Great Idea

Here's a great idea. Let's make energy costs skyrocket during a bad recession. [Link]

"Under my plan of a cap and trade system electricity rates would necessarily skyrocket. Businesses would have to retrofit their operations. That will cost money. They will pass that cost onto consumers."

Senator Barack Obama
Speaking on his energy policies
San Francisco Chronicle
January 17, 2008

Great. You'd think that Team 'O" would have thought of this before they announced their program.

** Cap and trade will likely cost $700 to $1,400 dollars per family per year.

Barack Obama admitted in an interview with The San Francisco Chronicle during the campaign that cap and trade energy policy would "cause electricity prices to skyrocket."
Here's more on this Obama business buster:

Why is cap and trade a bad idea? It's a scam to payoff some companies. [Link]

It is about 1) government rationing of energy consumption; and 2) big corporate payoffs in the form of energy credits to companies that know they are already under their quota, who would be handed tens of millions of dollars in carbon credits.

That's right – it is a big corporate payoff. Companies that have already invested heavily in low CO2 (read: less efficient) energy sources will finally get bailed out of their bad investments. They will get CO2 credits above and beyond what they need, and they get to sell them.

Guess who was one of the earliest and most vigorous proponents of Kyoto, and lobbied congress to give the EPA regulatory control over CO2 emissions? Enron. They knew that capping CO2 emissions would cripple coal-fired energy plants, and Enron was a big natural gas supplier. So they were simply rent seekers, trying to get the government to enrich them by hurting their competitors.

Plus, Enron would also get the CO2 credits, which they could sell and make a market in. A lovely double-whammy!

It's already being done in Europe, and it is not working well. [Link]

'Roll up for the great pollution fire sale, the ultimate chance to wreck the climate on the cheap. You sir, over there, from the power company - look at this lovely tonne of freshly made, sulphur-rich carbon dioxide. Last summer it cost an eyewatering €31 to throw up your smokestack, but in our give-away global recession sale, that's been slashed to a crazy €8.20. Dump plans for the wind turbine! Compare our offer with costly solar energy! At this low, low price you can't afford not to burn coal!"

Set up to price pollution out of existence, carbon trading is pricing it back in. Europe's carbon markets are in collapse.

Yet the hiss of escaping gas is almost inaudible. There's no big news headline, nothing sensational for TV viewers to watch; no queues outside banks or missing Texan showmen. You can't see or hear a market for a pollutant tumble. But at stake is what was supposed to be a central lever in the world's effort to turn back climate change. Intended to price fossil fuels out of the market, the system is instead turning them into the rational economic choice.

That there exists something called carbon trading is about all that most people know. A few know, too, that Europe has created carbon exchanges, and traders who buy and sell. Few but the professionals, however, know that this market is now failing in its purpose: to edge up the cost of emitting CO2.

The theory sounded fine in the boom years, back when Nicholas Stern described climate change as "the biggest market failure in history" - a market failure to which carbon trading was meant to be a market solution. Instead, it's bolstering the business case for fossil fuels.

Understanding why is easy. A year ago European governments allocated a limited number of carbon emission permits to their big polluters. Businesses that reduce pollution are allowed to sell spare permits to ones that need more. As demand outstrips this capped supply, and the price of permits rises, an incentive grows to invest in green energy. Why buy costly permits to keep a coal plant running when you can put the cash into clean power instead?

All this only works as the carbon price lifts. As with 1924 Château Lafite or Damian Hirst's diamond skulls, scarcity and speculation create the value. If permits are cheap, and everyone has lots, the green incentive crashes into reverse. As recession slashes output, companies pile up permits they don't need and sell them on. The price falls, and anyone who wants to pollute can afford to do so. The result is a system that does nothing at all for climate change but a lot for the bottom lines of mega-polluters such as the steelmaker Corus: industrial assistance in camouflage.