Meeting the USAs Cimate Change Goals:

What Will Be the Costs of Climate Change Legislation

Apr 17, 2009 David Keup

The Obama Administration has a clear goal to transform the USAs energy use and infrastructure. However, there are at least two views to how this goal should be achieved.

National and state cooperative industry executives, through a national study, have suggested that climate change legislation may increase utility bills anywhere from $10 to $100 per month.

Climate Change Legislation Moving Ahead

In the March edition of Illinois Country Today, Duane Noland, former Illinois state senator and current president of the Association of Illinois Electric Cooperatives in Springfield, Illinois, said that while taxpayers have heard for months that climate change, or global warming legislation was ramping up, the time-line for that change has accelerated phenomenally.

“Until recently, we believed Congress would entertain energy change this year in concept only,” Nolan said. “Now, we are hearing from House speaker Nancy Pelosi, as well as Barbara Boxer, senate environment and public works chairwoman, that they want to act on climate change legislation this year. Time is running short. We are calling on cooperative members throughout the country to help raise our concerns with Congress.”

Nolan said that the message coming from cooperatives nationally is positive, but couched with concern. They are supportive of increased investment in reliable energy and of diversifying the nation’s energy portfolio.

But having said that, Nolan added that cooperatives are very concerned about energy costs and what that will do to the average family and the standard of living.

Two Revenue Producing Options Being Looked At

The most frequent avenue suggested to address the climate change issue is a carbon tax, or a second option, a carbon cap and trade policy.

The carbon tax would most likely be a fixed amount, charged to those emitting carbon and passed along to the consumer.

The other alternative, (Congress seems to favor so far), would grant permits to plants that produce carbon. For those permit holders that would reduce emissions, could sell their permits to those with increased emissions, therefore creating the cap and trade structure.

Those plants where the amount of emissions would be high and that do not possess the adequate permits, would be fined.

NRECA Opposed to Cap and Trade

The National Rural Electric Cooperative Association (NRECA) has voiced strong objections to the Obama Administration’s stance on a favoring a carbon cap and trade policy. In an editorial published in a national cooperative association newsletter, Glenn English, chief executive officer for (NRECA), said that the association sent a letter to President Obama in early 2009 that strongly objected to the Administration’s plan to auction the carbon emission allowances under a cap and trade scheme.

In the letter, English pointed out that “such a program would only serve as a backdoor variable tax on consumers. Even worse, the level of the tax would be determined by Wall Street and large multi-national energy companies who would likely be the highest bidders in the auctions.”

English added that the auction scheme would disadvantage regions historically dependent on coal and unnecessarily burden consumers.

“Auctioning allowances is not necessary to achieve the environmental objective of a cap-and-trade plan - namely to achieve significant long-term reductions in greenhouse gas emissions,” English said. “According to the NRECAs analysis, those reductions are achieved by the cap established in the bill."

Obama Administration Supports Cap and Trade

It has been reported in various news sources that Administration officials have included revenues from carbon emission allowance auction's in the President’s proposed budget and have asserted these revenues can help pay for other government expenditures.

English said he rejects the Administrations approach stating that co-op consumer members would likely see an increase of at least 15 percent on their monthly bills under this plan.

“Auctioning allowances only serves to raise revenue for the government,” he said. “If the government needs to raise revenue to fund important national priorities, those taxes should be set by the government and collected by the Internal Revenue Service, not set by Wall Street and collected by utility corporations.”

English said the bottom line is that while electric cooperatives are eager to settle the debate over how to increase the price of carbon in order to move ahead with plans to meet projected demand, they have an obligation to try to prevent unnecessary increases that would strain the ability of their members to pay for electricity. The ongoing debate on climate change legislation will continue to be a key issue.

The copyright of the article Meeting the USAs Cimate Change Goals: in Environmentalism is owned by David Keup. Permission to republish Meeting the USAs Cimate Change Goals: in print or online must be granted by the author in writing.
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