News Free speech and cap 'n trade troubles

[mheslep]

...Until I see something real (such as cancelling a coal plant and building a nuclear plant instead), I'll continue to be skeptical of what they say they are trying to do. ...

I believe that is happening, slowly, in a different sense, i.e. no nuclear so far: as I recall, e.g. Texas had a half dozen coal plants planned for the past several years, and none of them got built. Instead they a) built some gas turbine plants, b) wind farms (helluva lot in Tx), c) made the load more efficient.

 

[russ_watters]

Natural gas domestic heating is about the best option. At least if you have natural gas fields and can pipe it direct to houses, it burns cleanly (after you've removed the sulfur) and is a lot more efficent than using it to generate electricity and then having electric heating.

I know, but oddly enough they still feel the need to use overblown claims regarding energy efficiency and greenhouse gas emissions to promote it.

Funniest one so far was one claiming that, since methane has a much higher greenhouse gas effect than CO2, by burning the natural gas in their power station they are doing their part to reduce global warming!

I didn't hear that one. I'll try to take more specific note of the claims and repeat some here.

 

[Al68]

But since nuclear plants aren't being built yet and take at least a decade to come on line and wind and solar (etc) can't provide anywhere near the capacity needed...

I just can't believe people could actually want to destroy the Earth by taking energy out of mother nature's wind and sunshine. What unforeseen effects will this cause? Global warming? Cooling? Rising sea levels? Lowering sea levels? More hurricanes? More ice cream headaches?

Butterfly effect in overdrive, I say. Stop wind and solar now before we destroy ourselves with our greed and ignorance!

Anyone who says I shouldn't post such wild speculation is just part of the greedy conspiracy!

The debate is over, no more wind and solar!

(Any resemblance of this post to anything said by Al Gore is purely coincidental)

 

[russ_watters]

I suppose that's sarcasm, but I can't imagine what your point is.

 

[tmyer2107]

I just spent some time reading through this thread and I am glad to see that most PF users see cap and trade for what it really is, a scam. I am currently working as an engineer in the oil refining industry so there has been a lot of talk around here about cap and trade. If this scam was ever put into effect it would force US refiners to cut even more jobs and raise gas prices to be able to pay the taxes involved. Valero would have to pay 7 billion a year in taxes if cap and trade was passed. That would devastate the company, which is America's biggest refiner, and cause gas prices to raise around 77 cents a gallon. And trust me, American refiners would not be able to take the hit if cap and trade was passed. They are already shutting down multiple refineries causing thousands to lose their jobs. The most recent refinery that was shut down was netting a loss of over $1 million a day for every day it remained in operation because oil margins are so slim. I just had to move from Philladelphia to Texas to keep my job, but I like country music so it’s all good.

http://www.forbes.com/forbes/2009/1130/companies-oil-energy-how-carbon-bill-would-hit-valero.html"

 

[mheslep]

I just spent some time reading through this thread and I am glad to see that most PF users see cap and trade for what it really is, a scam. I am currently working as an engineer in the oil refining industry so there has been a lot of talk around here about cap and trade. If this scam was ever put into effect it would force US refiners to cut even more jobs and raise gas prices to be able to pay the taxes involved. Valero would have to pay 7 billion a year in taxes if cap and trade was passed. That would devastate the company, which is America's biggest refiner, and cause gas prices to raise around 77 cents a gallon. And trust me, American refiners would not be able to take the hit if cap and trade was passed. ...

Seems to me Valero is only devastated if demand drops dramatically, otherwise it simply passes on taxes in the form of price increases. What demand drop does Valero expect?

 

[mgb_phys]

Valero would have to pay 7 billion a year in taxes if cap and trade was passed. That would devastate the company, which is America's biggest refiner, and cause gas prices to raise around 77 cents a gallon.

And the same excuse and the same made up numbers have been used for every worker's, safety and environmental legislation for the last 200 years.

People said exactly the same thing about disabled access to their offices that coal mines were saying 200years ago when the minimum age was raised to 9years old.
And pretty much the same thing was said in America about the end of slavery - it would cause food and cotton prices to rise so much that everyone would starve.

 

[Nebula815]

That being said, global warming is not near enough an exact science nor is cap-and-trade proven to be effective at all in doing what it is supposed to do.

It would be burdening the economy with a completely un-necessary new tax and regulations to try to solve a problem that may not even exist, and to try to do so in a way that will likely not work in the first place.

 

[tmyer2107]

Seems to me Valero is only devastated if demand drops dramatically, otherwise it simply passes on taxes in the form of price increases. What demand drop does Valero expect?

If cap and trade was passed then Valero would have to increase their price of gasoline more than any other refiner just to stay in the green. Other refiners lke Exxon own oil fields and have multiple foreign refineries which make up for some of the loss when their US refineries are losing money. Valero doesn't have this luxury. Other refiners will be able to price their gasoline cheaper than Valero, pushing consumers in their direction.

And the same excuse and the same made up numbers have been used for every worker's, safety and environmental legislation for the last 200 years.

People said exactly the same thing about disabled access to their offices that coal mines were saying 200years ago when the minimum age was raised to 9years old.
And pretty much the same thing was said in America about the end of slavery - it would cause food and cotton prices to rise so much that everyone would starve.

I don't see how you say the numbers are made up. The emissions each refinery puts out is easily quantified. The amount of tax applied to these emissions is spelled out in the bill. This gives you the $7 billion tax. Now if Valero had to make up for these taxes by adjusting their price of gasoline they would have to increase it by roughly 77 cents. What is made up?

The original idea of cap and trade may have been just but in todays economy it just isn't a beneficial solution.

 

[mgb_phys]

I don't see how you say the numbers are made up. The emissions each refinery puts out is easily quantified.

When emission controls on power plants were proposed every plant claimed it would cost $Bns to filter flue gasses and any legislation would destroy the power industries.
So emissions trading was introduced, a power plant received permits for a certain amount of pollutants and could either buy credits from others or reduce their emissions - when this free market was applied it turned out that fitting flue gas scruibbers was so cheap a whole bunch of permit trading companies went bust.

