Coal-Cap Disaster, For McCain, bad carbon economics could lead to even worse carbon politics

Tuesday’s Wall Street Journal strongly editorializes against the Warner-Lieberman cap-and-trade plan that allegedly will solve our alleged problem with global warming — now called climate change. This plan is very similar to the one Sen. John McCain announced two weeks ago. The Journal argues that cap-and-trade “would impose the most extensive government reorganization of the American economy since the 1930s,” including a huge tax increase, higher prices across-the-board, and significant losses to economic growth in the decades ahead.

But why do we need a planned economy for energy or anything else? Why not a fully deregulated free market for energy where prices allocate production and consumption?

And why not allow the current $130-a-barrel oil price to open the door to a full portfolio of energy resources, including offshore drilling, Alaska, nuclear power, oil shale, conversion of coal and natural gas to liquid fuel, and the development of so-called alternative-energy sources such as solar, wind, and various cellulosic investments (although this latter group may never contribute more than 10 percent to our energy needs)? A true free-market approach wouldn’t pick winners and losers with heavy subsidies or penalties.

Incidentally, market forces also will curb energy consumption. The rising price of crude oil and gas at the pump has already cut demand sharply. Michigan professor Mark Perry, at his great Carpe Diem blog, reports that Americans in March 2008 drove 11 billion fewer miles than they did in March 2007 — a drop of 4.3 percent. This marks the first traffic decline since 1979 while the month-to-month percentage drop is the biggest since record keeping began in 1942. It’s also the fifth straight monthly falloff in miles driven on a year-on-year basis.

Perry correctly bemoans the fact that the U.S. is the only country in the world where policies actually limit energy supply. And it’s my contention that Gosplan-type cap-and-trade regulatory planning will sharply limit our energy resources and our economy in the decades ahead.

The Wall Street Journal notes that under Warner-Lieberman existing coal-fired power plants that currently provide about one-half of U.S. electric power will be shut down, to be replaced by new nuclear-power facilities and other alternative technologies yet to be developed. Let that idea sink in. By pulling the plug on half of our current electricity production, cap-and-trade will risk a massive undermining of the American economy, as well as our future economic and national security.

The coal story is so important simply because the U.S. has massively undeveloped coal resources. With 27 percent of the world’s coal reserves estimated at 270 billion tons, the U.S. is the Saudi Arabia of coal. And yet cap-and-trade would destroy this critical sector.

New coal technologies being developed right now wouldn’t even be allowed to flourish under cap-and-trade. Synthetic-fuel-developed coal, through the Fisher-Tropsch technology, is a proven gas-to-liquid process that sequesters coal carbon. It could power the American economy for generations. Rentech Corp. is already using this process to create an ultra-low carbon and sulfur liquid that can be easily adapted to all our transportation needs. According to the ESS Environmental company, other chemical-based technologies that produce virtually no carbon emissions also could be used.

But the great risk is that cap-and-trade will stop these technologies dead in the water, right in their tracks. That would be a tragedy.

Sen. McCain, who favors cap-and-trade, has not yet spoken directly to the coal issue, or for that matter to the various ways that coal and natural gas can be liquefied and turned into clean fuel. But this could be an important political point for McCain.

Economist Jerry Bowyer has circulated a map of U.S. coal deposits that shows a proliferation of coal in key swing states such as Kentucky, West Virginia, Ohio, and Pennsylvania. Much has been written about Hillary Clinton’s ability to attract white, culturally conservative, working-class voters who have massively rejected Barack Obama. Various polls strongly suggest that McCain can capture as much as 20 or even 25 percent of these votes and thereby defeat Obama in November. But the Appalachian coal people may have a hard time swallowing cap-and-trade, which in effect would cap coal, their jobs, and their livelihoods.

To be sure, Obama also favors cap-and-trade, so McCain could win the vote anyway on the cultural grounds of traditional family values, religious faith, pro-war patriotism, and pro-gun individualism. But unless Sen. McCain can address clean-coal development and somehow carve out allowances for it, he may have a much tougher time moving the carbon working class into his column this November.

— Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s Kudlow & Company and author of the daily web blog, Kudlow’s Money Politic$.

People increasingly see the "green agenda" as a cover to increase government control over their lives and to raise taxes. Vaclav Klaus made the point the other day that much of the modern environmental movement is Communism Squared. These people are not about protecting polar bears or fighting global warming. These people are for taking away our freedom, our right to make to choices, to live our own lives in exchange for Big Brother running it. That's the Greens in a nutshell. And the response from our party's presidential nominee is to go along with the Democrats, with the Left to impose that collectivist agenda upon our country. Its not about preserving the environment for our kids and grandkids to enjoy. What's its all about is control - governmental control - of us.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

The speaker said that cap-and-trade was good for the big boys, bad for the people. He preferred Carbon Credits (I think I am remembering this correctly) which he said would enable less energy/polution efficient companies to pay others to be cleaner, while making net carbon be improved.

