Saturday, May 16, 2009

Cap-and-Trade Sucks

Yep, that's Tiger Woods throwing his cap and doing some trading with a golf iron, in a rather non-famous picture from about a year ago. But today's topic is "Cap and Trade" in the context of greenhouse gases. I don't care for it for several reasons, the primary one being that it is a secret tax on energy. Allow me to explain.

As was described in this rather okay NY Times article, cap and trade was a brilliant move for get reductions in a kind of air pollution known as sulfur dioxide, which was causing serious "acid rain" in many parts of the US. It combined the best of the environmentalist (read Left) principles within a free-market platform (read Republican Right). But it was a farce!

But here's why: the sulfur dioxide levels were based on the sulfur content in coal, fuel oil, and natural gas. Nearly all industries had an "allowance" or cap based on really stinky fuels such as high sulfur coal and "Bunker C" fuel oil. So to comply, all a company had to do was to purchase clean Wyoming coal or switch to natural gas, both of which were very low in sulfur. Reductions of 12,000 to 50,000 tons were possible nearly overnight! This was considered as being one of the best Clean Air Act measures every done but to me was the most deceptive.

But there is not way you can cheat the system with greenhouse gases like carbon dioxide (CO2), which is a function of caloric and BTU content. You can't play bait-and-switch. So a cap on CO2 becomes a tax, plain and simple - unlike sulfur dioxide, where many companies made money. Then consider that in all areas that tried the Kyoto Agreement and cap-and-trade, such as the EU, CO2 emissions still rose upwards, instead of going down. Prices for everything also went up, since energy is involved in making most tangible things.

I consider myself as an environmentalist and have been in the field of work since about 1990, and I don't want to be confused with the current Republican rhetoric that is happening today regarding climate change issues. I will say that I could see right through the cap and trade issue with sulfur dioxide, and that was a big ole joke.

1 comment:

Bryan said...

Sam, Geoff Styles at Energy Outlook has a good post on cap'n'trade (The Non-Tax Tax on May 13).

FYI, the nexus of Poof'n'Whiffs and Energy Outlook for me is Tom Andersen and Sphere. I found your blog and Energy Outlook through Tom and I'm very happy for it. Another good energy blog (that I found through Energy Outlook) is R-Squared. BTW, the author, Robert Rapier, lives near Dallas.