 

[tmyer2107]

When emission controls on power plants were proposed every plant claimed it would cost $Bns to filter flue gasses and any legislation would destroy the power industries.
So emissions trading was introduced, a power plant received permits for a certain amount of pollutants and could either buy credits from others or reduce their emissions - when this free market was applied it turned out that fitting flue gas scruibbers was so cheap a whole bunch of permit trading companies went bust.

I see what you are saying buy I am not here to debate the claims of some power plant. All of the numbers I am referring to are tangible and true. Whatever the power plants were claiming may very well have been false, I don't know.

 

[Nebula815]

When emission controls on power plants were proposed every plant claimed it would cost $Bns to filter flue gasses and any legislation would destroy the power industries.
So emissions trading was introduced, a power plant received permits for a certain amount of pollutants and could either buy credits from others or reduce their emissions - when this free market was applied it turned out that fitting flue gas scruibbers was so cheap a whole bunch of permit trading companies went bust.

The problem here is twofold though:

1) The technology to do this was in existence

2) They were dealing with pollutants

CO2 emissions are not a pollutant, even if Congress wants to say they are. If you have a coal-fired powerplant that is burning completely clean, it will have 100% pure CO2 emissions. The pollutants are the various other stuff that is in the coal that also comes out with the CO2, and that stuff is in much smaller quantities and you can filter it out.

The CO2 itself is released in massive quantities. We do not have the technology to capture and store it right now, as it isn't technically a pollutant.

Reducing pollution didn't mean reducing energy output because it was just a matter of filtering out the pollutants, but to reduce carbon output will mean reducing energy usage, which means higher prices for energy, and hence less economic growth.

It's like automobiles. You can put in all sorts of filtering technology to filter out the pollutants, but a pollution-free car will still put out pure CO2. There is no technology to capture that CO2 on vehicles right now.

 

[Astronuc]

Here is a relevant discussion.

Businesses in U.S. Brace for New Rules on Emissions
http://www.nytimes.com/2009/11/26/business/energy-environment/26emissions.html

To reduce emissions, Congress has been looking at a mechanism called cap and trade, in which legislators would set a limit on the nation’s emissions and it would decline each year. They would also assign pollution permits that companies could then buy and sell depending on their needs.

Much of the legislative horse-trading in recent months centered on which sectors of the economy would receive these carbon allowances free, as a subsidy to switch to low-carbon fuels or to invest in carbon-abating technologies, and which industries must pay for them.

Corporate America is by no means unanimous in embracing the idea of emission limits. Larger corporations, especially those operating in both the United States and Europe, have gone furthest in tackling their emissions. By contrast, many small businesses and domestic manufacturers have made little headway, and they are worried about the higher energy costs that an attack on global warming would require.

Oil producers have opposed the current climate legislation being debated in Congress. Refiners and producers claim the bill would result in higher gasoline bills, lower domestic output and an increase in fuel imports.

. . . .

One unintended consequence of poorly crafted Cap n' Trade legislation would be to eliminate small and/or independent businesses and leaving larger organization (i.e., eliminating competition in the market) and thus ultimately raising prices. And then there is also the question - "Will Cap n' Trade actually reduce CO2 emissions?" Certainly not if it's crafted to benefit a few at the expense of many.

Australia has one of the highest per capita carbon emissions - 80% of electricity produced by coal burning plants.

As for technology, various research groups are looking at carbon capture and sequestration. The technology exists, but it's rather expensive and inefficient. For example, one process requires about 25% of the plant generation. A 40% efficient coal plant becomes 30% efficient using a process which captures the CO2 output, captures and compresses it, and pumps it back into a geological repository.

Statoil is testing a process - Carbon Capture And Storage To Combat Global Warming Examined
http://www.sciencedaily.com/releases/2007/06/070611153957.htm

Carbon capture projects around the world
http://news.yahoo.com/s/ap/20091110/ap_on_bi_ge/eu_carbon_dioxide_town_glance

Environmental Engineers Use Algae To Capture Carbon Dioxide
http://www.sciencedaily.com/videos/2007/0407-possible_fix_for_global_warming.htm

Biogeochemists Map Out Carbon Dioxide Emissions In The U.S.
http://www.sciencedaily.com/videos/2008/1209-tracking_co2.htm


Rather than creating a financial market for Cap n' Trade, the investment should be made in effective technologies that reduce consumption of fossil fuels and as much as possible create a closed cycle of capture CO2 produced and converting back into a usable fuel (as is the case with biofuel using plants, algae, or extremophile bacteria).

We don't need financial middlepersons extracting their 5, 10 or 20% commissions for simply making financial transactions in Cap n' Trade. The motivation of profit is already there for those to develop and use technology to restructure energy production and utilization toward a sustainable and economic system.

 

[russ_watters]

It's like automobiles. You can put in all sorts of filtering technology to filter out the pollutants, but a pollution-free car will still put out pure CO2. There is no technology to capture that CO2 on vehicles right now.

Just about everything you said there was correct, but just to correc this one - a car doesn't put out pure CO2, it puts out a mixture of CO2 and water. Coal is almost all carbon, but oil is a hydrocarbon and contains something like two or three times as many hydrogen atoms as carbon atoms.

This is why methane is so good. Aside from hydrogen being both lighter and giving more energy from combustion than carbon, burning a molecule of CH4 yields 1 molecule of CO2 and 2 of H2O.

 

[russ_watters]

As for technology, various research groups are looking at carbon capture and sequestration. The technology exists, but it's rather expensive and inefficient. For example, one process requires about 25% of the plant generation. A 40% efficient coal plant becomes 30% efficient using a process which captures the CO2 output, captures and compresses it, and pumps it back into a geological repository.

You may consider this a minor quibble, but in my opinion, unless it is actually in use in a large power plant, it "exists" either on the drawing board or in research/prototype form. So I generally don't use the word "exists" - I think it can be misleading.

Why I think that that distinction is important is that though it "exists", it is by no means assured that it can ever be used on a real power plant.

