Cap-and-Trade Plan: Climate Change Reactions 27 comments
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A cap-and-trade plan to combat climate change gets a bit closer to reality today as the American Clean Energy and Security Act of 2009, a 1,200-page bill requiring the U.S. to cut reduce greenhouse gas emissions by 17% from 2005 levels by 2020 and about 80% by the next century looks set to pass the House. Ahead of a final vote, analysts are weighing in on what it could mean for companies and investors.
Mostly bad things, it turns out.
Paul McWilliams at Next Inning Technology Research says cap-and-trade simply opens the door for corruption:
There are many easy, painless and even economically positive ways we can encourage reduced CO2 emissions and the development of new technologies that will reduce our dependence on foreign oil, which is what is implied by the "security" part of the title. However, this bill will not accomplish these goals. What this bill will accomplish is a mechanism for massive corruption, the strengthening of the power of congressional incumbency, the establishment of a full employment act for lawyers and the debasement of the aggregate U.S. economy. Yes, those are bold words, but I can back them up.
If this bill passes, Congress will have the power to decide who gets to release CO2, how much they will get to release, how much they will have to pay if they want to release more than the congressional dictated allocation and who they must pay. Because nearly everything we do from raising cattle to growing crops to powering our electric grid to manufacturing everything we eat, wear and use emits CO2, the implication is Congress will have absolute control over not just our economy as a whole, but also in naming the winners and losers.
Make no mistake; what our Congress is trying to do is give itself the ultimate and nearly infinite power to selectively un-tax without the annoying encumbrances or inconveniences of due process. Congress knows that if it is successful in this ruse, it will have industry cowering at its feet to beg for just one more bowl of CO2 credits and, with that, all the campaign contributions and perks you would expect to change hands when favors are denominated in tens or, in some cases, hundreds of billions of dollars.
The tone is dire, but it's tough to disagree. By its nature, any carbon credit scheme mean doling out large-scale, arbitrary costs to companies that pollute. There's just no getting around it, and the temptation to play politics with how those credits are allocated will be great. (I'll admit I'm not informed enough on the bill to parse whether safeguards are adequate here).
So who will the winners and losers be if the bill becomes law? The IRRC Institute breaks it down for the S&P 500. Unsurprisingly, big polluters in the utilities, oil and gas, industrials and basic resources sectors fare worst.
Some companies to watch: Between them, Exxon Mobil (XOM), Chevron Corporation (CVX), ConocoPhillips (COP), American Electric Power (AEP) and The Southern Company (SO) account for 22 percent of the total S&P 500 emissions.
More broadly, earnings will take a hit in carbon-intense industries as wel l. The IRRC says company-level financial risk is highest for companies in the utilities, basic resources, food & beverage, chemicals and oil & gas sectors. They could see an overall EBITDA hit of 9 percent or more.
That's sizeable. With American companies enduring a long recessionary slog, the cost of cleaning up carbon emissions adds another bearish pressure on an already fragile market. Cap-and-trade might well be worth it in the long run if the rest of the world signs on and corruption can be kept in check (both big ifs). What's clearer, if the bill passes, is that the pain for industry is just getting started.
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This article has 27 comments:
> jack
On the one hand, there is no question that global warming is real and getting worse. Nothing is ever completely certain in science, but when the National Academy of Sciences and the tree huggers at Exxon Mobil agree that it is a problem, it is a problem.
For me, the biggest issue is that we are losing the snow pack in the Sierras and the Cascades, and more importantly, the Rockies. Of course, the snow pack levels vary from year to year, but on average, it is going, and the snow level is rising.
If you want to see clear evidence, just take a trip to Lake Powell which is fed by the Colorado River.
In short, the problem for me is not so much too much ocean water, it is too little fresh water. Fresh water is going to become precious.
On the other hand, with China bringing on a cagillion coal fired power plants, ALL of the rest of the world's efforts get canceled out. Why should we put ourselves at an even bigger trade disadvantage with China?
Still, I lean towards doing something vs doing nothing. At the very least, SOME kind of carbon tax (even if it is cap and trade) will encourage more investment in energy efficiency, and longer term, that is better for us, even if China doesn't go along.
And, the Chinese are no fools. If they think we are going to end up with a competitive advantage by focusing on newer technologies, I am pretty sure they will change direction quickly.
avoid corruption in politics? highly unlikely.
this smells like the same old crusted over cowpie with a new stick to stir it.
