Circumventing Cap And Trade With Another Bad Energy Bill

Posted on Thu 07/15/2010 by

2


By Nicolas Loris

In the midst of a crisis in the Gulf, some Senators are making a final push to pass energy and climate legislation this year. Senators John Kerry (D–MA) and Joe Lieberman (I–CT) are introducing a scaled-back version of their original cap-and-trade bill but still want to maintain a carbon cap. Senate Majority Leader Harry Reid (D–NV) wants to bring an energy bill up for debate the week of July 26 that addresses the oil spill response and a greenhouse gas reduction plan for utilities only. A draft leaked from Senator Jeff Bingaman (D–NM) would go after utilities and aim to “cut emissions from the electric utility industry by 17 percent in 2020 and 43 percent by 2030.”

When asked if the bill would contain a cap-and-trade program, Senator Reid responded, “I don’t use that. Those words are not in my vocabulary. We’re going to work on pollution.” But this is not about pollution. Carbon dioxide is a naturally occurring component of the air and is also the ubiquitous and unavoidable result of fossil fuel production and other naturally occurring events. Any bill drafted by Congress that aims to reduce carbon dioxide and other greenhouse gas emissions translates into rising energy prices for energy consumers, lost jobs, and a slower economy.

Even calls for significant increased renewable energy generation are being met with strong resistance. If electricity created by wind and other renewables were cost competitive, a federal law to force consumption would not be necessary. Though the source of wind and solar energy is free, power delivered from these sources is very expensive.

Why?

The flow of wind is erratic and uncertain, which means that the power generated from wind is as well. Further, location choices for fossil and nuclear-fueled power plants have much greater latitude than those for wind turbines, which, like hydropower plants, must be located where the natural resource is best suited—not necessarily close to where the power is used. This feature adds additional transmission costs to wind energy. Just yesterday, 11 northeastern governors sent a letter to Senator Reid warning of the exorbitantly high costs associated with building new transmission lines, which was pegged at $160 billion when analyzing the American Clean Energy Security Act passed out of the Senate Energy and Natural Resources Committee last June. The governors warned,

In its current form, this legislation would harm regional efforts to promote local renewable energy generation, require our ratepayers to bear an unfair economic burden, unnecessarily usurp states’ current authority on resource planning and transmission line certification and siting, and hamper efforts to create clean energy jobs in our states.

Ian A. Bowles, Massachusetts Secretary of Energy and Environmental Affairs, said, more forwardly, “This is a radical Soviet-style approach to transmission planning. If the market needs those resources, the market will create a way to get those resources.”

Whatever Reid has planned for the week of July 26, you can be sure it won’t be good for consumers.

Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.

Read more informative articles at Heritage – The Foundry

About these ads