But given that coal power is the cheapest we have by quite a bit, a 25% reduction in output + a 25% increase in plant cost (guess) would probably be worth the hit.

Assuming that it can be done as you say, what are the limitations? I presume it is limited by geology, so could a significant fraction of our existing plants be retrofitted or would we have to build a bunch of new plants in the mountains of New Mexico? How much capacity do the repositories have? Is there a danger of leaking/sinkholes/etc.? These types of questions are big, important viability issues and I've never seen them addressed when the concept is thrown on the table.

From one of your links:

Estimates of worldwide storage capacity range from 2 trillion to 10 trillion tons of carbon dioxide, according to the Intergovernmental Panel on Climate Change (IPCC) in its report on carbon capture and storage. Global emissions in 2004 totaled 27 billion tons, according to the U.S. Department of Energy's Energy Information Administration.

If all human-induced emissions were sequestered, enough capacity would exist to accommodate more than 100 years' worth of emissions, according to Benson, coordinating lead author of the IPCC chapter on underground geological storage.

The tone with which they say that seems to me to be intended to imply that that is good, but I don't see it that way. 100 years' worth is not a lot of capacity if it is evenly spread throughout the globe (our power plants and population centers are not evenly spread throughout the globe) or even worse, concentrated in a few places.

 

[Astronuc]

You may consider this a minor quibble, but in my opinion, unless it is actually in use in a large power plant, it "exists" either on the drawing board or in research/prototype form. So I generally don't use the word "exists" - I think it can be misleading.

Why I think that that distinction is important is that though it "exists", it is by no means assured that it can ever be used on a real power plant.

But given that coal power is the cheapest we have by quite a bit, a 25% reduction in output + a 25% increase in plant cost (guess) would probably be worth the hit.

Assuming that it can be done as you say, what are the limitations? I presume it is limited by geology, so could a significant fraction of our existing plants be retrofitted or would we have to build a bunch of new plants in the mountains of New Mexico? How much capacity do the repositories have? Is there a danger of leaking/sinkholes/etc.? These types of questions are big, important viability issues and I've never seen them addressed when the concept is thrown on the table.

Carbon capture and sequestration technology is being demonstrated at power plants and there are plans to scale up the applications. Large plants require large reservoirs and that is one of the key issues, and ensuring reservoir integrity is a key issue. There are two phases to CCS - one is demonstrating viable storage, and the other is demonstrating viable capture. It takes several years to design, construct and implement the technologies.


RWE npower commissions carbon capture and storage testing facilities at Didcot Power Station
http://www.environmental-expert.com/resulteachpressrelease.aspx?cid=28269&codi=37468

RWE npower launches carbon capture and storage joint venture
http://www.rwe.com/web/cms/en/113648/rwe/press-news/press-release/?pmid=4002805

RWE To Submit Plan To Build Carbon Capture Pilot Plant In UK (Nov 10, 2009)
http://fossilfuel.energy-business-review.com/news/rwe_to_submit_plan_to_build_carbon_capture_pilot_plant_in_uk_091110/

RWE npower Tilbury Fact Sheet: Carbon Dioxide Capture and Storage Project
http://sequestration.mit.edu/tools/projects/rwe_npower_tilbury.html

CO2CRC Mulgrave Capture Project
http://www.co2crc.com.au/research/demo_precombustion.html


RWE to join AEP in validation of carbon capture technology
http://www.aep.com/environmental/news/?id=1420

COLUMBUS, Ohio, Nov. 8, 2007 – American Electric Power (NYSE: AEP) announced today that RWE AG, one of the world’s leading power producers and the largest electricity producer in Germany, will collaborate with AEP and Alstom during a planned validation of commercial-scale application of carbon capture and storage technology on an existing AEP coal-fired power plant.

AEP and RWE, who have signed a memorandum of understanding (MOU) on the collaboration, are leaders in clean-coal technology and efforts to address greenhouse gas emissions from coal-fired generation. Greenhouse gases like carbon dioxide (CO2) are believed to contribute to global climate change.

AEP has more than 38,000 megawatts of generating capacity in the U.S., with 67 percent fueled by coal or lignite. RWE has more than 43,000 megawatts of generating capacity in Germany, Great Britain and other countries, with 60 percent fueled by coal or lignite.

Carbon Dioxide Capture and Storage Project Database (at power plants)
http://sequestration.mit.edu/tools/projects/index.html


Carbon Dioxide Storage Only Projects (capturing CO2 from natural gas fields and returning the CO2 to geological repository)
http://sequestration.mit.edu/tools/projects/storage_only.html

[/quote] From one of your links: The tone with which they say that seems to me to be intended to imply that that is good, but I don't see it that way. 100 years' worth is not a lot of capacity if it is evenly spread throughout the globe (our power plants and population centers are not evenly spread throughout the globe) or even worse, concentrated in a few places.[/QUOTE] The problem with some articles is that they mix discussions of science and technology with policy. I suspect that people involved in CCS want to do something and do it now. I agree that doesn't address viability over 100, 1000 or 10,000, or even 10 million years.

If we look at the fact that fossil fuels and nuclear fuel are finite sources, we can conclude that under the present system, humanity will consume all the resources, and then there is the waste issue as well.

In the long term, millenia or millions of years, the only viable source of energy will be solar based (direct solar as in PV or CSP, or indirect as wind and hydro) or perhaps geothermal.

 

[russ_watters]

The problem with some articles is that they mix discussions of science and technology with policy. I suspect that people involved in CCS want to do something and do it now. I agree that doesn't address viability over 100, 1000 or 10,000, or even 10 million years.

What I'm saying is that their numbers don't imply viability for even much shorter timeframes. This is admittedly speculative, but if the storage is spread out evenly around the world and all of it is accessible, the numbers for the US look like this:

The Earth is 197 million square miles.
The US is 3.5 million square miles or 1/58th of the Earth's surface (including alaska).
The US puts out 1/5th fo the worlds CO2 and half of that via coal plants.