Rather than monetise something with no intrinsic value, we might instead look at monetising the energy value of carbon, as reported in the FT Alphaville blog
ftalphaville.ft.com/20.../
Producers simply issue Units redeemable against electricity and/or carbon-based fuels, and price these Units against an "Energy Standard" unit of measure.
Then a carbon levy will fund a Carbon Pool fund, which may be invested in renewable energy production (MegaWatts) and even energy savings (NegaWatts). Units in the Pool would then be distributed equitably and the effect is that fuel prices may be gradually ramped up through an increasing carbon levy, and citizens will be compensated with Units they can redeem against fuel or other energy.
They can then carry on wasting fuel, or exchange their Units for something else of value.
It's not Rocket Science.
What we need to clean up our planet is to get the BS out of the Halls of Power!
On Jun 28 12:11 PM johndowd wrote:
> Cap-and-trade might well be worth it in the long run if the rest
> of the world signs on NOT It soves a problem that does not exist
> and if it did CO2 would not be the mechanism that would effect any
> change in the climate.
>
> What we need to clean up our planet is to get the BS out of the Halls
> of Power!
The blogger appears to have completely lost it since he has no explanation for his corruption talk.
Europe has had cap and trade for almost the entire decade without a substantial impact on energy prices.
No one has ever complained about the European cap and trade program being tainted by corruption.
On Jun 28 12:31 PM Trane250 wrote:
> What is gratifying is that despite enormous pressure from heavy hitters
> like Nancy Pelosi, Henry Waxman, Algore and Barak, 40 democrats had
> the good sense to vote against this turkey.
I understand that congress got the most phone calls of any bill and almost everyone is against it.
The sorry part of this is that there is no science that shows that man is causing earth warming. The few scientists that beleive it are govt. employees or are getting govt. money for their research. Nothing has been shown to the man in the street (who can understand science) to prove this fact which is now a religion.
Australia is in the process of shutting down their progam to stop energy use. More and more scientists are now speaking up.
The same relationship I felt held for the NOX & SOX success story in raising the prospects for Cap & Trade and would mean,(with the EU lessons learned) for the cap & trade in carbon. I thought the relatively painless process for both industry and consumer in clearing the air and acid rain would offer the best carbon solution.
Dr. James Hansen and "The Economist" magazine have turned me around with Tax & Dividend proposals.. The simplicity of calling carbon by it's name, taxed at it's source and this money sent to all of us. That reduces the overall complexity, for the public most of all. A system to deal with CO2 equivalence of other GHGs will be complex enough by it's nature of not having a choked point source.
Politically, C tax & dividend (I prefer the name Tax&Share) may be to late to the stage this year to have a legislative chance, but I am changing my arguments for it. Everyone will be able to chose weather to keep the dividend ( turn off a light switch) or spend it( to leave the lights on or fill a SUV gas tank)
Here is a post concerning modification of where the dividend should go, by Folke Günther, a chemical engineer in Sweden:
folkeg@gmail.com
Date: Wed, Jun 3, 2009 at 9:50 AM
Subject: Re: [biochar-climatechange] Emailing: 20080604_TaxAndDividen...
I agree with Jim's proposal on a global carbon tax .
However, I don't think the tax should be paid back to everybody, indiscriminately.
Instead, the tax collected to restrain emissions should be paid to those who sequester carbon from the air.
By that the counteracting measure could be very profitable
(In Sweden, the emission tax is 1 SEK per kg CO2, or 3.77 SEK (about $ 0.5) per kg carbon.)
If the same amount would be paid to those who bury char in their own land , a normal farmer, making char of the haulm could get an extra pyment of about $ 1000 per hectare! (assuming a harvest of 8 tonnes per hectare)
Many would join in. Here we are in a potential situation similar to that depicted by the anti-biochaists.
The solution to that is to restrict the payment to those following certain rules of an 'etical' charring.
I mentioned that in my paper 'Carbon sequestration for everybody<www.holon.se/folke/car...;' about Mrs Ruth Less.
FG
The National Academy of Sciences is the group US presidents use when they need to base a decision on the science.
Roosevelt relied on them when deciding to commit to the atomic bomb. Reagan consulted with them before deciding on Star Wars.
The guys I knew at the NAS were hardly left wing liberals, but they weren't right wing nut jobs, either. They were scientists, and they are, as a group, VERY skeptical.
There is PLENTY of science to support global warming, including that it is at least in part caused by humans, and the scientific debate has been over for a long time. The National Academy based their conclusions ONLYon the science, and they agreed that global warming is real.
