of whether mankind is
responsible for the temperature rise
related to carbon dioxide (C02).
In fact the earth's temperature has
actually been declining since 1998. In
general, however, the earth’s tempera
ture has been increasing since the 'Ice
Age.'
It is interesting that since the 1998
data was made known, the Adminis
tration has dropped the term 'global
warming' in favor of a more gentle
term 'climate change.'
The second part of the ACES's evo
lution is in fact a very real and present
dependence on importing foreign oil.
This must be dealt with but not
in such a hap hazard, hurried and
radical bill. There are much better and
sounder ways to accomplish our total
independence. None of these unfortu
nately are in the ACES bill.
The following is what I gleaned from
the bill having some first hand experi
ence in the energy world.
The objective of the bill is to cap,
or limit, C02 emissions over time and
force high emitting plants, especially
coal burning facilities, to specific tar
gets between 2012 and 2050.
The caps are a 3% cut by 2012, 17%
by 2020, 42% by 2030 and 80% by
2050. These percentages represent the
'Caps' in the 'Cap & Trade' jargon.
Next, the 'regulated' plants would
receive emission permits or Carbon
Credits, which would be free at first.
In the event a specific plant or com
pany cuts it's emissions and acquires
more Carbon Credits than they are
required to have, they may sell them
at a public auction to a plant which is
in need of more permits, thus enabling
the new buyer to emit more C02 than
he could have before.
The permits or credits may also be
banked for future use, maybe for a
plant expansion.
Non Regulated entities, such as
banks, non-profit organizations and
possibly investors, may buy and sell
permits.
Next, if a plant or company's emis
sions exceeds their permits in hand,
they would be fined twice the fair mar
ket value of the permits they should
have had in place.
This scenario represents the 'trade'
in the 'Cap & Trade' term.
This proposed market is expected
to produce revenue so the next part
of the ACES bill deals with where the
revenue should go.
Five percent is allocated toward
International Deforestration Preven
tion.
Under this it appears that we pay
some entity or government 5% of some
number not to burn their trees down.
15% goes to low or moderate income
households to defray high energy cost;
2 to 4% to be used to adapt to the nega
tive effect of global warming; 2 to 8%
to foreign nations for similar 'clean up'
and adaption.
Next there is a clause which pro
vides financial aid to workers displaced
due to new emission regulations. Those
affected are 'entitled' to 156 weeks of
income supplement at 70% of their
weekly wages in addition to 80% of
their health cost.
Also, they are entitled to $1,500 for
job search aid and $1,500 for moving
cost.
The most abundant fuel for electric
ity in America is our home grown coal
which accounts for 50% of our usage.
It is disconcerting that our hundreds
of coal burning plants are also the most
vulnerable to ACES.
I have worked on two very large coal
fired power plants, one in Missouri and
one in Kansas. Yes, they are big time
emitters of C02. The sad part is there
are thousands if not millions of jobs
in the coal industry from the mining
phase to the smoke out of the stack.
I know first hand that the utilities
have spent millions toward C02 reduc
tions but many simply cannot meet the
future ACES mandates.
There are still efforts to make coal
gasification, where gas is extracted
from coal, financially feasible, but we
are not there yet.
Another process is called 'Carbon
Capture and Sequestration' or CCS
which we will hear more of in the
future.
It is a complex and expensive pro
cess in which the C02 emissions are
captured and stored somewhere other
than the atmosphere - most likely in
the ground.
Denmark has been researching this
process with a pilot plant since 2006.
Germany and France are also work
ing on this problem but any solution
before ACES kicks in is unlikely.
Coal fired U.S. plants emit approxi
mately 9 billion tons of C02 annually.
The federal administration's own
EPA, who support this bill totally, esti
mated in a report last April that the
2015 C02 emissions will have a cost of
about $15 a ton.
This equates to about an $1,800 a
year increase in a family of four's elec
tric bill.
One has to wonder if this bill has
really been vetted at all.
Other features of ACES entail
energy efficiency standards, smarter
cars, cash for clunkers, etc., which are
lengthy and left for others to peruse.
Now, it is obvious I am thoroughly
skeptical of this bill as written, as it
is clear that most of the verbiage was
written not by technical people but
bureaucrats.
I will point out that the Republicans
drafted three separate amendments to
the ACES committee as follows:
1. ACES shall be suspended in the
event gas prices rise to $5 a gallon.
2. ACES will be suspended if elec
tricity prices elevate to more than 10%
of 2009 prices.
3. ACES will also be suspended if
Turn to Page 5 - Cap and Trade
A Safeguard Worth Noticing
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