So if the global capacity to store all CO2 is 100 years, the US's capacity to store our coal plant emissions only is 17 years.

And if, as the link implies, the storage is mostly in pre-existing oil and gas wells, that means we have to build pipelines to ship our CO2 to Texas or worse, Alaska. This is why I much prefer basing planning on a solution that is known to work and known to have at worst hundreds of years of fuel available. I'm curious about this, though, so I'm going to search around a bit to see if I can find any studies of the real viability of this.

In the long term, millenia or millions of years, the only viable source of energy will be solar based (direct solar as in PV or CSP, or indirect as wind and hydro) or perhaps geothermal.

There is no need to look that long term, but even if we look out the next few hundred years, fission still remains viable. The indirect solar will essentially always be viable but they are limited in capacity. Direct solar isn't viable yet, but I wouldn't bet against solar technology over a timeframe of 20 years, much less 50. Fusion, if it ever becomes viable, would also be long lasting, but I wouldn't bet for fusion even given 50 more years of research. Either way, the point is that if people are serious about wanting to do something about CO2 production, we do have viable options now that can be implimented simply by making the choice to do it.

 

[mheslep]

The problem here is twofold though:

1) The technology to do this was in existence

Yes that's an important point - it means everybody knew at day 1 (cap and trade on coal plants for SOx emissions) how to price scrubbing equipment

2) They were dealing with pollutants

CO2 emissions are not a pollutant, even if Congress wants to say they are. If you have a coal-fired powerplant that is burning completely clean, it will have 100% pure CO2 emissions.

Nothing burns completely clean in the atmosphere at high temperatures, not even hydrogen. See NOx.

The CO2 itself is released in massive quantities. We do not have the technology to capture and store it right now, as it isn't technically a pollutant.

The technology exists, but it's not proven at large scales, and the cost is uncertain.

 

[mheslep]

What I'm saying is that their numbers don't imply viability for even much shorter timeframes. This is admittedly speculative, but if the storage is spread out evenly around the world and all of it is accessible, the numbers for the US look like this:

The Earth is 197 million square miles.
The US is 3.5 million square miles or 1/58th of the Earth's surface (including alaska).
The US puts out 1/5th fo the worlds CO2 and half of that via coal plants.

So if the global capacity to store all CO2 is 100 years, the US's capacity to store our coal plant emissions only is 17 years.

And if, as the link implies, the storage is mostly in pre-existing oil and gas wells, that means we have to build pipelines to ship our CO2 to Texas or worse, Alaska. This is why I much prefer basing planning on a solution that is known to work and known to have at worst hundreds of years of fuel available. ...

Couple comments:
1. As you might guess the geology suitable for storage over the Earth's surface is apparently so non-uniform that it's probably not even approximate to use the 1/5 factor. For instance, most of the SE United States is apparently unsuitable for storage - wrong geology.

2. The fraction of global CO2 put out by the US is falling fast. We're flat (actually emissions fell several % in the last two years), as is W. Europe, but the rest of the world's emissions are growing exponentially. So the important question is for whoever made that 100 year assessment, did they plan for those conditions? In twenty years I expect the US will be 1/10 of global CO2 emissions and still falling.

3. We don't have to store ALL CO2 emissions, just a sizable fraction of it.

 

[Al68]

And if, as the link implies, the storage is mostly in pre-existing oil and gas wells, that means we have to build pipelines to ship our CO2 to Texas or worse, Alaska.

Why, don't Texas and Alaska have any local CO2 to sequester? Does the CO2 sequestered need to be the exact same CO2 molecules that are emitted from power plants?

 

[Astronuc]

What I'm saying is that their numbers don't imply viability for even much shorter timeframes. This is admittedly speculative, but if the storage is spread out evenly around the world and all of it is accessible, the numbers for the US look like this . . . .

I wasn't even discussing viability of the whole concept, but only the fact that there exists technology to capture and store CO2. Whether or not it is necessary to do so is a rather contentious subject.

It appears there are several small scale demonstration projects underway, with larger ones coming online in the next few years. It's a matter of economics - one starts small with low capital cost with the objective that the technology achieves what is expected, then scales up to larger systems. If the technology fails, then it's not applied on the larger scale.


If CCS is satisfactorily demonstrated, then I believe the plan is to use existing pipeline networks as much as possible. Otherwise, the plan is to storage captured CO2 in reservoirs under the plant where it is produced or within the vicinity.

 

[mheslep]

Why, don't Texas and Alaska have any local CO2 to sequester? Does the CO2 sequestered need to be the exact same CO2 molecules that are emitted from power plants?

It can be done, but pulling CO2 out the atmosphere generally is much more energy intensive that grabbing it immediately as a product of coal combustion.

 

[Al68]

It can be done, but pulling CO2 out the atmosphere generally is much more energy intensive that grabbing it immediately as a product of coal combustion.

Sure, but I wasn't comparing pulling it out of the air to grabbing it at the source. I was comparing pulling it out of the air to shipping or piping it around the world.

 

[Astronuc]

Sure, but I wasn't comparing pulling it out of the air to grabbing it at the source. I was comparing pulling it out of the air to shipping or piping it around the world.

Right now, carbon capture technology is focused capturing at the source, and piping it somewhere, locally or wherever, into an underground reservoir. In some cases, it could be pumped into oil or gas reservoirs to enhance production. In other cases it pure storage.

At 350 or 390 or 400 ppm, it would be rather expensive to capture CO2 from the air using a mechanical or industrial process. On the other hand, it seems the idea is to use plants or algae to capture CO2 from the air, since plants do it so well naturally.

There are programs looking at the effects of deforestation on climate, as well as programs to reforest areas in temperate and tropical regions.

 

[skypunter]

Indeed, the US now has the largest unproven gas reserves in the world due to the shale gas, some 1750 TCF. Even so, that's only 75 years of gas at today's US usage rates.
http://seekingalpha.com/article/164713-how-much-natural-gas-remains-in-the-usa

Proven is defined as reserves which are economical at todays price. Unproven reserves are discovered but not deemed economical at todays price. Our proven reserves estimate moves with the price of the commodity.

