Cap and Trade Pollution Control Could Be Pricey; Are the Positive Results of Controlling Emissions Too Costly to Attempt?

By Hunt, David | The Florida Times Union, April 21, 2009 | Go to article overview

Cap and Trade Pollution Control Could Be Pricey; Are the Positive Results of Controlling Emissions Too Costly to Attempt?


Hunt, David, The Florida Times Union


Byline: DAVID HUNT

Cap and trade hasn't quite become household dinner table talk, but it's an issue that might filter into everyone's household budget in coming years.

Right now, it's essentially a buzz term lingering throughout environmental policy talks among federal lawmakers. But the concept is seen as a pivotal point in reducing pollution and galvanizing an emerging high-tech job market developing renewable energies that would reduce dependence on fossil fuels and foreign oil.

But the economics of reducing carbon emissions this way could be crushing to utilities and their customers.

Here in Jacksonville, where city-owned utility JEA produces about 80 percent of its power with coal and petroleum coke, the emissions debate is watched closely.

Here's why.

WHAT IS CAP AND TRADE?

Cap and trade is a concept for pollution control in which corporations would have to keep carbon emissions within set thresholds or else purchase allowances or credits from lesser-polluting companies.

WHAT'S IT TO US?

A cap-and-trade system could reduce pollution, but at a potentially heavy cost. Those costs likely would trickle down to utility customers. Last year, JEA estimated the need each year to purchase $275 million in carbon credits. That would raise electricity bills by about 18 percent. But it could be worse: Republicans on the House Ways and Means Committee published a report in February estimating that U.S. utilities might have to boost customer bills up to 129 percent, spawning disastrous effects on the economy.

WHAT'S THE UPSIDE?

Some proponents of cap and trade for carbon emissions point to successes a similar program had in curtailing sulfur dioxide as part of the 1990 Clean Air Act amendments. The Environmental Defense Fund published a report showing sulfur levels came down 22 percent below the mandate, while costs came in at a fraction of expectations.

WHERE WOULD MONEY FROM CARBON CREDIT SALES GO?

Although the system has not been set by federal statute, President Barack Obama floated the idea on the campaign trail of using some proceeds to develop renewable energy sources and help families pay electricity bills. Some of the money also could remain in the pockets of the companies as an incentive to reduce emissions and sell credits to other companies.

WHO'S IN FAVOR OF CAP AND TRADE?

Feelings are mixed throughout the local delegation. Many politicians are withholding a position until a firm plan is up for a vote. U.S. Sen. Bill Nelson, D-Fla., supports the idea as much as it would enable the free market to control its own needs. Nelson's Republican counterpart, U. …

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