Even the oil companies agree.
The only real questions being debated now is what to do about it.
On Jun 28 01:01 PM CLH wrote:
> Your article that gives the real reason for the bill is right on
> the mark. The govt. will completely control the most important product
> in the world--energy. Whatever it takes to stop this bill must be
> done.
>
> I understand that congress got the most phone calls of any bill and
> almost everyone is against it.
>
> The sorry part of this is that there is no science that shows that
> man is causing earth warming. The few scientists that beleive it
> are govt. employees or are getting govt. money for their research.
> Nothing has been shown to the man in the street (who can understand
> science) to prove this fact which is now a religion.
>
> Australia is in the process of shutting down their progam to stop
> energy use. More and more scientists are now speaking up.
>
>
----------------------...
Hey Cap, how in the he!! do you as a layman make a statement like "there is no question...."? Do some independant research. Look at the instances where Jim Hansen and NASA GISS have been caught in the cookie jar manipulating data to show warming. Much research seems to indicate that there has been no warming for the past 10 years and that the warming of the last 30 years is a cyclical vestige of the "little ice age" of the 17th-19th centuries. The Earth is 4 billion years old with many huge climate shifts. Do you want economic decisions to be made on the basis of a batch of liberal scientists who are beholden to their liberal political friends for their jobs? Jim Hansen's former supervisor stated that Jimmie (who wants to execute oil executives) was an embarrassment to NASA.
1. There has been a long-term upward trend in temperature
2. That CO2 is THE cause of the long term increase
3. That human caused emission of CO2 is the major driver.
Note that NONE of these effects have been definitively shown to be true. The MWP (the flaw in Hansen's "hockey stick) was a much longer period of warming than the recent 150 years and lead to boons in agriculture and rapid growth of European cities. The notion of CO2 as a greenhouse was disproven by REAL experimentation (vice computer modeling) by R.W. Wood and Neil Bohr independently in 1909 and 1913 respectively. (BTW. thank God or someone for greenhouse gases or you would be a cinder right now). Also, it defies imagination to believe that 350 molecules of CO2 mixed with 999,650 molecules of other stuff in the upper atmosphere could have any effect on anything. If 1 and or 2 are not true then it follows logically that 3 is not true.
Sorry to blabber like this on an investment web site but, as I used to say to my mother, "he started it".
Summarized below are some red flags about Global Warming that you will not find in any politicized “scientific” discussion, especially the UN’s Intergovernmental Panel on Climate Change (“IPCC”) 2001 Study widely quoted in the press and the basis for Al Gore’s movie An Inconvenient Truth. Environmental extremists no longer refer to “global warming” but increasingly to “climate change” - I suspect because the whole global warming argument does not stand up to scientific scrutiny. The earth’s climate has always been changing and will continue to do so. The cause of these changes however has never been proven to be “anthropogenic” – caused by humans.
The 2001 IPCC Study ignored two well-documented scientific climate periods:
The Medieval Warm Period when earth’s temperatures were well above todays and when only farm animals were emitting CO2. In 1991 it was included in IPCC’s published reports as accepted scientific fact, but eliminated in their 2001 report without explanation! The 2001 report demonstrated a hockey stick warming graph since 1900 through today to support their desired global warming crusade.
The Little Ice Age from 1400-1800…another well-documented and scientifically accepted fact. Since 1900, the earth has been warming up – a normal climatic fluctuation that is not caused by man’s industrialization of the planet. The planet has warmed 1o F over the last century, but most of that occurred prior to 1940, while 82% of anthropogenic CO2 entered the atmosphere after that date.
Despite the documented fact that the earth has actually cooled at a rate of 3.5 oF / century over the last seven years, the IPCC models forecast a 3.9 oF / century warming to 2100. The recent global cooling is confirmed by satellite data and is not disputed by any credible scientific body – but despite that, the IPCC computer models ignore the recent and long term historical data to conclude the earth is about to undergo an unprecedented warming period!
There are a number of other instances of inconsistencies, data manipulation, and outright fabrications included in the IPCC 2001 Study. A complete analysis was presented to the US Congress by Lord Monckton, the former Science Advisor to the UK Prime Minister, Margaret Thatcher (scienceandpublicpolicy...). This is the same individual who Al Gore refuses to debate, and the Democratic Energy and Commerce Committee Members refused to allow to testify opposite Gore in March 2009. What does Lord Monckton know that Al Gore and our Democratic representatives not want the American public to know?
