The Fraud of Regional Cap & Trade

A chemist friend from New Hampshire e-mailed me suggesting that I look at the article entitled, "Cap and Trade Programs" in the October 18 issue of Chemical and Engineering News. He went on to suggest that the American Chemical Society, which publishes C&EN, get out of politics and confine its activity to Chemistry and Membership.

The essence of the C&EN article is a report on the development of regional Cap and Trade groups, which are composed of several states. One of the state groups is Regional Greenhouse Gas Initiative (RGGI) and includes New Hampshire and nine other Northeast states. Since New Hampshire is involved, I can see why my friend is upset.

For the uninitiated, Cap & Trade was originally proposed on the federal level as a Socialist Federal gimmick to obtain additional tax revenues from US taxpayers and distribute a portion to other countries as wealth redistribution. The Obama Administration hoped to obtain public and Congressional approval by establishing a fear that carbon dioxide emissions from the burning of fossil fuels would adversely affect climate. Using that basis, the idea was to establish a maximum limit on the emissions of carbon dioxide from various industrial activities, including electricity generation, and use a permit exchange process, with associated tax. Fortunately, Congress has been able to see through the duplicity of the proposed program and while they have previously demonstrated support of any tax increase mechanisms, they appear to be listening to the general public, since it concerns their reelection.

When The C&EN article devotes three pages in trying to prove the foresightedness of individual states in coming together to form regional groups for small Cap & Trade programs. C&EN cites that in 2009, which was RGGI's first year of operation, CO2 emissions in those member states fell 34%, without any significant change in electricity prices. Note that there was no data given on electricity production, the Cap amounts of CO2 allowed, nor the amount of taxes collected. C&EN's implication is that formation of the regional Cap & Trade group was a great success in reducing CO2 emissions. However, we have shown several times that the mere idea of controlling carbon dioxide emissions is ridiculous from a climate control viewpoint. It is only another gimmick to collect taxes and was not indicated to have been accomplished in the C&EN account.

The likelihood is that for the year 2010, we will also see a reduction of carbon dioxide emissions. However, such reduction will be purely coincidental with respect to any regional Cap & Trade programs. The general reduction in carbon dioxide emissions will have been caused by lower level of electricity production, resulting from the recession, in which we still find ourselves. In addition, there has been a strong technological/economic advance in the power industry. Through a relatively new process of fracturing shale, large amounts of low-cost natural gas are now available as fuel for electricity generating plants. This has brought down the price of natural gas compared to coal, which has been the traditional fuel. Bloomberg Business Week, October 25, 2010, gives a natural gas price of $4.06 per million British Thermal Units. The coal price is given as $4.75 per million British Thermal Units. It is obvious that energy buyers will more likely purchase natural gas.

The conversion to use of natural gas will also coincidently reduce carbon dioxide emissions, even though that has no practical significance. To produce 1 million BTUs of heat, burning 36 pounds of natural gas is required versus 72 pounds of coal. The burning of 36 pounds of natural gas produces 113 pounds of CO2, while burning 72 pounds of coal produces 264 pounds of CO2. It is obvious that burning natural gas versus coal for electricity production, automatically produces less than half the usual CO2 emissions. The key point here is that reduction of CO2 emission is likely unrelated to any Cap & Trade program, but is rather the substitution of natural gas for coal in electricity production.

There is nothing complex about the above calculations, and I strongly criticize C&EN in not having presented them and thus resulting in their use of deception in order to promote Cap & Trade as a regional reducer of CO2 emissions, and perpetuating the myth that CO2 emissions are significant in climate change.

Another interesting aspect is that the coincidental reduction in CO2 emissions, caused by recession and conversion to the use of natural gas versus coal, will likely lead to a continuance and expansion of regional Cap & Trade, as the public is more easily defrauded by national magazines and state government, as opposed to simple facts presented above. This will be unfortunate as the hole will be dug deeper. Lower caps will be required, thus requiring more trading taxes and installation of CO2 capture equipment at electric utilities, all of which will increase the cost of electricity to consumers. Down the line, the inhabitants of other states which have not become a part of this fraud system will be thanking their state governments for not having become a part of this silly program.