Cap-Trade Policy Dangerous to Wealth

President Barack Obama’s 2010 is focused on using the power of government to fight climate change. And energy states like Oklahoma are in the cross hairs.
It won’t be easy. His so-called “cap and trade” plan will dramatically raise energy prices in the midst of an economic recession. The winner of this battle seizes the upper hand in the climate debate for years.
“This will be the heart of the argument,” said Michael Ettlinger, a budget analyst at the liberal Center for American Progress. “Whoever wins that fight will decide how climate policy advances.”
Cap and trade is designed to reduce carbon dioxide and other “greenhouse gas emissions” across the economy in a cost-effective manner. Each large-scale emitter, or company, will have a limit on the amount of greenhouse gas that it can emit. The firm must have an “emissions permit” for every ton of carbon dioxide it releases into the atmosphere. These permits set an enforceable limit, or cap, on the amount of greenhouse gas pollution that the company is allowed to emit. Over time, the limits become stricter, allowing less and less pollution, until the ultimate reduction goal is met. This is similar to the cap and trade program enacted by the Clean Air Act of 1990, which reduced the sulfur emissions that cause acid rain, and it met the goals at a much lower cost than industry or government predicted.
The “trade” portion means that some companies can reduce their emissions below their required limit a lot cheaper or easier.
These efficient companies, which emit less than their allowance, can sell their extra permits to companies that are not able to make reductions as easily. This creates a system that guarantees a set level of overall reductions, while rewarding the most efficient companies and ensuring that the cap can be met at the lowest possible cost to the economy.
The Washington elite class loves cap and trade because they can claim to be taxing “polluters” and not workers.
Sadly, the opposite is true. Hit hardest will be all the working families President Obama keeps mentioning. What is omitted in Obama’s no-new-taxes pledge comes with a hedge — “unless you use energy.” The greatest inequity will be geographic. It 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.
The electric industry, especially in Oklahoma, is a sector that has a reputation for providing some of the lowest cost power in America. This plan comes at a time when this group’s customers can barely afford their current utility bills. A carbon cap-and-tax scheme imposes a “carbon cap and tax and tax” on its own customers.
This is an outrage on so many levels it makes your head spin. Proposals like this threaten to light the fires of a consumer revolt aimed at industry – instead of a revolt that should be aimed at those extremists who want to see energy prices go up.
Cap and trade, in other words, is a scheme to redistribute income and wealth. It takes from the working class and gives to the affluent.
There is a fallacy in tying reduction in green house gases to energy independence.
Most reduction in GHG will come from electric generation, but cars will only marginally be powered by electricity from the grid by 2020. A floor price of about $60 per barrel for coal-to-liquid could reliably get one million barrels per day minimum in a decade. Without such moves, we will continue to import increasing amounts of oil from the Middle East.
Should this cap and trade scheme succeed, it will destroy Americans’ ability to earn a living.
If we truly were dedicated to energy independence and determined to make significant progress over the next decade, we need to use today’s technologies to drill responsibly. And, we need to use coal-to-liquid technology like that being pioneered by Syntroleum Corp., providing a technology that converts natural gas into synthetic liquid hydrocarbons which can be refined into ultra-clean fuels.
The conservative solution is a lot simpler: removing government interference is the quickest way to discover and understand the technology that would free the U.S. from dependency on foreign oil.



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