Cap-and-trade plan fuels political debate; questions and answers on some of the major issues

Cap-and-trade plan fuels political debate; questions and answers on some of the major issues

by Sabrina Eaton / Plain Dealer Bureau
Monday July 13, 2009, 5:00 AM

 

WASHINGTON -- A plan to reduce the nation's carbon emissions, slow global warming and make America more energy-efficient has become one of the summer's hottest political potatoes. The House of Representatives recently approved it, leading to dueling predictions of either a greener, cleaner future that fuels economic growth with wind turbines and solar panels -- or of a nation strapped with steep electricity bills and continuing job losses.

Now things could cool down temporarily, with the announcement last week by Democratic Sen. Barbara Boxer of California, chairwoman of the Senate Environment and Public Works Committee, that she will postpone Senate votes on the issue until September.

But her take-it-slow approach hasn't done much to reduce the political hot air over the cap-and-trade bill.

Republicans fume it's a "cap-and-tax" plan. House GOP Leader John Boehner, from West Chester in southwest Ohio, calls it "a recipe for driving up prices for middle-class families and small businesses and shipping more American jobs overseas."

Democratic Rep. Betty Sutton, from Copley Township in Northeast Ohio, counters: "This bill will spur needed economic development in Ohio and break the stranglehold of our dependence on foreign regimes for energy by putting us on a path toward a more prosperous and clean energy future."

The issue is particularly charged in Ohio, where utilities and industry rely on coal that emits carbon dioxide when it's burned.

What is "cap and trade"?

An energy bill that passed the House of Representatives last month aims to use a "cap-and-trade" incentive system to reduce air pollution from carbon dioxide. The gas is believed to contribute to global warming by trapping heat in the Earth's atmosphere. The proposed system would set a limit, or cap, on nationwide carbon emissions. Companies would be allotted pollution credits they could buy if they wanted to exceed the cap, and sell if they already cut their emissions. Over time, the government would lower the cap, forcing polluters to clean up, purchase credits from cleaner counterparts, or offset the pollution they create through other means, like planting trees. The government has successfully used a cap-and-trade system to reduce sulfur dioxide emissions that cause acid rain.

Would this stop climate change?

Many countries besides the United States emit greenhouse gases, but the bill would regulate only U.S. emissions. Even if it meets its goal of cutting U.S. emissions by 17 percent below 2005 levels in 2020, the Department of Energy estimates the bill would reduce world emissions by just 3 percent. But without U.S. action, polluters like China would be unlikely to address their own problems and enable further progress, advocates say.

How would this affect the economy and consumers?

It depends on whom you listen to. Democrats who back the bill say it would create "green" jobs as more wind turbines and solar panels are built, while Republicans say it would kill jobs by driving up energy costs for manufacturers.

Projected consumer costs also depend on who's making the forecast. The Environmental Protection Agency and nonpartisan Congressional Budget Office estimate that meeting the greenhouse gas targets in the House bill can be achieved at a yearly cost of less than $200 per household in 2020. The conservative Heritage Foundation says it would eventually hike energy costs by close to $3,000 yearly for a family of four.

What do Ohio electric companies say?

Akron-based FirstEnergy, which serves more than 2 million Ohio households, did not take a stand on the House bill, although it backs the carbon cap approach to reducing emissions, says spokeswoman Ellen Raines. She says the company is monitoring proposals to be sure they "strike the right balance between achieving needed reductions of carbon dioxide and minimizing the impact on customers and the economy."

Duke Energy, which serves 520,000 customers in the Cincinnati area, and Columbus-based American Electric Power, which has 1.5 million Ohio customers, both backed the House bill, though they thought it was imperfect. Duke Energy President and CEO James E. Rogers says it "lays the foundation for the necessary environmental progress our nation needs to make while reducing the potential costs to consumers and our economy."

AEP calculates the House bill would boost electric rates by 5 percent to 10 percent initially and by 25 percent to 30 percent in future years, when emissions standards get tougher. But AEP thinks the bill provides flexibility and is better than many alternatives, though the company would prefer a longer timeline for greenhouse gas reduction, says spokeswoman Melissa McHenry.

What else is in the bill?

Among other things, it would require utilities to meet 20 percent of their power needs by 2020 through renewable energy sources. It would provide billions of dollars to research technology that someday might make it possible to capture and sequester or remove the carbon emissions from burning coal. And it would set standards for making buildings more energy-efficient.

Do corporations support the bill?

Some do. They include Dow Chemical, General Electric, Nike, Starbucks, John Deere, AEP, Duke Energy and Shell Oil Co., as well as labor, trade groups and environmental groups such as the AFL-CIO, Edison Electric Institute, Sierra Club and Environmental Defense Fund.

Who doesn't like the bill, and why?

Greenpeace, Friends of the Earth, the American Petroleum Institute, the U.S. Chamber of Commerce, the National Association of Manufacturers and the Ohio Coal Association are among the opponents. The environmental groups say it won't cut emissions fast enough and caters too much to businesses, while the industry groups maintain it would drive up energy costs. The Petroleum Institute says gasoline costs would rise because the bill shortchanges refiners on pollution credits while giving electricity producers more favorable treatment.

Where do Ohio members of Congress stand on this?

In the House of Representatives, all the state's Republicans opposed the bill, as did Democrats Charlie Wilson of Bridgeport and Dennis Kucinich of Cleveland. Wilson said he felt it would unfairly burden Ohio because 86 percent of its electricity comes from coal, while Kucinich said it wouldn't cut emissions enough and is "rounded out with massive corporate giveaways at taxpayer expense."

The rest of Ohio's Democrats voted for the House plan, arguing it would create 1.7 million renewable energy jobs. Several Democrats who were targeted by the Republican Party with negative ads after the vote, like John Boccieri of Alliance and Zack Space of Dover, said they were pleased it included a $30 billion revolving loan fund promoted by Democratic U.S. Sen. Sherrod Brown to help small- and medium-size businesses retool for the clean-energy industry.

Marcy Kaptur of Toledo backed the bill after its authors put in $3.5 billion to create a renewable power authority that would provide loans to businesses that are developing renewable power.

The Senate is still hammering out its own version of the cap-and-trade bill, but Brown, the Ohio Democrat, previously had qualms about any effect on industry and utility costs. But he is "working on the Senate bill so that it protects Ohio consumers, invests in manufacturing, and ensures the competitiveness of U.S. industries," says spokeswoman Meghan Dubyak.

Ohio Republican Sen. George Voinovich says the bill approved by the House will increase prices for "virtually everything" that uses energy to be made or is delivered on trucks, and that he will continue to work on alternative solutions.

Monday

July 13th, 2009

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