Bring the price up to a still reasonable $4.00 per mcf and the new unconventional reserves become proven reserves with a greater than 100 year known supply. These unconventional discoveries are a big part of the reason natural gas is so cheap now.
http://www.eia.doe.gov/oil_gas/natural_gas/data_publications/crude_oil_natural_gas_reserves/cr.html

Natural Gas requires minimal refining, and at $4.00 per mcf it would be cheaper than gasoline as a transportation fuel. Heavy haulers such as railroads and trucks which burn over 50% of transportation fuels are the easiest to convert to natural gas because they can carry the larger storage tanks required to travel acceptable distances. Natural gas hybrid autos would be next in line, having far greater range between fueling than an all electric. If we can come up with a more efficient gas liqufication process, then natural gas automobiles would attain greater range than gasoline powered vehicles of today. This is a realistic possibility.

If and when alternatives become cheaper than hydrocarbons, then they will be a more efficient use of our resources and we will turn to them.

Cap and trade attempts to artificially make hydrocarbons more expensive, through taxes, in order to make alternatives appear more affordable. That is money out of our pockets.

Where does this additional tax revenue go? We are promised many things, including support for alternative technology, lowering payroll taxes, or whatever else they think the masses will lap up.

When we legalized casinos in many states, the additional revenue was supposed to go to education...

The above does not even address the issue of creating a worldwide taxing authority (the UN), which is the equivalent of surrendering national sovereignty. Those who died for our independence are surely turning in their graves.

 

[Chalnoth]

Cap and trade attempts to artificially make hydrocarbons more expensive, through taxes, in order to make alternatives appear more affordable. That is money out of our pockets.

This is basically a lie. Cap and trade doesn't provide an extra tax. What it does instead is artificially limits production of carbon-producing fuels. Instead of a tax, there's a distribution of resources towards fuels/energy sources which are more carbon-neutral, just because people aren't allowed to buy as many carbon-producing fuels. This redistribution of resources is automatic, and driven by the market economy: those alternative fuels which are most cost effective will get the most resources under a pure cap-and-trade system.

Of course, this does have the effect of increasing prices somewhat, but it isn't a tax. The increase in prices comes from the increased resources required to extract energy from renewable sources. Basically, with a decent cap and trade system, the market economy automatically funnels the extra money into effective or promising (to investors) alternative energy sources. Because it isn't a tax, we don't need to worry about some bureaucrat in Washington deciding where the money goes. All that we do have to worry about is that there aren't nasty loopholes that allow extra emission of carbon. The market takes care of the rest.

 

[mheslep]

This is basically a lie. Cap and trade doesn't provide an extra tax.

tax
  /tæks/
–noun
1. a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.
2. a burdensome charge, obligation, duty, or demand.

Whatever the end effect of Cap and Trade, it exactly meets this definition. Whether or not the government subsequently allows redistribution of the collected revenue under a rule set to other individuals or businesses changes the definition of tax not at all. There are certainly different kinds of taxes; the best one can say here is that this tax different in application from, say, the income tax.

Furthermore, the effect of this bill as scored by http://energycommerce.house.gov/Press_111/20090626/hr2454_cbo20090626.pdf" for this particular bill is an increase in government revenue via carbon levies of $873 billion over ten years; roughly that same amount is then spent by the government under the bill (i.e. 'bureaucrats' as you mentioned) on other energy related topics such as energy efficiency technology R&D, renewable energy, carbon capture and sequestration, electric vehicle tech, etc, etc.

You should modify your opening statement.

What it does instead is artificially limits production of carbon-producing fuels.

ALL taxes tend to restrain trade in the area to which they are applied.

Instead of a tax, there's a distribution of resources towards fuels/energy sources which are more carbon-neutral,

That is what is hoped, it's not a fact of the proposed law

just because people aren't allowed to buy as many carbon-producing fuels.

No, there's no default quota placed on 'people' re how much they can buy; there's an intended increase in the price of carbon emissions. BTW, the bill may simply move emissions elsewhere ( e.g. China).

The increase in prices comes from the increased resources required to extract energy from renewable sources.

Secondary effect. In the first instance, the government demands the price increase, i.e, a tax.

 

[Chalnoth]

Whatever the end effect of Cap and Trade, it exactly meets this definition. Whether or not the government subsequently allows redistribution of the collected revenue under a rule set to other individuals or businesses changes the definition of tax not at all. There are certainly different kinds of taxes; the best one can say here is that this tax different in application from, say, the income tax.

It doesn't allow it. It simply happens: the government doesn't see any of any extra money paid at all. There is no revenue collected at all with pure cap-and-trade.

Furthermore, the effect of this bill as scored by http://energycommerce.house.gov/Press_111/20090626/hr2454_cbo20090626.pdf" for this particular bill is an increase in government revenue via carbon levies of $873 billion over ten years; roughly that same amount is then spent by the government under the bill (i.e. 'bureaucrats' as you mentioned) on other energy related topics such as energy efficiency technology R&D, renewable energy, carbon capture and sequestration, electric vehicle tech, etc, etc.

That may be an impact on the entire bill, but it's not an effect of cap and trade in and of itself. Carbon levies are, obviously, taxes. And they're not such a bad thing either, though cap and trade is perhaps better.

BTW, the bill may simply move emissions elsewhere ( e.g. China).

This is why for any cap and trade system to be effective, it needs to be supplanted with tariffs on imports from countries that don't have similar systems.

 

[Astronuc]

fee = tax?

I sat in on a meeting with some financial people who were apparently planning to make millions or billions off Cap n' Trade.

Duke Energy has been concerned about fair pricing for their offsets.

 

[mheslep]

fee = tax?

I sat in on a meeting with some financial people who were apparently planning to make millions or billions off Cap n' Trade.

Duke Energy has been concerned about fair pricing for their offsets.

Offsets are the downfall of Cap n' Trade. In my view there's no stopping massive gaming of the offsets, which is why I favor the straightforward carbon tax* strongly supported by many (most?) economists.

