Cap And Trade Legislation – A License To Print Money (For Governments)

Posted on Tue 04/13/2010 by


Since the abject failure of the UNFCCC Climate Change Conference in Copenhagen, Governments who were desperately seeking to introduce Carbon Cap and Trade Legislation have gone very … very … quiet on the matter.

Don’t be deceived however that they have abandoned the possibility of bringing it back. The old adage applies here.

Never come between a politician and a bucket of money.

In this case, the bucket is absolutely huge, and has no bottom, so, no matter how much money is poured into that bucket, it will never even approach full, and more money will keep pouring into it, no matter how long the bucket exists. Keep in mind also, that once introduced, it will become so attractive that there is every possibility that it will never be repealed.

What also needs to be realised is that it will have absolutely no effect whatsoever on the emissions of Carbon Dioxide (CO2) and therein lies the beauty of this vast new tax.

Governments can impose it, collect all the money, and effectively blame the emitters, thus seeming (as a Government) pure as the driven snow themselves, and also seeming to be seen as actually doing something about it.   …  

Today, a Senator for The Greens in Australia (Senator Christine Milne- Tasmania) where the Legislation has already stalled twice, has proposed that the debate be reintroduced into the House for discussion with a view to passing as early as July 1st.

For you readers in the U.S. this may concentrate on the situation in Australia, but the same applies for the U.S. only on a much larger scale.

This is the link to Senator Milne’s Press Release where she states that a cost should be placed directly on every ton of CO2 that is emitted, and that the cost should be $20 per tonne in 2005 dollars indexed to increase by the amount of the rise in the CPI (Consumer Price Index) PLUS and extra 4% each and every year.

What this idiot the good Senator fails comprehensively to comprehend is that the imposition of this vast new tax will do absolutely zero to lower those emissions from what is the largest of those emitters, those coal fired power plants.

She just mindlessly thinks that because those plants will seek to lower the amount that they have to pay, then they will just burn less coal, thus emitting less CO2. Her view is the same as for every politician out there who proposes this iniquitous new levy on their constituents way of life. They are blinded by the money in the main, and think that are actually doing something, but what they fail at most abjectly is to even check the simple facts.

So then, rather than grumble about what has been said, let’s then actually check those facts, and to do that, you need to be aware of how electrical power is produced by a large coal fired power plant.

Crushed coal is fed into a critical furnace. The immense heat generated then boils water to high pressure steam. The steam then drives a large multi stage turbine. The turbine then drives a huge generator via a large gearbox, and as simple as that word ‘gearbox’ sounds, it is in fact a complex Constant Speed Drive. (CSD)

This is because the generator needs to be kept rotating at that one constant speed.

Why is this important you might say?

Because the power being generated is produced at a constant frequency. That frequency here in Australia is 50Hz. In the U.S. that frequency is 60Hz, hence in the U.S. the generator must rotate even faster.

That frequency is the same as for the AC power supplied to your house, and that frequency is an absolute. It must be kept at that speed, no ifs, buts, or maybes.

So, the huge generator revolves to keep that frequency at a stable 50Hz or 50 Cycles per second, (60 in the U.S.) That 50 rotations per second equates to 3000RPM, or 3600RPM in the U.S.

Sounds pretty simple. The turbine drives the generator through a gearbox at 50 times a second. The generator in a large plant can weigh anything from 250 to 400 tons, and read that again ….. TONS.

So now, a huge multi stage turbine drives a CSD and then the generator. All that now increased weight has to be kept rotating at that speed. Snap your fingers … 50 rotations … snap your finger … 50 rotations. now speed it up so each snap is of one second duration. All of that around 400 tons minimum when you add the weight of the Turbines and the CSD.

So, huge amounts of very high pressure steam are required. To achieve this, coal must be kept pouring into the furnace. Vast quantities of coal in fact. A typical large coal fired power plant will burn 7 Million tons of coal each year, yes, around 19,000 tons a day on average. Each ton of coal burned produces 2.86 tons of CO2, and I know how hard that is to believe, but that is basic high school Science, nothing deep and meaningful here, and here is a link that explains that.

So now you can see that an average large plant will emit 20 Million tons of CO2 each year.

Now perhaps you can get some inkling of just how big that pot of money will be. In Australia, we emit, (and this is just from coal fired power alone, both here in Australia, and for in the U.S.) 260 million tons of CO2, while in the U.S. that figure is 2.7 Billion tons of CO2. Even more is emitted to produce electrical power when other forms of electrical power generation are taken into account.

So then, back to just the one large coal fired plant which, burning the 7 million tons of coal, emits 20 million tons of CO2 each year.

That frequency absolutely has to remain at 50 Hz (U.S.60Hz) The exact amount of coal that is needed to keep all that happening is calculated exactly.

Why exactly?