The effects of CO2 on the earth’s climate are vastly exaggerated.
The concentration of CO2 in the atmosphere is 0.035% and it is a very weak greenhouse gas. Water vapor is the most important greenhouse gas, accounting for 97-98% of the greenhouse gas effect. (Bet you didn’t know that – since governments can’t control water vapor, it is a fact you’re not likely to read in the press!) Water vapor (clouds) is principally ruled by the sun, which may be one reason why NASA has recently declared that the sun is most directly responsible for global warming (go figure!).
In the Paleozoic Era of prehistoric times, CO2 levels were 12 times higher than present. For those of you who don’t comprehend geologic-speak, you know this era as the Ice Age. So much for CO2‘s catastrophic warming effect on the earth!
Scientific evidence from ice cores in the Antarctic demonstrate over the millennium that increases in CO2 concentrations follow temperature increase – not the other way around.
Anthropogenic CO2 is an insignificant contributor to the earth’s climate.
Combining water vapor and nature’s production of CO2, 99.9% of greenhouse gas effect has nothing to do with human activity. Anthropogenic emissions of CO2 account for only 1% of the atmospheric reservoir of CO2. How can altering man’s miniscule 1% contribution to atmospheric CO2 levels over the last century have any discernible impact on the global processes of nature that have influenced earth’s climate for millions of years?
Termites, farm animals, volcanoes, and dissolved CO2 in the oceans emit much larger amounts of CO2 than mankind. In well-documented warming periods in 1860-1880 and 1910-1940, which occurred before any possible effect from mankind - is proof that there is absolutely no correlation between human activity, CO2 emissions, and global temperature.
There are a number of other fallacies propagandized by environmental extremists:
· Melting Glaciers – a number of well-documented glacier records indicate glaciers have been receding since 1750 and accelerated after 1820 (almost 100 years before the Model T). This is a natural phenomenon not related to human activity. Glaciers are still much larger than they were in the Medieval Warm Period.
· Polar Ice Melting – The West Antarctic Ice Sheet lost two-thirds of its ice mass since the last ice age but is now growing at more than 26 billion tons a year. How do you explain those well-publicized pictures of huge ice chunks breaking off and falling into the ocean? The natural process as the ice thickens inland, it pushes ice to the perimeter to the lower elevation where it breaks off. According to British meteorological stations in Antarctica, the continent is getting colder, not warmer. The Greenland ice mass has thickened by seven feet since it was first measured by laser altimetry in 1980, and continues to grow.
· Rising Sea Levels – Ocean levels have risen 400 feet over the last 18,000 years, a natural process that will continue without any influence from mankind. Current documented sea rise is 8-12 inches / century, much less than the mean centennial rise of 4 feet. The IPCC estimates 17-24 inch rise to 2100, slightly less than the 20 foot rise Al Gore prophesized in his film.
· Polar Bear Extinction – (related to polar ice) There are four times as many polar bears now than there were in the 1940’s….enough said.
· Increasing Hurricanes and Typhoons – According to the Accumulated Cyclone Energy Index published by Florida State University, the Index is at it’s lowest in 33 years. While Hurricane Katrina was a major tragedy for New Orleans, the destruction from that Category 3 storm was principally due to the failure of man-made levees.
Why is there so much emphasis on CO2 when the human contribution of it is trivial and water vapor is so much more important in greenhouse effect? The simple answer is that governments can control only people, not nature. For millions of years, the sun and the clouds have been principally responsible for climate change. There is no indisputable scientific evidence anything mankind does can influence climate change. Governments cannot control the sun or the clouds, so they must find a cause that can be blamed on people. If people have no impact on climate change, there is no justification for all of the scientific grants and studies to validate government intervention. The environmental extremists will go to any lengths to prove mankind’s relevance on climate change, otherwise they have no seat at government’s trough.
There is no need for government to regulate and tax CO2 emissions, and to invade every aspect of American lives. The environmental extremists have manufactured a climate change crisis, based on fraudulent and manipulated scientific data, that has empowered liberal congressmen with a huge, new source of potential tax revenue they can redistribute to fund their liberal agenda. It’s not about climate change, it’s about tax revenue.
The US Weather Service cannot accurately predict weather more than about a week in advance…why would we dramatically change our entire economy and our way of life based on climate models forecasting 40, 50, or 100 years in the future?
Jrbarnes has nailed it
This is one big money and power grab that is going to have terrible consequences for literally billions of people.