*With a return of the revenue through general tax cuts or rebates.

 

[Chalnoth]

Offsets are the downfall of Cap n' Trade. In my view there's no stopping massive gaming of the offsets, which is why I favor the straightforward carbon tax* strongly supported by many (most?) economists.

I'm not so sure it's strongly supported by most economists.

But yes, a lot of people stand to make a lot of money out of cap and trade, through one of two means:
1. Political maneuvering to get more "carbon credits" than they should get.
2. Having the ability to drastically cut carbon emissions quickly, thus allowing them to sell their carbon credits.

Point (1) is obviously a problem that needs to be dealt with strongly for cap and trade to be effective. Point (2) is very desirable, and the entire purpose of cap and trade in the first place.

 

[russ_watters]

Offsets are the downfall of Cap n' Trade. In my view there's no stopping massive gaming of the offsets, which is why I favor the straightforward carbon tax* strongly supported by many (most?) economists.

Follow-up question: who cares what economists think? Are economists environmental scientists and mechanical and chemical engineers?

The problem isn't the economic models per se. The problem is the view of reality input into the models isn't based on real science/engineering. Economists don't know that pollution reduction vs cost isn't a continuous function because they don't understand what it actually takes to reduce pollution.

Ie, in the case of CO2, you can't say that money/current pollution = new pollution

Back when "pollution" referred to abnormal combustion products such as nitrous and sulfur oxides, it was theoretically possible (and was done) to reduce them in a hyperbolic function of cost along a very wide range of pollution levels. The reason is, the solutions were designed to improve, not replace, existing energy production methods. You can take a coal plant and reduce the NO2 by a factor of 10 if you want and it is just a question of money. But CO2 isn't like that. No amount of new technology is going to reduce the CO2 output of coal power plants by more than about 20% (the difference between current efficiency and the theoretical maximum). Only by discarding coal altogether can we get rid of its CO2 production. So by slowly cranking down on the cap, you can, in the short term, get your cap and trade to follow a continuous function, but in a little bit of time, you'll hit a wall where you can't go any further without abandoning the coal plant (or finding a way to destroy or store CO2 itself). And if that's the way it has to go, you've wasted time and money on a partial solution that is of little help in working towards the full solution.

 

[Chalnoth]

I think that's sort of the point of cap and trade: to provide incentives to gradually replace fossil fuel technologies.

 

[skypunter]

I think that's sort of the point of cap and trade: to provide incentives to gradually replace fossil fuel technologies.

With what?
It feels like we're being herded toward a cliff, while the "shepherd" promises that we can fly!

 

[Proton Soup]

Isn't this like the Nasa employees that were 'silenced' for mentioning evolution or global warming?

Your employment contract (especially with a federal agency) says you can't make public pronouncements about your work without clearing them with the press office.
So to drum up some publicity you claim to have been silenced by The Man.

i do wonder how that would collide with laws passed to protect whistleblowers.

 

[skypunter]

Nasa's director was censured for expressing doubts about the IPCC prophecies.
http://www.ewire.com/display.cfm/Wire_ID/3967
And isn't this interesting...
Hansen hopes summit will fail!
http://www.upi.com/Science_News/200...-warming-summit-will-fail/UPI-47481259868717/

 

[russ_watters]

I think that's sort of the point of cap and trade: to provide incentives to gradually replace fossil fuel technologies.

That's the goal of people who support CO2 reduction, but cap and trade isn't capable of doing that because you can't "gradually replace" a power plant, nor can you gradually invent a new technology (such as carbon capture).

This is part of the reason we don't see more nuclear plants being built now. The return on investment is on the order of 30 years because it takes a long time to build them and they are expensive. But once up and running, they are cheap to operate. So you have to be willing to accept a 30 year ROI on the construction of the plant. But ask any business what kind of ROI they'll accept on an energy reduction project and you'll get answers on the order of 5-10 years.

Economics is simply not equipped to handle this issue, so as said above, we're getting hearded towards a cliff. And that's with or without global warming: our nuclear plants are aging and we aren't building new ones, while at the same time our capacity margins are getting thinner. We're going to run into major electrical grid reliability problems because of this.

 

[Chalnoth]

With what?
It feels like we're being herded toward a cliff, while the "shepherd" promises that we can fly!

A wide variety of technologies. Fossil fuels are obviously too useful for anyone single renewable energy source to replace them.

Nuclear is obviously one solution. Others are wind and solar, but those require significant improvements in the electrical grid. Conservation is another solution, as there is one heck of a lot of wasted energy out there. We also have biofuels (esp. algal biofuels) as an alternative for fuel for transportation.

All of these solutions come with their problems, but the complaint that they're 'too difficult' or 'too expensive' completely misses the point: they're necessary. If we don't switch off of fossil fuels at some point, modern civilization ends. The specter of global warming merely forces us to switch off of fossil fuels a bit sooner than we otherwise might, or else face dire economic and humanitarian consequences.

The nice thing about initiatives like cap and trade is that they automatically divert resources into effective or promising alternative fuels (and even ways of conserving energy), using the market to ensure that those resources are divided as efficiently as possible. And they do it in a way that scales with the difficulty of the problem of generating energy from alternative sources.

 

[mheslep]

Follow-up question: who cares what economists think? Are economists environmental scientists and mechanical and chemical engineers?

The problem isn't the economic models per se. The problem is the view of reality input into the models isn't based on real science/engineering. Economists don't know that pollution reduction vs cost isn't a continuous function because they don't understand what it actually takes to reduce pollution.

Ie, in the case of CO2, you can't say that money/current pollution = new pollution

Back when "pollution" referred to abnormal combustion products such as nitrous and sulfur oxides, it was theoretically possible (and was done) to reduce them in a hyperbolic function of cost along a very wide range of pollution levels. The reason is, the solutions were designed to improve, not replace, existing energy production methods. You can take a coal plant and reduce the NO2 by a factor of 10 if you want and it is just a question of money. But CO2 isn't like that. No amount of new technology is going to reduce the CO2 output of coal power plants by more than about 20% (the difference between current efficiency and the theoretical maximum). Only by discarding coal altogether can we get rid of its CO2 production.

