HR 2454 - Taxing American Business to Oblivion

HR 2454 (ACES - American Clean Energy and Security Act) is purported to potentially save every American household, on average, $750 by year 2020 and $3,900 by year 2030. This declaration came from the American Council for an Energy-Efficient Economy (ACEEE).

An important claim is that the energy efficiency provisions in the bill will reduce the transitional costs of capping carbon pollution, with the saving from reduced energy usage to be reinvested locally. This reinvestment purports to generate both economic activity and jobs. These claims were made by Steven Nadel, the Executive Director of ACEEE.

"Cap and Trade" is an important provision in this legislation, and is similar to the Clean Air Act provisions of 1990.

The idea behind Cap and Trade is that every business will be limited to the amount of greenhouse gases that can be emitted into the environment, and which will be regulated by "emissions permits" for every ton of CO2 released into the atmosphere. The "cap" is the enforceable maximum limit that the company can emit. The "trade" is that some companies will be able to comply or transition with less expense than others. For those companies that emit less than their "cap", they can "trade" that deficit with other companies (probably for a fee). This theoretically results in an overall reduction in "greenhouse gas" emissions while reducing the risk for some companies that cannot quickly transition without incurring huge penalties levied by the Federal Government.

Over a LONG period of time, the theoretical goal is to reduce U.S. generated "greenhouse gas" emissions by 80 percent by 2050 (42 years from today). Here's the kicker though. It is estimated by organizations friendly to this legislation (like The Center for American Progress) that the taxes (or fines) have the potential to generate $50 billion to $300 billion annually! This is above and beyond all of the new taxes that are being contemplated at both the federal and state level to cope with the current tax revenue shortages being experienced by ever level of government. This is also not to mention an aggressive new implementation for an nationalized health-care option or system that will cost $1.1 trillion over ten years.

The problems are manifold. Cap and Trade has been used in Europe for years and what happened was that relatively "green" West European manufacturers happily sold carbon "credits" to their really dirty East European counterparts who then happily went on polluting to their heart's content. Net result, it wasn't until the recession kicked everybody in the teeth in 2007 that carbon emissions in Europe finally started to drop. But the reason was because fewer people were purchasing products manufactured in Europe, not because their industries were any more "green".

I am not against green technologies. I am very much for them. But make no mistake, the vast majority of so-called "green" energy production schemes (fuel-cell, wind power, geo-thermal, solar, etc) are still immature or implemented on such a small scale as to barely make a dent in the overall power demands of the American consumer. Consider this information: According to the U.S. Department of Energy the breakdown of energy production was: Petroleum (39%), Natural Gas (23%), Coal (22%), Nuclear Electric Power (8%) and "Renewable" (7%). If we break down the "Renewable" category, we find that Solar represents 1%, Hydroelectric 36%, Geothermal 5%, Biomass 53% and Wind 5%.

Think about that for just a minute... Solar energy production in the U.S. in 2007 generated .07% of our total energy production. Wind produced .35%, or 1/3 of one percent of our total energy needs.

So, here's the grind... Even though I agree with Pres. Obama that there is MUCH potential in the creation of green energy sector jobs I do not see how green technology can possibly replace traditional, well-developed and mature energy sources such as petroleum, coal and natural gas. And during that LONG period of time, the American manufacturer is going to be heavily penalized for failing to cap their CO2 emissions. And since only Europe really makes any effort to enforce CO2 emissions, you can be sure that we will continue to lose jobs to Asian manufacturers.

I personally think this whole thing is just a g-d tax scheme anyway.