Posted by Paul | Posted in General | Posted on 25-11-2009
Tags: free energy, Free energy generator, magnet motor free energy
The energy bill's ticking time bomb – Yahoo! News
The Holy Grail for climate change advocates is creation of a cap-and-trade system to reduce carbon dioxide and other harmful gas emissions.
But to secure that coveted prize, proponents must answer two questions: Will consumers suffer from the costs, and is the system doable?
With House passage of the legislation last month, opponents are intensifying their efforts in the Senate and dividing their energies around those two attack lines.
Republican lawmakers are hollering about an “energy tax” that will plague consumers, while industry lobbyists are wielding charts and studies that suggest the legislation sets emissions reductions that are not just hard but pretty much impossible to meet without killing industries.
POLITICO wandered into this murky debate to get a sense of how the House addressed those two concerns and what changes might be sought as the Senate takes up the legislation.
First, a primer: In a cap-and-trade system, the government imposes a cap on how much pollution a plant can emit. To reach those targets, businesses can modernize equipment, use renewable energy, invest in a nonpolluting entity to offset emissions and buy newly created pollution credits. Companies operating below an emissions cap can trade or sell their excess polluting allotment to dirtier businesses.
Who pays?
Consumers could get hit with higher energy bills if the energy generating companies pass on the costs of the new construction, retrofitting or the purchase of the pollution credits required to meet the cap.
Republicans have dubbed that potential pass-through an “energy tax,” and they claim it could run as much as $3,100 annually per household.
Democrats saw that attack coming before they drafted the first version of the bill and prepared to blunt it.
President Barack Obama’s climate change proposal called for the government to sell the pollution credits and use the proceeds to finance a middle-class tax cut to offset any household utility bill increases.
That plan could work if consumers apply their tax cut cash to their electric bills, which may or may not happen.
So House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) took a different approach: He scattered roughly $650 billion worth of emission credits throughout the legislation over 10 years to attract support, blunt critics and protect consumers.
The legislation gives away 35 percent of the pollution credits to the electric utilities that deliver power to consumers. Those companies would sell them on the open market to power generators, such as coal and natural gas plants.
Another 9 percent of the allowances would be given to natural gas utilities, and 2 percent is slotted for home heating oil distributors; those firms could sell the credits.
Obviously, the sales would create big windfalls for the utilities. But the law requires that they use that influx of cash to absorb costs created by the cap-and-trade program before they reach consumers.
In addition, the legislation includes new regulations that would allow the government to monitor the utilities to ensure they don’t try to sneak any costs along to homeowners.
Those provisions, and others aimed at improving energy efficiency, led the Congressional Budget Office to conclude that the cost to consumers would amount to about 48 cents a day, or $175 annually, rather than the thousands predicted by Republicans.
The Heritage Foundation, the conservative think tank that calculated the higher costs to consumers, argues that the CBO underestimated the costs of the program, in part, because it didn’t properly measure the negative economic consequences of the system.
Waxman set aside another 15 percent of the emission credits for organizations that assist low-income families in paying their utility bills.
A final batch of free credits, about 11 percent, would go to high-energy-consuming industries, such as the steel industry, that are exposed to international competition. The firms could sell the emission credits and use the proceeds to help offset their own higher energy costs.
The remaining credits would be sold by the government. Overall, the CBO estimated that the legislation would create a net gain to taxpayers of about $50 billion between 2010 and 2019.
Will it work?
Historic evidence suggests a cap-and-trade system can be a very effective tool for reducing emissions. But experts on both sides of the issue admit that a system aimed at carbon dioxide is tricky because of the need for complex new technology.
The model for the program is one that has been operating in the U.S. for more than a decade: The 1990 Clean Air Act’s creation of a cap-and-trade system to reduce sulfur dioxide emissions, which contributed to acid rain.
In the 1990 debate, opponents predicted the program would bankrupt businesses. The emission credits, they argued, would cost in the range of $600 to $850 per ton, and the Environmental Protection Agency estimated that the program would cost $6 billion annually.
Ultimately, the credits cost between $100 and $200 and the actual costs of the program were between $1.1 billion and $1.8 billion, according to the Office of Management and Budget.
The results were better than predicted, too. The covered industries wound up reducing sulfur emissions 22 percent below the mandated caps in the first phase of the program.
The acid rain program worked, in part, because the solutions were obvious: Use coal with less sulfur or install scrubbers in plants. After the law passed, a flurry of new scrubbing technology soon hit the market.
The carbon solution is unclear
Capturing emissions is more difficult, and they must be stored in a way that prevents future leaks.
Scientists have been working on “clean coal” technology for years, but they haven’t licked it yet.
That’s why mining interests are leading the industry battle against the legislation. Without the right technology, they argue, coal-fired plants — which produce 50 percent of the nation’s electricity and happen to be the biggest emitters of carbon — would buckle under the cost of buying offsets and pollution credits to meet the program’s caps.
To accommodate their concerns, Waxman lowered his carbon emissions reduction target of 20 percent to 17 percent by 2020. He also set aside tens of billions of dollars for grants and incentives to spur research into clean coal technology.
Still, the industry is pushing the Senate to lower the 2020 goal to 14 percent, the same target Obama set on the campaign trail. “We’ve been working with a group of senators for some time,” said Carol Raulston, a senior vice president of the National Mining Association.
But pushing back against them is a powerful coalition of environmentalists and businesses — including energy companies — that wants to see an aggressive cap-and-trade system finally put in place.
Steve Corneli, senior vice president of market and climate policy at NRG Energy, said the Waxman bill included an ample range of pollution offsets — including planting trees — to help the mining industry deal with the transition.
“The more of those [offsets] that people can use for compliance purposes, the longer the buffer time can be,” he said.
John Rowe, the chief executive officer for Exelon, is also pressing Congress to move ahead on climate change.
“John believes it is real and that there is a scientific consensus that it is a big issue,” said David Brown, vice president for federal affairs. “He also does see it as inevitable.”
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