Criticism Ramps Up Against Cap-And-Trade Systems

June 11, 2009

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Several organizations are joining the ranks of growing criticism of cap-and-trade programs around the globe, saying carbon offset programs do more harm than good and could result in significantly higher costs for some industries.

Recent criticism comes from the American Trucking Association (ATA), which told a Congressional Committee that a cap-and-trade program could result in significantly higher costs in the trucking industry and for American consumers.

Tommy Hodges, ATA first vice chairman said that provisions in H.R. 2454’s cap-and-trade program grant oil refiners 2 percent of the carbon allowances between 2014 and 2016 to help mitigate refinery greenhouse gas emissions, but the 2-percent allotment ignores carbon emissions from the combustion of petroleum production, which leaves downstream users like trucking companies exposed to sudden fuel price spikes.

The trucking industry believes that mobile sources, such as commercial trucks, should be addressed differently than traditional stationary sources under any proposed carbon reduction regulatory program.

Hodges also serves as chairman of ATA’s Sustainability Task Force, which developed a progressive sustainability agenda that will reduce fuel consumption by 86 billion gallons and CO2 emissions by 900 million tons for all vehicles over the next 10 years, helping the trucking industry to reduce its carbon footprint.

Friends of the Earth’s recently released a report that examines the Clean Development Mechanism (CDM), a carbon offset scheme. The report, A Dangerous Distraction, concludes that the practice of carbon offsetting isn’t leading to global emission reductions or helping developing countries, but instead is leading to more ways to avoid cutting emissions.

The merit of CDM projects have been criticized many times over the past several months.

Chevron Corp. said efforts to cut U.S. carbon emissions by 80 percent by 2050 were unrealistic because so much current energy infrastructure would have to be replaced, reports Reuters.

Chevron CEO David O’Reilly said in the article that making every U.S. vehicle carbon free would only cut out 34 percent of greenhouse gases, while a completely zero-emission power generation system would only eliminate 40 percent.

In the debate hosted by the Commonwealth Club, a San Francisco-based public affairs forum, O’Reilly and Carl Pope, executive director of environmental group Sierra Club, agreed that moving away from coal toward natural gas in power plants would be one of the quickest ways to reduce carbon output, reports Reuters.

Both men also said in the article that a carbon tax was a far simpler way of reducing consumption, with O’Reilly calling the legislation “unnecessarily complex” and Pope criticizing U.S. energy regulation for not forcing utilities to buy more low-carbon electricity.

A report by the Investor Responsibility Research Center Institute and Trucost indicates the financial risk to companies in the S&P 500 could be significant for some under a cap-and trade program. The report shows the utilities sector faces the highest financial exposure to carbon costs. If the 34 utilities analyzed in the study were to pay for each metric ton of emissions, carbon costs could reduce their combined earnings by 45 percent.

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Reader Comments

I expect complaining about cap and trade to grow increasingly louder. It makes sense that anyone creating an externality where negative effects harm someone or something else should be encouraged to stop creating that negative effect. Cap and trade will result in those who burn fossil fuels to use them more efficiently or perhaps switch to a different energy source. Bring it on!

sustainelaine | June 11th, 2009

Cap and trade is just one way for the government to overstep its bounds and attempt to take over the markets. Unfortunately, most supporters of cap and trade do not realize that the effects of Carbon dioxide on the climate are widely disputed (and most of the facts concerning global warming are based studies that have since been disproved). People also do not realize that the government will be able to restrict any human activity to whatever limit those in power decide is acceptable, in other words it can be used as a means to suppress whatever and whoever they wish, in the name of environmental safety.

TrueLiberal | June 28th, 2009