Four Corners Power Plant is one of the dirtiest in the country, based on its emissions of nitrogen oxide, carbon dioxide and mercury. Under a cap-and-trade system, plants like this would have to cut pollution or buy carbon permits. (Photo by Daniel Kraker)
President Obama wants the U.S. to reduce the greenhouse gases like carbon dioxide that contribute to global warming. Congress is considering a carbon cap-and-trade program. Lester Graham reports on what that will mean to coal-burning industries and your power bill:
Transcript
President Obama wants the U.S. to reduce the greenhouse gases like carbon dioxide that contribute to global warming. Congress is considering a carbon cap-and-trade program. Lester Graham reports on what that will mean to coal-burning industries and your power bill:
For all the talk about carbon cap-and-trade, few people really understand what it is. And no one really knows what it will end up costing you on your electric bill – at least not yet.
The President wants carbon dioxide polluters such as coal-burning power plants to cut how much carbon dioxide they spew from the smokestacks.
So, the government is now designing a plan to cap the total amount of carbon dioxide pollution nation-wide. Once that amount is set, each polluter is allotted a limited amount of allowances to release carbon dioxide. Go over that allowance and the polluter has to pay per ton of CO2 released. Don’t use all of the allowances, and a company is free to trade them -–for a price—to others who need the allowances.
Over time that nation-wide cap will keep get lower, making carbon pollution more and more expensive.
How much of that cost ends up on your electricity bill is the big question.
There are some wildly different predictions. Some lobby groups indicate cap-and-trade could nearly double electric rates. But politics really plays into many of those predictions.
We went to analysts at Point Carbon. It’s a respected world-wide carbon market consultant. Veronique Bugnion says Point Carbon made some estimates based on President Obama’s carbon cap-and-trade plan in his proposed budget.
“Now, in terms of the U.S. average, what we calculated is that it would represent a roughly seven% increase over current electricity rates.”
That’s the average.
But, if your power company uses mostly coal instead of hydro-power or nuclear or wind or solar, Bugnion says it could cost more.
“At the extreme, in the regions that are essentially entirely coal dependent, the impact would be closer to anywhere between ten and 15-percent.”
President Obama says says a carbon cap-and-trade scheme can be designed so that it smooths out the effect on consumers who live in a coal-dependent area.
“The way it’s structured has to take into account regional differences. It has to protect consumers from huge spikes in electricity prices. So, there are a lot of technical issues that are going to have to be sorted through.”
And Congress is just beginning to sort through them. But coal and power companies as well as big oil and industries that use a lot of energy are lobbying hard to kill carbon cap-and-trade or make sure doesn’t cost them, or their shareholders, more than they want.
That leaves most of us wondering what reducing the greenhouse gases will end up costing us after Congress gets finished.
Sandy Kline runs a small house-cleaning business called “More Grime than Time” out of her home in suburban Detroit. Because of the economy she’s lost some business lately. Times are a little tighter.
She says she’s concerned about climate change, but she’s worried what the President’s carbon cap-and-trade plan might do to her power bill and her family budget.
“What he’s proposing sounds like a good idea –big picture– as far as the greenhouse emissions and that, but, you know, on an individual basis it can really hurt people like me.”
She wonders if consumer pressure isn’t enough to get those power companies using coal-burning plants to change. But, that could take decades. Climate scientists say we don’t have that kind of time. We have to do something to reduce greenhouse gases now.
So, experts say you should get ready. Since we don’t know exactly what cap-and-trade will do to electricity rates, it might be a good idea to reduce your power usage. Take advantage of the current tax incentives to get more energy efficient appliances and tighten up your home.
They say, even if rates do go up because of carbon cap-and-trade, if you’re using less power, it could be you won’t see a much of a difference when you get your electric bill.
For The Environment Report, I’m Lester Graham.