That coal needs to be purchased. Steaming coal comes in at around $50 to $100 per ton, depending on current costings. More often than not, large coal fired plants are built near coal mines so that transportation costs do not add even further to that cost. S, you can see, the cost of the fuel, the coal itself, is quite considerable.

So, bean counters at the plant know exactly how much coal needs to be burned to keep that immense weight rotating and producing that huge amount of power at the required frequency. More is superfluous and less is critical, because the plant will just stop. See the point?

Enter Cap and Trade or its evil twin brother, an absolute cost on the total being emitted.

With Cap and Trade, the Plant will need to buy the emissions permits, hey, very conveniently from the Government at the start. To get the most they will calculate the upper limit of the plant’s current emissions.

In the U.S. then Senator Obama, prior to his election to the Top Job, stated that he couldn’t care less where they went after his starting price of $50 per ton, saying it was neither here nor there to him if they went as high as $500. It does not need me to tell you that where they have been introduced in Europe, they have shrunk to one quarter and less than their start price, but then that doesn’t worry politicians because they have got their amount at the start price anyway. Companies then trade these permits on an exchange similar to the Stocks and Bonds market. Those with (Government approved) green credentials have their permits (for sale) calculated by the Government, at their starting price, and emitters with their existing permits now only worth one quarter have to buy those new permits at the upper price set by the Government and then watch as the bottom falls out of them as son as they purchase them.

They have already paid the Government at the start price, so the Government has already got their money. The emitters now have to pass all those costs, at the outset, and then as they purchase new permits, straight down to the consumer, so, everybody who consumes electricity now has to pay an increased price for the electricity that they use, and trust me, that extra charge won’t be small, and some estimates have it as a 60% increase on your current power bill.

Here’s where the Government continues to gouge those power plants. Each year they say they will lower the Cap for emissions from your power plant, and you will (a) need to buy more permits from the Government or their green credentialled businesses, or (b) just pay the Government the extra.

Now, before you go any further, go back and read how the plant produces its electrical power. The coal they burn is calculated to the minimum required to keep the plant turning, so they need to keep the plant rotating all the time at the required speed, so they just cannot lower that amount of coal being burned, or the CO2 being emitted. With the CO2 emissions Cap now lowered, the only thing they can do is pay the extra.

And each year, the cap gets lowered even further. The only way there might be a reduction in CO2 emissions is when the bean counters calculate that the added cost is too much, and the plant will just shut down completely, and that is already beginning to happen, as smaller coal fired plants get in early, shut down completely, and remove that level of power from the grids.

Man! Who would have thought. A license to just print money. Those Governments just can’t lose. The extra cost gets passed straight down to the consumers, and the Government is pure as the driven snow because it’s those filthy dirty disgusting emitters of that foul CO2 who are raising the price as they just blindly destroy the Environment. (Sarc off now)

They just cannot lose as a Government. See how clever it all is?

The evil twin brother, that of an outright charge for each ton, is even more despicable. Even at what we are told is a reasonable $20 per ton, that is a guaranteed income for Governments every year no matter what. They just charge for each ton that is emitted, and as I explained, it’s a captive market. They just have to pay, and then pass that cost down to you the consumer.

In both cases, that cost passed down to you is not just on your personal residential account for electrical power. The Residential sector consumes 38% of electricity, the Commerce sector 37%, and the Industrial sector 24%, so those costs incurred in those other two sectors will also be passed directly to consumers.

In the U.S. consider this then. Each year, just to produce the electrical power you all use at every stage of your daily life, an amount of nearly 3.2 Billion tons of CO2 is being emitted, so the amount of money that will bring any Government there that introduces this Legislation will raise immense amounts of money, be it Cap and Trade, or an outright charge on each ton of CO2 being emitted, that amount continuing for every year from then on, after their Legislation passes.

So, those Governments win, and you, well you just pay, and pay, and pay without end.

So, when a politician says that something like this is desperately needed to lower CO2 emissions, be very aware that (a) that politician is just flat out lying, or (b) that politician hasn’t even bothered to find out the facts behind the matter.

In Australia, the good Senator is from the Party who call themselves The Greens. That green is obviously the colour of the money they hope to gouge from this.

Oh! And Senator Milne, It’s Carbon Dioxide not Carbon.

Also, at the bottom of your press release, you mention Base Load Solar Power plants.

Are you insane?

Surely even you must know that Concentrating Solar plants use Natural Gas fired turbines to drive the generators when the Sun can no longer keep the compound molten to boil the water to steam to drive the turbine, and that those still relatively small plants at around 150MW will still be emitting close on 1200 tons of CO2 each and every (bright sunny) day, as carefully explained at this post. Forget the initial cost of (minimum) $1 Billion for a plant this size, that it will take 7 to 10 years to construct, and then only have a life span of 20 years at best.

I’ll bet the CO2 being emitted from these plants is an entirely unintended consequence.

You must have practiced very hard to keep that straight face.

This has nothing whatsoever to do with the environment. As I have said all along, it’s just about money.