Think Cap and Trade is Dead – Think Again

By Allen Wilson

Remember when you were a kid and you would “just pretend”?

Well  let’s just pretend for a bit. Just pretend that you are a family of four, house, mortgage, two cars and the kids go to a good public school. You and your spouse both work but you’ve been able to keep pace with the economy and as long as you keep your nose clean at work your jobs are fairly safe. Like many families you spend a good portion of your time ferrying the kids to school activities. You even get to enjoy the occasional night out with the better half.

With all of this, the American Dream, you are able to bank 15% of your joint income each month. Life is good.

Now just imagine that the government tells you your cars are exhausting too much polluting gas, they create more heat that the environment should have to tolerate, and they make too much noise.

You could have them modified but that would cost a bundle and the line for modification is long. When it is done your modified cars will get less mileage and cost more to operate. You can buy new cars but they are very expensive and the manufacturers aren’t able to manufacture enough quick enough. On top of all of that, the new and modified cars may have to meet even more restrictive regulations in the future.

Without the cars you can’t get to work, you may lose your jobs, your kids may have to give up their extra-curricular activities, and you may get a hefty fine if you don’t comply fast enough. Life just took a turn for the worse. That house is in jeopardy, the mortgage may be too much with all the additional costs, forget about the retirement account and calling your congressman won’t help. It’s a rule passed by a government agency. They’d have to pass a law to get it changed and by then your might become a statistic.

Thank goodness it was just pretend. But it isn’t just pretend for the electric power generators in the USA. The US Environmental Protection Agency is proposing four new rules that will cause some power plants to shut down, some to shut down sooner than planned, and others to append large sums to modify their plants which when modified will be less efficient and produce less electricity.

When adopted, these rules will reduce the capacity of the power grid Planning Reserve Margins due to as much as 19% of fossil fired steam capacity. The details are technical and involve cooling systems on the plants, emissions requirements, and disposal of ash, a byproduct of burning the fuels.

The net result is less energy available to the end users, lost jobs, higher demand for project financing which is already suffering from lack of availability, and a higher demand for product which would have to be produced outside the USA. The latter would result for no other reason than the speed of the reaction would tax worldwide production of the necessary modifications.

And the worst part of this scenario is that no new legislation is being passed, these effects are as a result of rules written by the EPA. This is just one more example of government bureaucracy out of touch with the state of the nation. Even a Republican Congress will struggle to get in front of the problem. This is an executive branch initiative. And it may be coming to a power plant near you.

To read more about it go to www.nerc.com.

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