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Energy policy legislation raises questions; makes assumptions; increases costs

The recent passage of "cap and trade" legislation by the US House of Representatives should serve to focus the discussion of our options for energy sources.  The cap and trade provisions are designed to reduce the emission of, so called, "greenhouse gases" , primarily carbon dioxide (CO2),  through a complex arrangement of permitting and licensing.  Some licenses, about 85%, will be given away and a new "market" or trading platform will be created.  Total emission levels, the "caps", will be determined and licenses issued to companies whose operations involve such emissions.  (Primarily, electrical power generation, refining and major manufacturing concerns are targeted.)  Companies that emit at levels below their "caps" may "trade" or sell their excess capacity to companies that exceed their limits. 

An additional, stated objective is to lessen the US reliance on fossil fuel imports by stimulating research and development of alternative and renewable energy sources (Wind, solar, geothermal, wave, tidal and biomass) for power generation.  Some portion of the anticipated revenue for cap and trade licenses would be utilized for subsidies, research grants or direct investment in companies involved in renewable energy research most is earmarked for defraying increased energy costs of low income families or individuals.  Overall objectives of the legislation include an 80% reduction in greenhouse gas emissions by 2050; 10% of total electrical power generation from renewables by 2012 and 25% by 2025.   Inherent in the federal government's energy proposal is an assumption that here-to-fore unknown technologies in power generation will be developed, tested and place in production within the aforementioned time frames.

Currently, about 2.5%, excluding hydro, of electrical power generation is from renewables.  (Hydro-electric power accounts for something between 6% and 10% of total power generation.)  To increase total penetration of renewable energy beyond 20%, some type of energy storage technologies will be required.  Currently, electrical power is not "stored" as such.  In addition, massive improvements in efficiency plus the reduction of power loss from the national energy transmission grid will be required. 

Achieving the stated goals, described previously, for both emission reductions and renewable power generation will be virtually impossible without some reliance on natural gas fired power generation rather than coal (80% lower CO2 emissions than coal) and nuclear power generation (no CO2 emissions, renewable).  Implementation of the proposed energy plan will, however, result in dramatically higher costs for energy and anything that requires energy in its manufacture.  The most visible cost increases will be in agricultural products (food), automotive fuel, plastic production and bio chemicals including pharmacueticals.


  • Lee Mossel 5 years ago

    CORRECTION: I have just finished reading a more complete version of the "final" edition of the legislation. A last minute amendment called for about 85% of the licenses to be "given away." The remaining 15% will be sold with the proceeds earmarked for defraying the increased energy costs to low income families and individuals. The "trade" provisions, however, remain intact and companies not utilizing there full emission capacity can "sell" the excess to companies needing additional amounts. Lee Mossel