With respect to returning cap and trade revenues back to the public. This is based upon the theory that the consumer, when faced with a higher energy price, will cut back on his/her consumption, notwithstanding that he/she knows that part or all of this increase will be rebated back. The extent to which full reimbursement occurs depends upon how the system is structured. For example, if this is directed to lower incomes people, then the higher income groups will get little or no reimbursement.

Here is my question. If one knows that higher prices for energy will be later rebated in whole or in part, will one tend to discount those higher prices? If one knows that one gets the money back, won't the intended result of lower consumption be negated? It seems to me that I am only going to cut consumption if I know that the higher prices will not be recouped. I have to know that my discretionary income after energy costs is going to be reduced if I don't cut my consumption.

This is just a question for discussion because, frankly, I am not sure what the behavior is going to be under a cap and trade/rebate program.

Another thing. Wouldn't this program be more effective if individuals were sold or given carbon credits. The frugal/efficient could profit in two ways. They would have reduced energy costs because of their frugality combined with additional income because of their ability to sell excess carbon credits.

People are totally down with solutions to climate change as long as the costs are unloaded on someone else. Doesn't give me a warm and fuzzy about chances for anything meaningful.

Cap and Trade is somewhat like rationing with the white market being in the auction process. The trouble with Cap and Trade is that the consumer sees only prices, not the actual effort to limit the use of the fossil fuels. For some fossil fuels, especially oil and it's products, a direct rationing system at the consumer level would be preferable in my view, since most of the emissions are at the level of the individual or small business. That's because the ration limit is directly visible to the consumer who is the one that must make the decisions on how to use the available fuel and what sorts of equipment (that means cars and housing) to purchase as time goes on.

Worse, once Peak Oil becomes blindingly obvious, it's hard to imagine a situation in which the base price for oil would not tend to increase over time, perhaps rapidly. Adding the cost of the Cap and Trade allocation on top of the cost of production of the declining oil resource would only hit the consumer that much harder.

I do think that there are situations where Cap and Trade limits would be appropriate, such as the industrial and electric generation sector, where the consumption occurs mostly in the business side of the economic activity. that's because coal is much different than oil and the major coal consumers are either used for electric generation or for steel production. The final consumption is the products of these processes, not the consumption of the actual material itself. In past years, the oil industry has consumed only a small fraction of the primary fossil energy in the initial resource compared to that which is delivered to the end consumer.

In the end, the question is whether the market system is actually going to be able to include any such limits on availability without massive distortions and disruptions. The story from the WSJ posted on the Drumbeat today linking oil shocks and recessions is just one indication of how difficult it will be for the economy to adjust, once things begin to unravel.

E. Swanson

Peak Oil is a more immediate problem than Global Warming. An energy bill that recognizes this would focus more on reducing our dependence on oil and less on reducing our dependence on coal. Take the amount of money this bill will require to be spent. Refocus the money on pluggable hybrids and electric cars. If we did this we'd be better off in the next 15-20 years.

However, with regard coal: Why not just make a simple rule that beyond date X (say 2015) all new coal plants must capture 90+% of their CO2? This would cause a big shift toward nuclear power.

I oppose tax regimes to reduce CO2 output because I see them as more driven by the desire for tax revenue than a desire to reduce CO2 output.

Title 3: Reducing Global Warming Polution - Sets goals of reducing global warming gases by 20% below 2005 in 2020; 40% below 2005 in 2030; and 83% below 2005 in 2050. Also includes Cap and Trade program, with parameters not yet specified.

I get a kick out of these blowhards coming up with figures like reducing global warming gasses by 83% by 2050! They haven't a fricken clue how or if it can be done - And they know they will be safely retired out of office and/or dead by then.
When (if ever?) they start putting specific details of how they expect to achieve their lofty goals that they put into all their legislation, then I might(?) start to pay attention.

Let's step back and look at the big picture here.

Congress will be congress so we should not expect a bill that doesn't have loopholes or tax breaks. They just can't help themselves.

The absolute key provision must be strong regulations and barriers that limit the burning of coal. I have no doubt that we're going to use every drop of oil in the ground. (Anyone disagree?)

So once we see the price spikes next year, there will be strong economic pressure (read: "panic") to turn to coal-to-liquids--either US or imported.

I can already hear the congressmen complaining about all the jobs that will be lost due to high gasoline prices and how we all know that the US has 200 years of coal available (sarcasm).

Opinion polls will almost never come out in favor of imposing current costs for fairly intangible future benefits. Citizens have to be convinced that expenditures are needed to mitigate a clearly foreseeable harm. Why else would our defense budget be a sacred cow (images of warfare and nuclear destruction are vivid) and why is social security universally supported (aging robs us of our abilities)?

The surveys indicate that a sense of urgency is creeping up on folks, but we aren't there just yet. Frankly, we've come a long way since the Clinton/Gore honeymoon when it briefly seemed possible to enact a btu tax to promote conservation. That window shut quickly when offsetting tax cuts fell off the table.

The problem with cap-and-trade for CO2 is that conservation is currently the best way to get reductions. We do not have robust competition between reduction options (i.e. technology) that will be facilitated by cap-and-trade. So the best it can hope to do is provide a price signal, i.e., the same as a carbon tax. At worst, cap-and-trade will be gamed by brokers, feeding a sense of distrust in the broader public.

