Congress plans to raise your electric bill 50 percent with green energy

President Barack Obama speaks about the passage of
the Clean Energy Act by the house of Representatives
in the Diplomatic Room of the White House, Friday,
June 26, 2009 in Washington. (AP Photo/Manuel
Balce Ceneta)

The ‘‘American Clean Energy and Security Act of 2009’’ HR 2454 is a 1,200-page bill passed by the House of Representatives last Friday that claims to recreate jobs with renewable sources of energy. It still has to be debated and passed by the Senate, and then signed into law by President Obama.

It really doesn't matter if you deny that Global Warming exists, or if you think that it exists, but is caused by volcanoes and sunspots, or if it is the result of runaway burning of fossil fuels, which powers our modern society. Once this bill becomes law, the debate is over and you are stuck with a different bill--higher electric rates.

At the beginning of the legislation, there is a description of Carbon Capture and Sequestration. That is the first half of what is known as "Cap and Trade". Essentially the Cap part takes the carbon dioxide (the stuff that keeps your Coke or Pepsi from going flat) produced by utilities, squeezes it, freezes it, and pumps it into a cave where, hopefully, it won't come back to the surface for a very long time.

The problem with this "capping" is that it is very expensive. How expensive? The Department of Energy explains the current state of Carbon Capture Research on their website. Let me save you the mouse click by reprinting those few paragraphs here.

Existing capture technologies, however, are not cost-effective when considered in the context of sequestering CO2 from power plants. Most power plants and other large point sources use air-fired combustors, a process that exhausts CO2 diluted with nitrogen. Flue gas from coal-fired power plants contains 10-12 percent CO2 by volume, while flue gas from natural gas combined cycle plants contains only 3-6 percent CO2. For effective carbon sequestration, the CO2 in these exhaust gases must be separated and concentrated.

CO2 is currently recovered from combustion exhaust by using amine absorbers and cryogenic coolers. The cost of CO2 capture using current technology, however, is on the order of $150 per ton of carbon - much too high for carbon emissions reduction applications. Analysis performed by SFA Pacific, Inc. indicates that adding existing technologies for CO2 capture to an electricity generation process could increase the cost of electricity by 2.5 cents to 4 cents/kWh depending on the type of process.

Furthermore, carbon dioxide capture is generally estimated to represent three-fourths of the total cost of a carbon capture, storage, transport, and sequestration system.

I emphasized the "2.5 cents to 4 cents/kWh".

So, how does that translate to your electric bill? If you don't know how much you pay for electricity in terms of kilowatt-hours, it's pretty easy to calculate. Last month my family used 1,122 kWh in the "USAGE" column from my electric bill. ELECT-RESIDENTIAL was $84.15 and FUEL ADJUSTMENT was $.92, for a total of $85.07. That works out to $85.07/1,122= $0.0758, or about 7.6 cents/kWh.

My city buys its power from Indiana-Michigan Electric, which has one of the lowest rates in the country. But if my power company has to add a four-cent cost of Carbon Sequestration, my bill will go up by 52%! For me, that will be at least another $320 per year for no visible benefit.

If you don't have your bill handy, here is a chart from the government, estimating your electric rate by state.

The Trade Part

About half way through, HR 2454 describes an elaborate systems of Emission Allowances and Offset Credits (section 721). It might be somewhat cheaper for a utility company to pay someone else to do the heavy lifting and not capture any carbon at all. One Emission Allowance is the equivalent of one ton of carbon dioxide gas.

For instance, let's say you're a farmer with several hundred acres.  A government administrator determines that if you choose not to grow anything, you get a some quantiy of offset credits.  The theory is that a prairie or a forest can absorb carbon from the air just as effectively as pumping the same amount of CO2 into the ground..  These offsets can be sold on an exchange, like commodity futures, and may be purchased by the utilities or other global warming gas polluters.

One of the effects of taking arable land out of production is that it raises the price of food. When demand remains the same, decreased production increases the price of the finished product.   That's just basic supply and demand economics.  Land speculators could do the same.  They could make land prices go up by buying the land for its carbon offsets.  In effect, you and I are buying land through our electric bill for no productive use.  It smells like welfare for the rich again.

Depending on the futures price of offset credits, there might be some motivation for a third-party to build a sequestration plant. However, such a venture may be as risky or more risky than building a power plant or a refinery.

You see, the government has the option of canceling offset credits at any time. In reality, they are nothing more than sequentially numbered pieces of paper. Given a change in political wind, your carbon capture business could crash even faster than those who went into the ethanol.  By the time all that plays out, you and I are hundreds or thousands of dollars poorer.