Cap and Trade Catastrophe

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The cautionary tales arising from European-style progressivism just got another jolt, if you’ll pardon the expression, of reality last week. On Wednesday, British utility giant Scottish Electric announced that the gas and electricity bills of five million customers would go up by a whopping 19 and 10 percent respectively, beginning August first. Six other major power providers in Britain are expected to follow suit. The move follows a 30 percent increase in the wholesale costs of energy since last November, and will push average annual household costs for fuel as high as $2050, the highest level ever recorded. Yet rising wholesale costs are only half the story.

“Wholesale prices for gas and electricity have increased significantly since the end of last year and continuing unrest in global energy markets means future prices are volatile,” said Raymond Jack, Scottish Power’s chief executive. “We understand times are difficult for many people, and we have done what we can to absorb these additional costs for as long as possible to minimize the impact on our customers.”

Mr. Jack then said something that should sound distressingly familiar to Americans. “The rising burden of non-energy costs faced by Britain’s energy suppliers–including the cost of meeting government environmental and social programs and the cost of distributing electricity on the national grid–has also placed further upward pressure on energy bills.”

What Mr. Jack is referring to is government regulations which essentially decide who the “winners” and “losers” are in the energy game. These regulations are designed to intentionally drive up prices, and then give the extra money to the owners of renewable power generators. One of these regulations is called a Feed-in-Tariff (FIT) in which an inflated price is paid to the owners of massive wind farms or those who put rooftop solar panels on their houses. This cost is then added onto everyone’s electric bills. Since those who can afford wind farms or solar panels tend to be people who are better off economically, the net result is that poorer Brits are subsidizing the power consumption of those who are better off.

Another of these regulations is the Renewables Obligation, where “loser” power suppliers are compelled to show the government Renewables Obligation Certificates (ROCs) which represent a percentage of the electricity they produce each year, measured in mega-watt hours. Where do the losers get the ROCs? The government issues them to the “winning” owners of any power plants it defines as producing “renewable” energy. The winners then turn around and sell them to the losers as a means of offsetting “buy out fees,” (read: fines) the losers incur for producing “dirty” power. Since government has escalated the percentage of electricity produced by loser companies that must be covered by the ROCs — currently 11 percent, expected to reach 15 percent in 2015, where it will remain until 2037 — it forces energy prices up, irrespective of free market forces.

Like almost any company faced with a price increase, those increased costs are then passed on to the customer. Even worse, such an arrangement provides no incentive for renewable power entities to cover their costs by actually selling electricity. They are more like government-subsidized banks offering environmental “dispensation” to the less fortunate, non-renewable power providers. In effect, the government is creating a middleman in the power supply chain out of thin air.

If this scheme sounds distressingly familiar, it’s because the Obama administration has made “cap and trade” one of the prime movers in its attempt to “green” America. And in 2008, then-candidate Obama made no pretense of what would occur as a result. “Under my plan of a cap and trade system, electricity rates would necessarily skyrocket…because I’m capping greenhouse gases…[W]hatever the [energy producing] industry was, they would have to retro-fit their operations. That would cost money. They will pass that money on to consumers,” Mr.Obama told the San Francisco Chronicle.

Cap and trade was killed, despite Democrat majorities in both houses of Congress, when the Senate refused in 2010 to take up the bill narrowly passed in the House in June of 2009. Why did the scheme die? “The short answer is that it was done in by the weak economy, the Wall Street meltdown, determined industry opposition and its own complexity,” offered the NY Times in March of 2010.

Nonsense. The bill was done in by a Democratic Party coming to grips with the fact that ObamaCare, which took the exact same command-and-control approach with healthcare that cap and trade does with energy, was an unmitigated disaster. After the 2010 election, which put Republicans in control of the House, cap and trade could no longer be implemented legislatively.

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  • geez

    Another picture of useful idiots, Obama loves them.

  • Alex Kovnat

    HIgh electric power cost is the price we are paying for not implementing nuclear power. And again I would like to point out that if carbon dioxide buildup in our atmosphere is indeed a problem, the method of coping with this problem that will yield the greatest reduction in CO2 in proportion to cost, is to levy a carbon tax on all fossil fuels.

    • Rifleman

      Another tax, yea, that'll fix everything.

    • davarino

      Ya and when we cant afford to heat the house guess what will happen. Its back to choppin down your precious trees and burning them in the fire place.

      Oh wait we can blanket the US with solar panels to provide 10% of our energy needs.

    • Jim

      Alex… Do you work for Al Gore, or are you just retarded?

    • Asher

      In their Obsession To get America off fuels that are in place, the Left is destroying what sources we have to run this planet on…It takes time to build Nuclear facilites, which is hindsight on their part..We should have been building Nuclear power plants 20 years ago….Well Obama said, "Under my plan Electricity rates will necessarily Skyrocket. Look at Oil prices too from the Moratorium on Drilling….

    • ajnn

      we need to go with nuclear power. good point.

  • johnwp61

    Just watch. Obama will blame rising energy costs on greedy capitalists.

