Bad Trade: CO2 Cap by Eric Fehrnstrom
From Romney’s Free and Strong America blog:
Bad Trade: CO2 Cap by Eric Fehrnstrom
As President Barack Obama pushes for a national cap-and-trade system, results are starting to come in from the nation’s first mandatory program to limit carbon emissions and they foreshadow higher electricity prices for all.
The Regional Greenhouse Gas Initiative (RGGI), got under way on Jan. 1 and covers power plant operators in Massachusetts and nine other Northeast and Mid-Atlantic States. RGGI caps carbon emissions at current levels through 2014, and then reduces them 10 percent by 2018.
At the center of it is the concept of selling to power plants the right to discharge CO2 into the air, something they previously did for free, turning it into a lucrative revenue source for government.
The “cost to pollute” is expressed as the price to emit a ton of carbon. The first auction of permits was held last September, when the price was set at $3.07 per ton, more than 50 percent higher than the $2 predicted by the University of New Hampshire.
The price increased to $3.38 in a second auction in December. It went up to $3.51 in a third auction in March.
Through this nifty scheme, states so far have pocketed $262 million from the power-producing sector, which can only come from one place: electricity users. Auctions are held quarterly, and the per-ton price will rise as the carbon caps are lowered over time and speculators get in on the game.
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