CaptianJJack, you've been played
Exxon and the other corporations can tell which way the tide is running. They are not going to stand in front of this train and lead the charge against the green house gas global warming sham. They will only draw criticism and skepticism. They have been cowered and know how to play a weak hand.
Here's the bottom line. If you believe in global warming, you are either a fool or in on the scam.
On Jun 28 09:21 AM CaptainJJack wrote:
> I have really mixed emotions.
>
> On the one hand, there is no question that global warming is real
> and getting worse. Nothing is ever completely certain in science,
> but when the National Academy of Sciences and the tree huggers at
> Exxon Mobil agree that it is a problem, it is a problem.
>
> For me, the biggest issue is that we are losing the snow pack in
> the Sierras and the Cascades, and more importantly, the Rockies.
> Of course, the snow pack levels vary from year to year, but on average,
> it is going, and the snow level is rising.
>
> If you want to see clear evidence, just take a trip to Lake Powell
> which is fed by the Colorado River.
>
> In short, the problem for me is not so much too much ocean water,
> it is too little fresh water. Fresh water is going to become precious.
>
>
> On the other hand, with China bringing on a cagillion coal fired
> power plants, ALL of the rest of the world's efforts get canceled
> out. Why should we put ourselves at an even bigger trade disadvantage
> with China?
>
> Still, I lean towards doing something vs doing nothing. At the very
> least, SOME kind of carbon tax (even if it is cap and trade) will
> encourage more investment in energy efficiency, and longer term,
> that is better for us, even if China doesn't go along.
>
> And, the Chinese are no fools. If they think we are going to end
> up with a competitive advantage by focusing on newer technologies,
> I am pretty sure they will change direction quickly.
Jimbo is NOT one of them.
Tree hugging morons like gore, the loser have managed to conceal
the sun situation from most of you.
Two years ago the sun went into a dormant phase.
It's the quietest it's been for almost 100 years- no sunspots/flares
Prepare yourself for the inevitable global cooling.
/Manmade global warming is a cruel hoax- you've been conned
and now we've got to stop the runaway CO2 lies before they bankrupt American industry. It was the only thing bushleague had right. ;-)
On Jun 28 02:52 PM Jimbo wrote:
> A city in South Africa recorded its' coldest September night in history
> last year. A mountain in New Zealand had the deepest snowpack in
> recorded history last year. We had snow in Malibu , California last
> winter. The Anasazi Indians abandoned their magnificent canyon dwellings
> long before the white man came because of what may have been a thousand
> year drought. In 2002, I talked to some astronomers at a well known
> observatory and asked about global warming. They said the main driver
> of temperature on Earth is Solar output. My concern is that this
> THEORY of man made warming is another utopian attempt to create a
> perfect government when the Soviet Union, and other Marxist schemes,
> failed. The bill that passed the House contains many, many bribes
> to various constituent groups. For this reason, It really does not
> bite for about ten years. Then it kicks in with a vengeance. I believe
> it is a society killer.Note also that records show that there has
> been no global warming since 1998 but that sunspot activity has dramatically
> declined. Post Hoc, Ergo Propter Hoc?
On Jun 29 12:11 AM venture exchange wrote:
> Prepare yourself for the inevitable global cooling.
We badly need term limits on our "representatives". Maximum terms of 6 years, with re-election cycles every 2 years. Wow, think about all the positive ramifications of such a thing... What a wonderful world we'd live in!
Let anyone who wants to criticize my claim, post a legitimate website that shows supporting data for the global warming claim and I will CHANGE my opinion.
After 20 years of asking for such data, all I here is global warming is causing...... more hurricanes, forest fires, melting ice caps, etc. etc..
And if you are believer....... ask yourself why you can't simply google up that information anywhere???? If I had proven global warming I would proudly release my findings. That is all that is needed...............H...
If I am a high integrity, intelligent person and not a potential sucker, fool, or idiot....then before taking massive actions affecting millions of lives or even publicly commenting.......I would present more than political opinions.
Why don't doesn't the media tell you to stop watching TV, going to the movies, turn off your computer. That would reduce a lot more CO2 than changing your light bulbs.
Next time you see a TV show on global warming, write the station and tell them you are not watching tv any more to save the planet.
You have been suckered into focusing on something harmless, when there are so many real problems that need attention.
Not fair? That's how it's going to work. India and China will not do anything about global warming. After the US economy is totally destroyed, China will take over and make polluting mandatory.