There is a lot of conversation these days over the House of Representatives passage of a energy bill that would create a “cap and trade” system for carbon emissions. If you aren’t familiar with the proposed system, here’s the basic concept. Utility and other companies would be required to have a permit with an attached allowance for each ton of carbon dioxide or other greenhouse gas that they emit. Each year, the total cap will be reduced to cut harmful emissions. The current plan would require emissions to be steadily reduced until total emissions are cut 83% by the year 2050. The term “cap and trade” refers to the secondary market that would be created in which companies that are not using all of their permitted emissions could effectively sell their remaining allowance to other companies.

Nobody is really against the concept of reducing greenhouse emissions, but the issue being hotly debated is what the cost of such a system would be to our economy and to the average American family. Those that support the current bill point to a recent estimate from the Congressional Budget Office that estimates the 2020 cost to the average American household at $175. Sounds very manageable, right? Well, those on the other side of the debate point to estimates that put the cost per family at $3,000. So, which number is right? The truth is, nobody has any idea!

There are so many complex assumptions required to estimate the cost of the bill, that it is really impossible to know what the true cost would be. One major unknown is the rate at which low-carbon technology will advance. If technology advances more quickly than expected, the cost required for companies to reduce emissions will be lower and the energy costs that get passed on to consumers will be less, as well. As you can imagine, how quickly these costs come down is anybody’s guess. Another major cost factor will be the path we take with our future power generation. If we continue to rely primarily on coal power plants instead of building new nuclear power, the carbon-emission cost that gets passed to consumers will be much higher. It is extremely difficult to guess how this will play out, as well.

My personal take on the issue is that taking some action would at least get things moving towards a cleaner future. Should costs begin to rise too quickly for consumers, cap adjustments could always be made at that point. If the real cost per family was approaching $3,000, there would be enough of an uproar that some sort of changes would have to be made to the pace of the cap adjustments. Now, let me go ahead and contradict myself. While I think some action is better than no action, now is not the time to test the waters. We need to focus on the economic issues at hand before going after the environmental issues. Regardless of your beliefs on global warming, delaying action 1-2 more years isn’t going to make or break life on Earth.

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