Edit: I think you are on point here with a major problem surrounding the application of cap and trade to CO2, but imprecise. I agree completely that reducing real toxics like SO2 was just a question of money, and it was understood almost exactly how much money so the value of those improvements could be traded. Here's the difference with CO2: I assert removing it from, say, coal plants is also just a question of money, and time. I could set up a rig in my basement to capture CO2 from a combusted a lump of coal. However, the problem is we do not know how much money sequestering CO2 at scale costs. Is my geology suitable for storage? Don't know. Got to do some test drilling. If I can't store CO2 here, got to pipe it. What's the cost of the right of way for ~100 miles of pipe? Don't know. What's the cost of a certified CO2 separation rig at 1GW scale? Well there have been several pilot plants, but nothing certified so I really don't know that cost either. The point is without knowing the cost, I can't trade the value to someone else. Now, economists well understand this kind of limitation of uncertainty of costs, even if they don't know a dam thing about drilling and CO2 separations.

So by slowly cranking down on the cap, you can, in the short term, get your cap and trade to follow a continuous function, but in a little bit of time, you'll hit a wall where you can't go any further without abandoning the coal plant (or finding a way to destroy or store CO2 itself). And if that's the way it has to go, you've wasted time and money on a partial solution that is of little help in working towards the full solution.

The problem is externalities. Engineers in this context are in business of optimizing designs given input/output costs to their system. They don't evaluate the cost to the nation based on the security issues surrounding imported oil, nor mostly do thet care about carbon emissions (I'm skeptical on CO2 in the short run). They don't care because there is no cost to either imports or CO2 on their balance sheets. If these external problems are to be considered in the overall design of energy plants and systems, someone has to put a price on them that then shows up on the engineers tally. That's where economists come in. The best way to do this, IMO, is not via caps, it's via a rebated carbon tax.

 

[mheslep]

That's the goal of people who support CO2 reduction, but cap and trade isn't capable of doing that because you can't "gradually replace" a power plant, nor can you gradually invent a new technology (such as carbon capture).

This is part of the reason we don't see more nuclear plants being built now.[...]

I don't follow this last part - what does long term around times in nuclear have to do with proposed cap and trade, which is not in effect yet?

Economics is simply not equipped to handle this issue,

I share concerns about the results of bad policy and economics, but not that economics is not relevant. Economics is about understanding the effects of supply, demand, and prices. Of course it's relevant to energy, and anything else that can have a price put on it.

 

[Chalnoth]

The best way to do this, IMO, is not via caps, it's via a rebated carbon tax.

Well, the nice thing about cap-and-trade is that the money is automatically redistributed to more efficient (in terms of CO2 output) energy sources. With a carbon tax, you not only have to rely upon the government to do a good job applying the tax, but also in redistributing it.

Basically, the effect on carbon production is the same either way. But with cap-and-trade, because the market is allowed to take care of redistribution, redistribution of funds is made optimally cost-effective.

 

[skypunter]

Lots of uneasy jockeying for position happening around Copenhaagendazs.
Gore backs out.
Obama reschedules.
Maybe Gore is the wiser of the two.
The future is, as always, uncertain.

 

[russ_watters]

Edit: I think you are on point here with a major problem surrounding the application of cap and trade to CO2, but imprecise. I agree completely that reducing real toxics like SO2 was just a question of money, and it was understood almost exactly how much money so the value of those improvements could be traded. Here's the difference with CO2: I assert removing it from, say, coal plants is also just a question of money, and time. I could set up a rig in my basement to capture CO2 from a combusted a lump of coal. However, the problem is we do not know how much money sequestering CO2 at scale costs.

I almost agree. While I'm sure the concept can be demonstrated on a science fair scale, I'm not convinced the viability has been studied in detail (much less even theoretically described) on a national, industrial scale. The difficulty isn't in the capture, it is in the disposal.

Astronuc provided some of the best articles I've seen about the subject, but even they just discuss the issue roughly. What is needed is a 1000 page government study of the true national scale viability. It would look like this:

Take the biggest 500 coal plants and analyze the technical and economic viability of carbon capture/sequestration for each of them and all of them as a group. The study would need to figure out:
-What is the quantity of CO2?
-What would the retrofit cost?
-Does the plant have the remaining lifespan necessary for that to be worth it?
-Where can you put the CO2?
-How do you get it there?
-Does the geographic layout of plants lend itself to a pipeline?
-How much would that cost?
-How much storage capacity does that location have?
-What are the risks of failure in the storage location?

Now the end result of such a study might be that it appears technically viable to store all of our emissions for 10 years (or half for 20 or 1/5 for 50, etc.) - and that would still be worth doing if the economics look reasonable. Either way, the study would have answers to the questions of technical and economic viability. But then moving toward implimentation, you need a nationalized strategy to properly implement it. Pipelines, in particular are not something you can do without government involvement.

And what happens if the study finds it is only technically viable to store 10% of our emissions for 10 years at a cost of $20 billion per 1000 MW? Then the idea would have to be abandoned as a viable national energy strategy.

One thing I envy about France - 40 years ago, they put together a national energy strategy and they just did it! In the US, we've been talking about the downsides of fossil fuels since at least the mid-70s and have made essentially zero progress in moving away from it.

The problem is externalities. Engineers in this context are in business of optimizing designs given input/output costs to their system. They don't evaluate the cost to the nation based on the security issues surrounding imported oil, nor mostly do thet care about carbon emissions (I'm skeptical on CO2 in the short run).

That's an oil issue and I'm mostly just talking about coal here. But you're right, there is just no reason for an engineer or financial advisor to care about what the government spends on an issue when he's being paid by a power company to make a strategy work for them.

 

[russ_watters]

I don't follow this last part - what does long term around times in nuclear have to do with proposed cap and trade, which is not in effect yet?