    • dan

      …and as Maxine Waters alluded to a couple of years ago during a hearing, "socialize, er, uh, er, I mean, nationalize" (at that hearing) the oil companies. Just look how the Democovets are building a case to "socialize, er, uh, nationalize" ALL energy industries as publically/government owned "utilities" (as they can't help but continue to throw monkey wrenches into the private machinery that must continually bob and weave to keep from getting a knockout blow — like what's already happened to nuclear).

  • Cuban Refugee

    Well, we cannot cry and moan that we did not have plenty of inadvertently-made, self-issued warnings from Obama about his destructive agenda even before he assumed control of power in order to bring down our republic. When he talked to Joe the Plumber about "redistributing the wealth," the corrupt state media swept the classic communist statement under the rug of lies and leftist propaganda they have lain all over our country. When candidate Obama asserted that "under my plan … electricity rates would naturally skyrocket," were the alarm bells rung to alert the drones, robots, and useful idiots who had already made up their minds to vote for Hope and Change about the potentially catastrophic mistake they were about to make? No, all the chess pieces of the elites were in an advantageous position on the board for the chosen one to lift his arrogant chin, and bring America to its knees with his malevolent "Checkmate!"

  • Alex Kovnat

    Rifleman notes:

    >Another tax, yea, that'll fix everything

    I have said a number of times that, in evaluating whether carbon dioxide really is a crisis, we can't ignore the idea that those who have a philosophical peeve against the automobile or our way of life in general, are going to have an emotional vested interest in the idea of global warming. This, I believe, is as much a vested interest as if one were to hold stock in oil or coal companies.

    But if carbon dioxide is indeed a problem, I believe a tax on fossil fuels according to carbon content is the most flexible way of incentivizing us to reduce fossil fuel consumption by driving a smaller car, driving less, or some combination of both – whatever is most convenient for any given individual.

    • albert

      an emotional investment is the same as a monetary one? surely you jest, just as you jest about imposing a tax based on an "if." and believe it or not, some people have no "flexibility" about, nor do they find any "convenience" in, freezing to death in the winter to satisfy the emotionalists.

    • winoceros

      So what if they have an aversion to cars and want to hold their breath to save the planet? Let them ride their bikes and stay home in the dark. Nothing else "needs" to happen as the "feelings" of these individuals have no bearing on our liberty as individuals nor our right to property.

      You segue from "bad feelings" to "what THEY need to do about it."

      THEY don't need to do a thing. Greenies can cower in the corner and write opinion pieces, which is how things get done in society.

  • winoceros

    He has a lot to ponder every weekend at the golf course.

  • doug

    He must be voted out before he does further damage…he is the Jimmy Carter of our era, only more eloquent. Ron Reagan, where are you?

  • Ghostwriter

    We may soon have a rush of immigration from Great Britain to the United States for this. It won’t surprise me if that happens.

  • Alex Kovnat

    Reason I propose a tax on fossil fuels if AND ONLY IF carbon dioxide buildup in our atmosphere is a genuine problem is, its more flexible than rigid cap and trade schemes.

    If its possible to prove that carbon dioxide buildup in our atmosphere is NOT a problem, then I would favor neither cap and trade nor carbon taxes.

  • Ghostwriter

    I predict that there will be a large wave of immigration from Great Britain to the United States. This may happen and it will also not help President Obama win reelection.

  • Raymond in DC

    "In Britain, the Institute of Fiscal Studies (IFS) points out that many of the country’s poor will be faced with a choice between “heating and eating” next winter." If the same thing happens here (which it will), not to worry… We'll just expand the Fuels Assistance programs using money borrowed from China and Saudi Arabia.

    Responding to Alex' call to tax fossil fuels, it would be one thing if it would be implemented on a truly free market base (no picking winners and losers, no special tax breaks and subsidies) *and* if it were revenue neutral. (Good luck with that.) Recall John Anderson's proposal in 1980 to increase the tax on gasoline to deal with the second oil crisis, while *reducing* social security taxes. Creative, but not necessarily the best solution.

    Of course, in the end we got out of that crisis after Reagan removed the ridiculous distinction between "old" and "new" natural gas and oil, followed up later by eliminating price controls on the interstate sale of natural gas, regulations promoting coal over gas for power generation, etc. Once the dead hand of government control was lifted, the market did what it does best.

  • robertg222

    You want a good source of renewable energy. Burn environmentalist for heat. That solves 2 problem and once.

  • jlori

    We have been warned by economists and climate realists that the economic policies of the global warming alarmists would destroy our economy, destroy jobs and reduce us to 18th century energy poverty. I would argue this is already happening. We are in a “death spiral” brought on by Obama and the EPA’s insane crusade against CO2. If you don’t think this is the case, just look at our economy – sick and sinking.

    If you want a look at the future, look to California. The countries highest unemployment, the most anti-business state in the union all a result of the most destructive environmental policies of any state. No wonder businesses are fleeing as fast as they can.

