Cap and Trade Free Allowances = Windfall for the Worst Polluters...

[Junkdrawer]

I have no fundamental problem with Cap and Trade. What concerns me is how the initial allowances are created.

One way is to sell the allowances in an initial auction and to use the revenues to invest in greener technologies.

The other is to simply give away the allowances to companies based on their initial emissions.

The latter approach would create a windfall for the country's worst polluters. So guess which method Big Coal and the big utility companies want.

Now, from what I'm hearing, Waxman-Markey started with the first approach and is rapidly moving to the second approach. This is what to watch for in the coming months as the legislation makes its way through the Senate.

In a recent DemocracyNow, this and other issues were debated:

...

JUAN GONZALEZ: Tyson Slocum of Public Citizen, you’ve said that what started out as a fairly good bill has gotten worse and worse. Why?

TYSON SLOCUM: Well, I mean, part of the problem was there were a significant amount of meetings that occurred behind closed doors in between the time that Chairman Waxman and Markey released their draft bill in March of this year and then they released a significant revision just last week. And in those closed-door meetings, they met with representatives of the oil and coal industries, and significant numbers of concessions were made.

Look, Public Citizen supports strong, effective climate legislation, and the fact is, is that this bill does not do that. We can talk about the aspirations of hoping to achieve greenhouse gas emissions reductions, but when you look at what this bill will do, it will not result in significant reductions.

It creates a legal right to pollute for industries and gives away credits for free to allow companies to meet those targets without having to pay for them. And that is simply not going to spur the kind of investments we need. President Obama had it right when he announced in his budget in February that if you wanted to pollute, you would have to pay for the right to pollute. And by holding an auction, the government would raise hundreds of billions of dollars that could be reinvested back to the American people to offset the impacts of higher energy prices that a cap-and-trade program would bring and to spur billions of dollars in needed investments in energy efficiency and renewable energy.

This bill also creates a new carbon tax that will be administered by coal utilities, collected from households and businesses alike, and that money is going to be invested only in technologies that benefit the coal industry, not into technologies that would benefit working families, like allowing families to weatherize their homes or install solar panels.

We think that while the stated goals and intentions of the bills are admirable, the fact is, is that way too many concessions were made. This bill is making the same mistakes that the Europeans made when they embarked on addressing climate change. In Europe, they gave away the allowances for free. It completely undermined the ability of Europe and other countries that signed to Kyoto to meet their pollution targets. And the fact that—

DAN LASHOF: I just think that’s wrong.

TYSON SLOCUM: No. Absolutely. I mean, the facts state for themselves. The countries—most of the countries that signed onto Kyoto did not actually reduce their greenhouse gas emissions. The main countries that did are all in the Eastern Bloc, where they had reduced emissions because they have dysfunctional economies. You look at a country like Canada that has a very similar carbon intensity situation as the United States, their emissions have increased more than 100 percent over their targets, even though that they signed on to reduce their emissions by, I believe, eight percent.

DAN LASHOF: I think Tyson is—

AMY GOODMAN: Dan Lashof, your response?

DAN LASHOF: Yeah, well, I think Tyson is missing the point. Right now, polluters can put as much carbon dioxide as they want in the atmosphere at absolutely no cost, with no legal limits on it. This bill would fundamentally change that and would drive down the pollution that causes global warming.

I think that Tyson would agree that Henry Waxman is the most effective environmental champion in the United States Congress. And this is, in my view, without a doubt, the very best bill that is possible to get out of the House Energy and Commerce Committee. And so, I think the question that we have to ask is, do we move forward with this legislation, which I will agree is not perfect? And we’ll be working to improve it as it goes along, but I think it’s an excellent start. And the choice is to have no comprehensive federal legislation.

I want to also address this question of, are we making the same mistakes that Europe did? No. Waxman and Markey learned the lesson of the windfall profits, that Europe did make some serious mistakes when they set up their emission limits and emission trading program, because they gave the allowances to unregulated electricity generators. This bill does not do that. It gives allowances to regulated electricity and natural gas retailers with the express requirement that the value of those emission permits must be used to benefit their customers.
...

http://www.democracynow.org/2009/5/22/climate_debate

[Junkdrawer]

1. FYI: Windfall was what happened in Europe when allowances were given away:

Power firms to pocket 6bn from carbon 'handouts' in new emissions regime
By Danny Fortson, Business Correspondent

The UK's biggest polluters will reap a windfall of at least 6bn from rising power prices and the soaring value of carbon under the new European carbon trading scheme that critics say fails to correct the flaws of the system it replaced.

From yesterday, the second phase of the European Trading Scheme (ETS) took effect. Analysts have predicted that the price of carbon for 2008, already trading at about 22 per ton, could nearly double under the new regime, which sets much lower emissions ceilings for the participating countries than those that existed under the recently ended first phase. Critics argue, however, that the scheme, under which nearly all allowances are granted free of charge rather than having to be bought by big polluters, has created a distorted market in which the worst offenders will enjoy bumper profits while incurring no extra underlying cost for producing greenhouse gases.

Under the "Phase Two" of the ETS, which runs until 2012, 104 million tonnes in annual carbon allowances have been allocated to the major UK power generators, the single biggest source about one-third of the UK's total of CO2 emissions. At 22 per ton, those allowances are worth about 2.2bn (1.6bn) annually. That amount could rise dramatically. Analysts at Deut-sche Bank predict that under the more stringent thresholds, the carbon price will rise to 35 per ton this year, while UBS forecasts an increase to 30.

Under the ETS, companies can sell any excess allowances and pocket the profits. They can also pass on the implied increase to generation costs to customers though higher energy tariffs, thus benefiting from the system without the desired effect of also being encouraged, through the payment of large carbon bills, to invest in new clean generation technologies. Jake Ulrich, the managing director of Centrica, said: "If companies and individuals are to be made to reduce their output of CO2, the ETS needs to be structured to make polluters pay. To do this, we need to eliminate the current free handouts of allowances to emit, which give big windfalls to polluters and do not encourage development of clean generation."

...

http://www.independent.co.uk/news/business/news/power-firms-to-pocket-6bn-from-carbon-handouts-in-new-emissions-regime-767623.html

[BlooInBloo]

2. The bill is not, nor will it be, perfect. Gore, Krugman, and others are strongly for it, though...

So even with warts, it's still a good first step in the right direction.

Naturally, we should push to minimize the warts until the final vote.

[Junkdrawer]

3. Just trying to raise the level of the debate. n/t

[FreakinDJ]

4. The real problem is population control

which for many of these emerging countries there is none

You can huff and puff until your blue in the face but every single one of these environmental concerns can be traced back to 1 single source - just way too many people for 1 planet.

The US and other developed countries used to sponsor population control/birth control in developing countries but Ronald Ray-Guns curtailed most of the best programs, and Bush 43 killed off the remaining programs

[Junkdrawer]

5. Kick

:kick: