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Carbon tax vs. cap and trade

May 17, 2009

In today’s Messenger-Inquirer, Reporter Jim Mayse has taken a look at efforts to get a handle on carbon emissions at coal-fired power plants.

Hancock County is at the center of some of those efforts with a test well funded by energy industry giants Peabody Energy Corp., ConocoPhillips and E.ON U.S. and state dollars. The well is testing the viability of the long-term storage of carbon dioxide in rock formations thousands of feet underground.

Such research is prompted in part by talk at the federal level of enacting a system to reduce carbon emissions from coal-fired plants. The top two solutions being bandied about are either taxing carbon emissions at power plants or creating a “cap and trade” system for allowances.

New York Times Reporter John Broder has examined the background of the “cap and trade” system, in particular its origins as a pollution-reduction theory beginning in the late 1980s. The system developed then to deal with sulfur dioxide and the acid rain it produced helped the country get a handle on that environmental issue.

But as Broder notes, the carbon issue is worldwide, not just regional or nationally, which could make a cap and trade system more difficult to implement.

The debate about how to limit climate-endangering emissions is gearing up as Congress begins to grapple with how to proceed.

It’s a good goal – to reduce carbon emissions – but one that’s going to be guided more than it should be by politics with the energy industry spending millions on lobbying. In the end, the cost of whatever system is imposed could have an impact more on the wallets of the consumers of energy rather than the producers.

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