    If the EPA does not show some common sense, the ruin that is California is going to be brought upon us all.

  • monst0r

    A factor is 10 is the usual deflator. Think increases around 75% and up.

  • Know your Daddy

    Why does America need to continue to remake the wheel – at taxpayers expense, when people are TaxedEnoughAlready? Existing technology/coal has proven to outperform solar and wind.
    – townhall-com/U.S. Has Cut Emissions … Without Cap and Tax Feb 19, 2011 “…While the federal Environmental Protection Administration is about to impose regulations and taxes on carbon emissions by executive fiat — in the name of stopping global climate change — the United States has already dramatically cut its emissions and probably has already complied with the Kyoto/Copenhagen goals for reduced emissions. And this has been done without taxes, without regulations and without government intervention…Just as the Obama stimulus package was designed to increase public spending, not to stimulate anything, so the environmental regulations are exploiting public concern over climate change to ratify a growth in government power and oversight. And that's the inconvenient truth…”
    Supply and demand has always been better than forced federal mandates – when will people demand to be represented – are people not concerned that we are getting used? One way to “fundamentally transform” a nation is through education – and the referenced is prof of how the far left will diligently work for their end – whatever it takes to get what they want.
    -Washingtonpost-com White House Adviser Van Jones Resigns Amid Controversy Over Past Activism
    the blaze-com – GREEN MAKE BELIEVE: Van Jones Admits Left is ‘PRETENDING’ Need for Regulations in Green Movement – VIDEO – Dec 21, 2010 In this video he is encouraging young folks to go to the EPA, and Congress and show your support for the carbon tax/cap and trade. He states there are only 3 options regulation, tax, or permits. Apparently he is saying the carbon [crisis] is damaging the planet; and by not taxing people to put an end to this horrendous atrocity, thereby providing environmentally friendly, [federal,union, and public service] jobs for people, the economy will suffer.
    – riehlworldview-com/carnivorous conservative/2007/03/Al Gore's Inconvenient Loot “… Gore's company, GIM was specifically established to take financial advantage of new technologies and solutions related to combating Global Warming… this all means higher prices and taxes with more regulation and an altered standard of living for people like you and me, while Al Gore sits ensconced in his other America reaping profits from each new government mandate for us, business and even government itself. It's win win, alright, but mostly for Al…. To add insult to injury, Gore chose Peter S. Knight, an old friend and colleague some are sure to recall, as the US President of GIM…”
    generationim-com/about “… generation investment management … is an independent, private, owner-managed partnership …The firm was co-founded in 2004 by Al Gore and David Blood. – Sustainable Investing for the Long Term

  • Whose your Daddy

    —– “now that the republicans have worked so hard to hand over America to their corporate benefactors and their policies have failed … the repo plan ???
    double-down on the deregulation that bankrupt America …” – REPLY – Yes – double-down on the deregulation – if you were told what you must do to keep your businesses running by someone that never held a corporate position, or a hypocrite who has held a corporate position, and add to the insult by told you're too big, so you need to shoulder more of the financial burden – (although friends in crime, such as unions, health “care” supporters, and EPA are exempt) – because the “rich” can afford this leveling of the playing field – would you feel secure in hiring more employees? – As usual, (with the far left) the opposite of the truth is believed/ double-down on the deregulation that bankrupt America.
    CAPITALISM trumps Socialism/Totalitarianism anyday – search socialists ideals, which are very similar to this neo-democrat administration, and also warnings from socialist news writers, and support from dictators.
    -investors-com/-investors-com/The $10 Trillion Climate Fraud 04/28/2010 “Al Gore is co-founder of an investment management firm that is now the fifth-largest shareholder in the Chicago Climate Exchange…Cap-And-Trade: While senators froth over Goldman Sachs and derivatives, a climate trading scheme being run out of the Chicago Climate Exchange would make Bernie Madoff blush. Its trail leads to the White House…” 04/28/2010 “Al Gore is co-founder of an investment management firm that is now the fifth-largest shareholder in the Chicago Climate Exchange…Cap-And-Trade: While senators froth over Goldman Sachs and derivatives, a climate trading scheme being run out of the Chicago Climate Exchange would make Bernie Madoff blush. Its trail leads to the White House…”
    -mountainwestmilitia-com America transformed (Cloward-Piven Strategy)
    –reason-com June 10 2010 Senate votes to let the EPA ration energy, ah, carbon
    *heritage-org/Research The EPA's Global Warming Regulation Plans January 20, 2010 – “… The EPA's attempt to regulate carbon dioxide (CO2), in addition to being the most expensive and expansive environmental regulation in history, would bypass the legislative process completely. Congress should amend the Clean Air Act in order to prevent unelected government bureaucrats from bankrupting the nation…”
    Please at least subscribe to e-mail from your reps.

  • John Lukens

    CO2 can't be a problem if it is increasing while (as NOAA/ NASA satellite data shows), the global climate is cooling. The real problem is Obama, his democrat cronies, and the green loonies. The solution? Kick them all out in 2012.