Greenhouse Gas Cap/Trade Fiasco

Discussion in 'Current Events' started by JimofPennsylvan, Sep 24, 2008.

  1. JimofPennsylvan
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    JimofPennsylvan VIP Member

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    With these permits to release greenhouse gases that states are embarking on auctioning off, unless they make profound changes in these programs they are essentially going to be taking their citizens for a ride where they figuratively end-up crashing into a concrete wall at a high rate of speed. Specifically, Americans across the nation, especially our leaders, should be concerned that the way these programs are being handled they will lead to dramatically higher utility bills for American consumers over the long-term.

    The crux of the concern should be about the secondary market for these permits. There is no limits on what prices the buyers, most importantly the electricity producers, will have to pay to acquire these permits in the secondary markets. This is an extremely important consideration because the electricity producer buyers will pass these costs onto the utilities that buy the generated electricity who will pass it onto their utility customers, American consumers. This will be extremely important over time because with the climate change the world is experiencing with hurricanes and droughts, etc. it is a given that power generating companies are going to face tougher restrictions on how much green house gases they can emit, since they are the biggest such polluters in society. Therefore, these permits will become much more precious over time; probably, being so precious that some electricity producing plants will not be able to operate without them because of the technology they use, e.g. some coal power generating technology, which will likely produce unacceptable levels of green house gases. Because these permits will be so precious and necessary for electricity producers in the future these permits will likely end up selling for alarmingly high prices in the secondary markets unless the government takes action. The government should take action now because it will be much harder to do it later because as time goes by permit owners, who bought on the secondary markets, will have likely paid high amounts of money for these permits, so for the government to later step in and pass regulations causing these permits to sell at lower rates to protect consumers such intervention will trigger great opposition from the current permit owners who will likely suffer significant economic losses if the regulations go through.

    The states and/or the Federal Government should do one of two things to remedy this problem. They, through regulations, should limit the sale price of these permits in secondary markets to what the original sale price of the permit was plus factoring in for inflation using a standard inflation index and allow a reasonable marketing fee or the issuer of the permits should on a yearly basis set a maximum permissible re-sale price for these permits factoring in that ultimately utility customers will end ┬ľup paying this permit re-sale price so it should not be too high.

    This Thursday, states that are members of a program called the Regional Greenhouse Gas Initiative are planning to auction off these permits that allow holders to emit green house gases.
    Citizens from those states and Americans across the nation (because if citizens in a state end-up getting socked with crushing electricity bills the Federal government will be expected to come to their aid) should be clamoring about the secondary market issues on these permits that have been outlined above. The end game on these permits to protect consumers should be established before the auctions are held, otherwise it is unwise government action taking place. Again, now is the time to act not after the fact when Americans will have a sub-prime loan like fiasco on their hands.
     
  2. doeton
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    doeton Senior Member

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    what's the reason for being able to sell the permits is?

    wonder if may be it's so that a utility with high costs of reducing gases could go and trade/buy a permit from a company with lowers costs for pollution reduction.

    hmm...something markets leading to more efficient use of resources....gee isn't that supposed to reduce consumer cost?
     
  3. dilloduck
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    dilloduck Diamond Member

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    The reason to sell the permits is to make consumers pay for corporate pollution.
     

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