CAP AND TRADE HURTS

Cap and Trade. Sounds simple enough and earth friendly, right? We just limit our emissions of greenhouse gasses for a better future. Not this time. It will be a barrier to new business pursuits and cause increases in our basic cost of living.

Congress has just passed a bill that will empower the Environmental Protection Agency(EPA) to implement new regulations on the emission of carbon dioxide (CO2). This is a major problem for every hard working Utahan.

We all want to take care of the planet, we all want a cleaner environment and a better place for our children to live. We just need to do it in a way that is fair, makes sense and is scientifically sound.

Back in the early 1990’s, the EPA implemented a cap and trade policy on power plants and factories to clean up air pollution. One of the main targets of this regulation was sulfur dioxide gas(SO2). These SO2 emissions caused acid rain which was a legitimate threat to many ecosystems. The rules limited SO2 emissions at a set level for each business and if any one business wanted to emit excess pollutants they would have to buy additional pollution allowances on the market. These regulations on emissions created an artificial market for pollution credits for SO2. It has worked out fairly well with SO2 emissions down in many areas and sales of low sulfur coal increasing as one inexpensive way to cut down on SO2 emissions. New businesses found ways to clean up their emissions to reduce their SO2 output and not have to buy pollution credits. This regulatory scheme worked to clean up the air. The new regulations passed by Congress will not clean up the air and will hurt business development while raising our cost of living.

The new regulation targets CO2 as a green house gas contributing to global warming and seeks to reduce CO2emissions. This is problematic on many levels.

First, regardless of what you may have heard or read there is no monolithic consensus in the scientific community about global warming. There is warming and cooling and the most recent iteration of this danger to the planet is called global climate change. We actually appear to be entering cooling cycle now.

Second, even if global warming is happening, the human based impact on greenhouse gasses is not significant. There are many natural sources of methane gas from swamp lands and tropical climates. Forest fires produce large amounts of CO2. The global warming gasses from human sources versus natural sources are very minor in comparison.

Third, clean CO2 emissions were the goal of many EPA regulations from the 1990’s. When something is burned and CO2 is the only emission it means that a complete burning of the source fuel was accomplished and the other pollutants were cleaned from the emissions and the environment is better off for it. After so many years of seeking to clean up emissions so that only clean, pure, environmentally friendly CO2 was emitted from so many sources, the EPA is going to regulate that too? It boggles the mind.

Fourth, CO2 is one of the most natural and beneficial ambient gasses in the world. It is produced by breathing air and is recycled back into oxygen by plant life. It is basic biology and science. CO2 makes up less than one half of one percent of the earth’s atmosphere and some scientists believe that a greater amount of CO2 will promote additional growth of plant life.

By putting a “cap and trade” regulation for CO2, there will be penalties and problems for all EPA regulated industries that emit it. Coal fired power plants will have to pay more no matter how clean they are. Any EPA regulated industry that relies on heat produced by coal or natural gas will be forced to operate under the cap and trade allowances for CO2.

There were unintended consequences from prior cap and trade regulatory schemes. In the 1990’s companies were limited by mandate on SO2 emissions. If they kept under their limits they were allowed to bank and then sell these pollution credits to other companies. In some cases, companies that went bankrupt still had the pollution credits they could sell to other companies making it profitable for the company owner to remain closed instead of reopening and creating new jobs.

There were rumors a few years ago about Kennecott Copper moving their smelting operations overseas and shipping the ore there instead of smelting here. Under these new regulations that could make the option even more likely.  If Kennecott found they would make more money selling their CO2 credits instead of using them here it would make better business sense to move smelting operations overseas. Whether the smelting operations are moved or not the caps on CO2emissions will make smelting operations more expensive and will prohibit increased production from the mine due to increased costs.

Electrical Power in Utah primarily comes from coal fired power plants. The power plants cleaned up their emissions quite nicely to be emitting CO2 without the more odious gasses. Under the new cap and trade rules, the electricity produced will cost more for everyone and these increased operating costs will be passed down to the average consumer as a hidden tax, or inflation, or whatever you call increased costs from overt government regulation.

Any new manufacturing businesses would still be at a disadvantage with these cap and trade policies. No matter how clean burning the equipment, the mere fact that CO2 is emitted would cause problems for them and they would have to pay more to open here than in another country. Existing businesses will have an incentive to quit growing. Energy costs will go up and the cost of everything will increase under this regulatory framework.

The Cap and Trade bill will not do anything to save the environment, improve our lifestyle, or encourage business in an already difficult economy. It is merely imposing regulation for the benefit of government by creating a new income stream via the auction of pollution credits and passing the cost onto the hard working people that get things done.

Shame on Congress for passing it.

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