I would advocate a gradual tax on GHG emissions along with proactive subsidies of clean energy and energy efficiency, to seed the marketplace with clean technology and alternative energy. It should start low (the $3/ton level observed in the Northeast U.S. market among generators might be fine) and move up a bit every few years, creating a stronger signal for clean energy/reduced energy. Once we get some technology penetration and the potential for international buy-in, tradeable permits for CO2 can make sense.

Here's the EPA site on US GHG emissions.

http://www.epa.gov/climatechange/emissions/downloads09/07Energy.pdf

2005 had 5925.3 MtCO2equivalent from CO2(96%), 206.5 MtCO2eq(3.3%) from methane and 51.9 MtCO2eq (.8%)from nitrous oxide.
Total GHG of 6183.7 MtCO2eq.

96% of CO2 emissions were from combustion of fossil fuels.
40% of CO2 emissions were from electricity,
32% from transport
14% from industry
6% from residential
4% from commercial

Reducing electricity generation from FFs by 30% and reducing transport emissions by 30% would reduce CO2 emissions by 20.7% or 568MtCO2
(2020 goal is 20%).

Just raising average US car fleet efficiency from ~20 mpg to 35 mpg in 2020 would reduce CO2 emissions by 390 MtCO2.
This could be expedited by the manufacturers
'recalling'inefficient cars(<35 mpg)from the road(car recycling).

Cofiring all coal plants by replacing 10% of the coal with biomass would reduce CO2 emissions by 189 MtCO2. This would take about 300 million tons of biomass per year. US timberlands can sustainably produce 370 million tons of biomass per year. Growing energy crops like poplars could take the place of mining.

http://feedstockreview.ornl.gov/pdf/billion_ton_vision.pdf

390+189=569 MtCo2>568 MtCO2(20.7% reduction)
It could work.

I think the main reasons the European cap and trade scheme has achieved little are
1) free rather than auctioned permits
2) generous use of offsets ~50%.

In Australia's proposed scheme some industries like aluminium will get free permits since they are allegedly vulnerable to say Chinese competition which has no carbon penalties. I suggest however every industry must buy permits, offsets are limited to just 10% of the cap and vulnerable industries get some other compensation like import tariffs or highly visible cash subsidies.

I agree than there should be technical standards and green energy quotas to back up the cap. The cap may have unintended consequences like a move from coal to gasfired baseload generation. On the other hand cap and trade isn't supposed to promote one technology over another.

Cap and trade may not always inflate carbon fuel prices. The CO2 spot price could actually decline in times of low demand. It is claimed that auction revenue disbursement will claw back fuel demand. Maybe but it will be hard to spend the money on more carbon as it has already been allocated; the green alternative should look more attractive.

I have some friends at a local energy efficiency non-profit and they are hoping that the cap and trade system will create a pool of money that can be used for building retrofits and efficiency improvements.

Large whole home retrofits are effective but expensive. And the cost must be paid up front. Falling housing prices are making second mortgages difficult to get. One of our cities has talked about using property tax assessments to give low interest loans but that is dependent on bond sales and those have not gone well.

I think we need to find a way to pool up capital and put it into efficiency efforts at very low interest rates. It could be done through a tax (like the European gas taxes), or done through a cap and trade system.

I do believe climate change is man made but even if you don't, prices for fossil fuels will return to record highs. We can either capture some of that revenue stream and rout it into higher efficiency or we can do nothing and watch it turn into Dubai sky scrapers and ski runs.

We pay either way.

1. Raising taxes on American working people in the midst of recession is bad economic policy.

2. Raising energy costs for American manufacturers will put them at an even greater disadvantage to manufacturers in China, Mexico, VietNam, and other countries don't imposes similar costs on their own manufacturers.

3. GCM computer models show that this program, in spite of its immense costs, will have virtually no effect on the amount of CO2 in the atmosphere in the future or on projected global warming.

Several points on CO2 emissions regulations:

1) CO2 emissions taxes are a big temptation to big government folks to grow the size of government.

2) Regulations that restrict CO2 emissions in various ways are a clearer demonstration of honest desire to restrict CO2 emissions than are carbon taxes.

3) Efforts to reduce oil usage should get priority over efforts to reduce coal burning because oil is what going to peak real soon now. I would rather kill two birds with one stone and focus on oil first.

4) If we are going to do something about coal I have two proposals:

A) Simply ban new coal electric plants. This will shift demand toward the next most expensive electric power sources which are natural gas, nukes, and wind.

B) Impose performance requirements on coal electric plants for efficiency: a minimum number of kwh generated per ton of CO2 emitted.

I think the American Clean Energy and Security Act of 2009 is a potentially landmark first step to usher America into a powerful clean energy economy that will create millions of jobs for American workers, save consumers and businesses hundreds of billions of dollars in energy costs, make our country energy independent, and limit global warming pollution. While very comprehensive, the bill, as presently written, still have areas that need further improvements to meet science-based goals to combat the threat of global warming in the immediate future. We must also ensure that workers in older industries that are highly reliant on carbon based energy – and the communities in which they’re concentrated – are provided with the assistance and tools necessary to make the transition to the clean energy economy. I ask Congress to continue to work to strengthen these provisions before it is voted on.