Legislative Update- Cap-and-Trade
Early in May nearly 3,000 Electric Cooperative leaders from throughout the country gathered in Washington D.C. The purpose of this meeting was to address cooperative issues of concern with our elected senators and representatives on Capital Hill in conjunction with the National Rural Electric Cooperative Association Legislative Conference.
This year Board of Trustee President Ray Cebulski and I attended this important event. In meetings with Sen. Max Baucus, Sen. Jon Tester and Rep. Denny Rehberg as well as others we discussed a variety of issues that will directly affect the members of MEC in the future. None of these issues was more important than climate change legislation through a proposed system of cap and trade.
Existing climate change proposals seek to reduce emissions of greenhouse gases, carbon dioxide in particular. In the United States, power plants that burn fossil fuels produce about 2.4 billion tons of carbon dioxide every year. Electric co-ops are involved in cutting-edge work to develop new technologies to reduce CO2 emissions from power plants, but those options aren’t yet ready for prime time. They’re limited, largely untested and expensive. Yet potential legislation would rely on them to make significant carbon dioxide cuts nationwide.
A key committee in the U.S. House of Representatives has announced plans to consider a climate change bill by this summer, one that may, for the first time, classify CO2 as a pollutant and impose a cap and trade tax to limit carbon emissions. Cap and trade systems work by setting a specific limit on airborne pollutants from sources like power plants, factories and refineries, and require those sources to account for all emissions with issued allowances. Allowances would be auctioned off at undetermined prices, leading to potentially costly burdens for any source of CO2 emissions. In the case of power plants, those costs would ultimately be passed on to consumers using the power and adding your share of those costs to your electric bills each month.
In late February, the Obama Administration pointed to such a system as a new, substantial source of revenue for the federal government —effectively muddying the initial environmental argument for regulating CO2. That’s a back-door tax increase. Depending on how it’s structured, it could force co-ops to essentially become tax collectors for the government and allow Wall Street investors to set allowance prices and determine how much you pay for electricity.
We need to help Congress draft an energy solution that accomplishes environmental goals while taking affordability into account. But time may be tight. If Congress fails to act, the U.S. Environmental Protection Agency stands ready to step in, leaving decisions that affect consumers’ pocketbooks up to unelected bureaucrats. Electric cooperatives want to work with Congress to address climate change in an affordable and environmentally responsible fashion. We’re ready to provide insight into how various policy proposals will impact consumers and urge lawmakers to reach the right answers.
National energy and climate change policy must focus on reducing emissions, not on “revenue enhancement” for federal government. Money generated, through a cap-and-trade tax or otherwise, must be used wisely: devoted to developing related technology or returned to those who foot the bill. And Congress should take the lead on climate change, not regulators or Wall Street speculators.
Electricity is intertwined with every American’s quality of life and the nation’s economic productivity. In 1932, FDR declared that electricity was a necessity, not a luxury and that it must be affordable to all Americans. This is as true today as it was over 70 years ago.
Mark Hayden
General Manager