The same problem exists for nuclear power, whether cap and trade is an issue or not. Whether calculating the impact of cap and trade or just doing the normal business of projecting whether your power company needs to build a new plant to handle new demand or replace an existing plant, the problem is the same: people are short-sighted.

I share concerns about the results of bad policy and economics, but not that economics is not relevant. Economics is about understanding the effects of supply, demand, and prices. Of course it's relevant to energy, and anything else that can have a price put on it.

Obviously, any solution has economic implications that need to be considered. I didn't say that economics is not relevant, I said economics is not equipped to handle this issue. By that I mean that you cannot use economics as the driver of the issue. Cap and trade is an attempt to use economics (without even really analyzing the economics!) to drive a problem that is technical in nature.

And the thing that irritates me most about it is that it doesn't seem to even attempt to address either the economic or technical viability of the solutions. You just crank down on the cap and let the power companies deal with all that. How much does carbon sequestration cost? Meh, not my problem - just crank down on the cap and they'll figure it out!

 

[skypunter]

That's the goal of people who support CO2 reduction, but cap and trade isn't capable of doing that because you can't "gradually replace" a power plant, nor can you gradually invent a new technology (such as carbon capture).

This is part of the reason we don't see more nuclear plants being built now. The return on investment is on the order of 30 years because it takes a long time to build them and they are expensive. But once up and running, they are cheap to operate. So you have to be willing to accept a 30 year ROI on the construction of the plant. But ask any business what kind of ROI they'll accept on an energy reduction project and you'll get answers on the order of 5-10 years.

Economics is simply not equipped to handle this issue, so as said above, we're getting hearded towards a cliff. And that's with or without global warming: our nuclear plants are aging and we aren't building new ones, while at the same time our capacity margins are getting thinner. We're going to run into major electrical grid reliability problems because of this.

Russ is right.
France's nuclear program is a great example of a social program which works. We could do this too, the technology is known.
Once again, environmental extremists have a ball and chain around our ankles.

 

[mheslep]

One thing I envy about France - 40 years ago, they put together a national energy strategy and they just did it! ...

First, France has no oil at all so they really felt the embargo in the 70's, second they're half a police state to my mind and forced the issue. I don't care to emulate that.

 

[russ_watters]

First, France has no oil at all so they really felt the embargo in the 70's, second they're half a police state to my mind and forced the issue. I don't care to emulate that.

In general, I don't care to emulate France either, but this is one of very few issues that requires a government orchestrated strategy.

 

[Argentum Vulpes]

That's the goal of people who support CO2 reduction, but cap and trade isn't capable of doing that because you can't "gradually replace" a power plant, nor can you gradually invent a new technology (such as carbon capture).

This is part of the reason we don't see more nuclear plants being built now. The return on investment is on the order of 30 years because it takes a long time to build them and they are expensive. But once up and running, they are cheap to operate. So you have to be willing to accept a 30 year ROI on the construction of the plant. But ask any business what kind of ROI they'll accept on an energy reduction project and you'll get answers on the order of 5-10 years.

Economics is simply not equipped to handle this issue, so as said above, we're getting hearded towards a cliff. And that's with or without global warming: our nuclear plants are aging and we aren't building new ones, while at the same time our capacity margins are getting thinner. We're going to run into major electrical grid reliability problems because of this.

I'd like to add a bit to the reason we aren't seeing any new construction of nuclear plants in the US. In a word regulations. If you want to build a nuclear plant to replace say a coal, LNG, hydro plant, ect. and the electrical grid is a nuclear virgin system the plant builder is responsible for the upgrading of the grid. Tax breaks and loan grantees form the fed are almost imposable to get. Finally anyone with a lawyer can file an injunction against the plant owners and stall building for a long time. 20 years to build something in a civilian setting is completely ridiculous. The US navy can have a perfectly safe reactor put together and running in about four years. China recently put a civilian reactor from ground breaking to running in about 5 years as well. Anyone else see a problem here.

Just for a small comparison. A 150 MW wind farm in MT was up and running in 1 year and with tax credits the investors made back there initial investment when the first kW went down the line. Also the state covered the upgrading to the electrical grid.

Another reason there have been several big wind projects in MT is not because of the wind but because of all the slack electrical generation capacity that is available. Current electrical grids are built on the need to have a constant available amount of power in the system. So renewables like solar and wind are problematic when they are not generating power, some other source must be putting power into the grid, or it crashes.

So basically nuclear is the future for power production in the US. It would solve so many problem like CO2 production for electricity. New gen 4 reactors can also produce hydrogen gas from waste heat, giving the hydrogen economy a cheep CO2 free start. Provide cheep electricity, and provide the most jobs per kWh compared to any other power production industry.

We don't need cap and trade (AKA cap and tax/pollution indulgences), we need nuclear power.

 

[skypunter]

What is more practical, reprocessing fuel and then storing the resultant low grade waste or attempting to store enough CO2 to regulate global climate?
I know what I think, but would like to hear the reasoning of those who are opposed to nuclear.

 

[skypunter]

In general, I don't care to emulate France either, but this is one of very few issues that requires a government orchestrated strategy.

IMHO government should be limited to basic infrastructure, such as roads, law enforcement and defense.
It does appear that energy is becoming a necessary component of the infrastructure, vital to our national interest. Energy has almost become "the coin of the realm" for modern civilization.
In the case of nuclear energy, since strict security concerns are also involved, an exception to the "infrastructure only" limitation may be applicable.
Nuclear energy would surely pay for itself and so would not be a long term burden on the taxpayers.
Domestic hydrocarbons, particularly natural gas, would continue to be competitive.
The benefit of this mix would be that we would not have all of our eggs in one basket.
The largest uranium reserves are presently in Australia, but the US has substantial domestic reserves.
http://www.euronuclear.org/info/encyclopedia/u/uranium-reserves.htm
http://www.worldenergy.org/publications/survey_of_energy_resources_interim_update_2009/part_i_uranium/1808.asp
Notably, the largest uranium reserves lie beneath free nations. That's refreshing.