"When former skeptics cite melting habitat as the reason polar bears are now threatened, you know the global warming debate is over." - Sen. Joe Lieberman
Is it indeed?
THE CAP AND TRADE PROGRAM
The "cap and trade" approach to emmissions trading in the United States is an administrative program that is used to ostensibly control pollution by providing economic incentives for achieving reductions in the emissions of pollutants, and significant economic penalties for not doing so. As such, it is the largest proposed tax in the history of the United States.
The Waxman Markey Cap and Trade bill is the latest of the cap and trade bills before the U.S. Congress (as of June 27, 2009). Cap and trade involves placing an aggregate cap on all sources of emmissions and pollutants (i.e. coal burning power plants, manufacturing plants, etc). The cap is arbitrarily established by the government, and these businesses which are sources of emmissions and polutants are then allowed to trade among themselves to determine which sources are willing to pay to actually emit the total pollution load. This benefits businesses that produce no pollutants (like a a business operating wind powered turbines, or producing hydroelectric power), and penalizes businesses producing carbon-based emissions or other pollutants (like coal burning power plants).
Under cap and trade, coal-burning power plants would have to purchase energy credits from renewable source energy producers not needing them (wind, and water powered energy sources) which themselves are currently only a very small percentage of the US suppliers of energy.
Many experts feel that this program will increase energy costs significantly (certainly in the short term, and very probably for the long term), as coal-based energy accounts for at least 60% of the energy produced in the USA, and this program would significantly increase that production cost. Twenty five states get between 50% to 98% of their electricity from conventional coal-fired generation, and six states get more than 80% of their energy from coal. According to the Energy Information Administration (EIA), Ohio gets 86% of its energy from coal, while Indiana (94%), Missouri (85%), New Mexico (80%), West Virginia (98%) and Wyoming (95%) are even more dependent on coal. The rate payers in these states are going to be disproportionately penalized by cap and trade.
Cap and trade willl heavily and disproportionately punish the Coal industry, which is America's largest source of energy. It will increase the cost of America's natural gas supplies. It will therefore, increase America's dependence on foreign energy sources, including foreign oil.
American businesses not using their credits would probably sell them to the highest bidder, and although this income would help to fund less cost-effective suppliers of renewable energy in the long run, it's immediate effect would certainly increase energy costs. Perhaps by a factor of two or three times.
According to President Obama (from a speech given when he was a presidential candidate):
"You know, when I was asked earlier about the issue of coal, uh, you know -- under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket." (January, 2008).
According to the Wall Street Journal, even though Democrats promised that the cap-and-trade legislation won't pinch wallets of the average American, behind the scenes these same Democratic congressmen have acknowledged "the energy price tsunami that is coming". The cap and trade bill was only debated for a few days in the House Energy Committee, and during this brief debate, Republicans offered three amendments to the bill:
to suspend the program if gas hit $5 a gallon;
to suspend the program if electricity prices rose 10% over 2009; and
to suspend the program if unemployment rates hit 15%.