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Friday, May 30, 2008

Climate Security Act

Next week our Senate will be debating the "Climate Security Act", which in some circles is becoming known as the Economic Insecurity Act.

What the Act does is mandate reduced carbon emissions, by allocating every dwindling numbers of carbon credits to industry, then setting up a "cap and trade" scheme, in which your industry, if it's good, will have extra credits, and can sell them to those that don't.

Exceed what you are given and you either buy excess credits from someone else, or pay hefty fines to the new government bureaucracy set up to administer the system. Here's the Chamber of Commerce's depiction of the bill's regulatory set up. Go ahead, try and figure it out without getting a migraine.

A lot of focus is spent in the bill, and in editorials and other opinions on the problems this is going to create for the electric generation business. The only (viable) option to meet the reduction goals mandated is going to be replacement of coal plants. Since oil fired plants wouldn't reduce emissions enough to meet goals, that leaves "Green Power", nuclear, or Natural Gas as the fuels of choice.

Green is the least cost effective, and effective period, option. For a newer generation coal plant to be replaced would take between 25 and 50 square miles of windmills packed as tightly as possible. Solar isn't an economically sound option due to cost, and area required. In the areas where coal is most prevalent, the upper Midwest and North East, solar isn't viable due to sun availability.

Natural Gas would use many less carbon credits, but again, to fire a large enough plant to replace a coal generation facility, you'd need a much larger NG infrastructure. The bill contains no provisions to increase the supply of that cleaner burning fuel, or make it easier to transport. You end up with residential customers fighting utilities for a dwindling supply.

That brings it to nuclear. The problem is we'd need to more than double our current number of nuclear plants to replace our coal fired plants. The bill again contains no provision to make that happen, and the electric industry says while 150 new plants would be needed by 2020, the realistic number that could be built is closer to 30.

While cost is the initial barrier to nuclear plants, over their lifetime they end up costing less than coal plants because of reduced staff needed, lower maintenance costs, and obviously, not having to buy fuel daily.

The bigger problem, which again, the bill doesn't address, is the legal maze that pops up every time someone says "I want to build a nuke plant". Start planning now and you MIGHT be able to break ground in 12-15 years on a new plant.

Max Epstein, writing in the Washington Post points out other flaws in the bill, specifically how the "free credits" to power companies actually increase the cost to consumers of reducing carbon emissions.

The Wall Street Journal points out that the EPA has estimated a drop in GDP growth of between .9 and 3.8% by 2030, and 2.4-6.9% by 2050. That's somewhere between 1 and 3 TRILLION dollars of economic growth stiffled by the legislation.

They also point out that there are a lot of more transparent tax increases that could be used to try to adjust behavior. However, cap and trade lets the legislators decided who are the winners and losers, other tax hikes leave that to the people taxed. Congress just can't have that happening.

I will be writing both of my Senators this weekend (Durbin and Obama) and letting them know that this bill seems to be the worst possible option to try and drop the growth of carbon emissions, and that they should vote against it. I know those letters will be ignored, but at least I' can say I tried.

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1Comments:

OpenID chamberpost said...

Check out the new chart detailing the Boxer Amendment. Thanks.

http://www.chamberpost.com/2008/06/regulatory-inef.html

11:35 AM  

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