Carbon credits only come about when there is a cap. They are what is traded in a cap and trade system. If you read any of these Senate bills, you will find that any trading system involves a huge government bureaucracy to adminster the trades and to enforce the caps. And all of this to try to control greehnouse gases that are not proven to have any meaningful impact on climate change. The government grows. The traders get rich. The U.S. is subjected to international oversight. U.S. business are hog-tied. The U.S. economy goes in the tanker. The environmentalists and globalists accomplish the largest wealth distribution scheme ever conceived by man. There is nothing good about cap-and-trade.

I would imagine many in congress are as Prepared for this as Senator Lugar.

The following was on his web site it has since been pulled ( almost 2 years ago now ), but it does still exist on the Chicago Carbon Exchange site.

The copy below is from my saved files.

Lugar Stock Farm, Inc. joins Chicago Climate Exchange® as an Offset Provider (Washington, DC– May 18, 2006) Lugar Stock Farms, Inc., a farm owned by Senator Richard G. Lugar of Indiana and his family, has joined Chicago Climate Exchange (CCX®) as a provider of tradable greenhouse gas emission Offsets.

The 604-acre family-owned farm in Marion County, Indiana produces corn and soybeans. A third of the farm is a classified hardwood tree farm, including significant acreage in black walnut trees that were planted in recent years. Growth of these trees produces oxygen and removes carbon dioxide from the air. The rising concentration of carbon dioxide in the earth’s atmosphere is associated with the risk of global climate change, which could have profound effects on ecosystems, agriculture and human health.

Chicago Climate Exchange (“CCX”) brings together over 170 entities dedicated to building cost-effective, market-based systems for reducing greenhouse gas emissions. Members of CCX include leading companies such as Ford, American Electric Power and IBM, cities such as Chicago and Portland, the State of New Mexico, and major universities, traders and environmental professionals. CCX is an integrated system of rules governing monitoring and independent audit, as well as electronic trading and registry platforms. CCX Members commit to reduce their greenhouse emissions 4% by the end of 2006, and 6% by 2010. Members can reduce emissions internally, and can partner with other members - through trading – to achieve reductions wherever most practical. Trading allows members to comply by financing emission cuts at facilities of other members, or through Offset projects, including reforestation projects. Reforestation and other agricultural projects - continuous conservation tillage, methane capture - mitigate global carbon emissions and yield local environmental benefits, such as cleaner water and wildlife habitat.

“I want to encourage farmers to explore this new opportunity to increase their farm income by using carbon-absorbing environmental practices. We have had testimony in the Senate Agricultural Committee about the potential for farmers to receive ‘green payments’ and now that opportunity can be realized. I would also encourage agricultural and environmental organizations to explore how they may help promote these opportunities among our industries, communities and landowners,” Lugar said.

“Lugar Stock Farms’ membership in CCX demonstrates Senator Lugar’s long-standing personal commitment to sustainable agriculture and forestry. He understands the role that market-based mechanisms can play in rewarding the environmental services provided by farmers, foresters and ranchers. We are honored and proud to be able to further build this environmental market with the help of Senator Lugar’s farm as a source of emission Offsets.” said Dr. Richard L. Sandor, Chairman and CEO of CCX.

Farmers who undertake reforestation, methane collection, continuous conservation tillage or grass plantings may be eligible to earn emission offsets and should contact Nathan Clark at (312) 554-0819.

About Chicago Climate Exchange (CCX): Chicago Climate Exchange is North America's only, and the world's first, legally binding multi-sectoral, rule-based and integrated greenhouse gas emission registry, reduction and trading system. CCX is the only available mechanism through which US based entities may engage in the integrated carbon market with a linked reduction and trading system and is a vital tool for understanding the price of carbon in all operations. CCX members range from large industrial concerns such as DuPont, International Paper, Baxter Healthcare and Temple-Inland, to utilities such as American Electric Power, Tampa Electric and Green Mountain Power, to universities such as Iowa and Minnesota, to non-governmental organizations such as World Resources Institute and Rocky Mountain Institute, to cities such as Portland, OR, Oakland, CA and Chicago, IL, to farmers in Iowa and Nebraska and the Iowa Farm Bureau, to the State of New Mexico, the first U.S. state to join CCX. Eligible emission Offset projects include agricultural soil carbon sequestration, reforestation, landfill and agricultural methane combustion, and switching to lower-emitting such as biomass-based fuels. See www.chicagoclimateexchange.com. ####

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