Carbon Cap and Trade Taxes

Background

Carbon Dioxide (CO2) is a gas in earth’s atmosphere that is essential to life. All of the carbon in fossil fuels and in every living organism was once carbon dioxide in earth’s atmosphere. It was converted to food and fuel by plant photosynthesis and returns to the atmosphere after the food or fuel is eaten, burned, or decomposes. It is a natural process that has continued since the beginning of life. There is no credible scientific evidence that carbon dioxide produced by man has, will, or can cause any negative environmental impacts. During most of earth’s history atmospheric carbon dioxide levels were much higher than they are today.

Early studies that linked atmospheric carbon dioxide levels with climate change have been discredited. Unfortunately there are interest groups that have perpetuated and expanded the discredited theory for economic and political advantage.

There have been several legislative proposals intended to limit carbon dioxide. In political circles carbon cap and trade systems are most popular because they hide huge tax increases in electric bills.

What is Cap and Trade?

There are several carbon cap and trade systems with many variables being debated in Congress. All would set a limit (cap) on how much carbon dioxide could be produced in a year. Below the cap, allowances (credits) would be sold for each ton of carbon dioxide produced. Initially some allowances may be given to existing CO2 producers. How many and to whom is being furiously debated. Suggestions range from initially free allowances for all carbon dioxide producers to no free allowances for anyone. Each year the number of allowances would be reduced. There is also a wide range of proposals for pricing the allowances. Suggested prices range from $10 per ton to $120 per ton. Once purchased the allowances could be traded. Commodity markets would determine the cost. In our area the price per ton in dollars would roughly equal the percentage increase in the cost of electricity. If the utility paid $10 per ton, consumer electric bills would increase 10%. If the utility paid $120 per ton, consumer electric bills would increase 120%. Electricity cost increases would also be added to the cost of every product we buy. Allowances that were allocated or sold could be traded. Commodity markets would determine the cost of traded allowances and the impact on electric consumers. Regions of the country with high percentages of nuclear and hydro generation (east and west coast regions) would benefit at the expense of regions where generation is primarily coal.

At 2008 estimated CO2 levels, a $10 per ton tax would cost electric consumers in this country 24 billion dollars a year just on their electric bills. At $120 per ton the federal government would increase taxes by over a quarter of a trillion dollars per year.

There are many different proposals for utilization of the revenue from the cap and trade tax. They range from investment in foreign forests to funding a national healthcare plan.

Reasons Carbon Cap and Trade (CCT) is a bad idea:

• CCT is a hidden tax. If legislators support a tax, they should be honest enough to admit it and courageous enough to face the consequences.
• CCT could easily be the largest tax increase in American history.
• CCT will damage the economy at a time when we can least afford it.
• CCT will with have very little impact on atmospheric CO2 and absolutely no impact on climate change.
• Electricity is a necessity in the modern world and should not be subjected to the whims of speculative commodity pricing.
• Many parts of the country need more electricity. CCT discourages construction of needed economical power generation.
• CCT increases America’s dependence on foreign energy by pricing American resources out of the market.
• CCT discourages American manufacturing by adding costs foreign suppliers will not have.
• CCT does nothing to promote technological solutions to our nation’s energy problems.
• CCT redistributes wealth from America to foreign countries and from rural states to urban states.