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Cap and Trade, Native Americans, and Nuclear Power

“What exactly is cap and trade,” a friend asked me recently. “Because it sounds like a good idea to me.”

I’m not an economist, but I have spent a lot of time researching cap and trade over the last three years. During the primaries, I wrote about it for Boston’s Weekly Dig in the context of the front runner’s energy policies.
Back then, cap and trade seemed like a great idea. Thomas Friedman and Paul Krugman, whose columns I often read in the New York Times, both think cap and trade is a good starting point for reeling in our carbon emissions and getting a hold on global climate change. I respect their writing tremendously, but sometimes I wonder if they are fully taking into consideration what this will mean for the working class, the poor, and outside of America, the starving poor. Lately I’ve been reading that cap and trade could increase our energy costs by as much as 30%. I don’t like the idea of rampant pollution because I think that we should be good stewards of the one place in the universe where we know we can survive. That being said, let’s confront the possibility that the damage we’ve already done might not be reversible. I just think we need to question the talking heads who claim their plans will reverse global warming. I think that’s a VERY tall order. Just because we can break it doesn’t mean we can fix it.

A lot of the new legislation on the horizon looks like solutions to a global climate crises, but may lead to something else, ie. shifts of power, bigger government and more taxes, all of which would lead to an increased dependence on the state and therefore less individual freedom. Not a good thing, in my mind.

So there’s two points I’d like to add to the conversation. I hope you’ll hear me out.

Point number one: no serious person doubts that mankind has had an effect on the environment, but is it realistic for us to undo that damage fully, or even slow the momentum? I’m not a fatalist, but just because you can push the boulder off the cliff doesn’t mean you can change the trajectory of its fall. I’m wondering if it might be better to accept the reality of climate change and adapt to it, rather than spend a lot of money on climate change boondoggles. And whose to say that our perceived effects on the climate aren’t happening in conjunction with other complex processes that we have zero control over? In other words, could the world be going through a natural warming period which our carbon emissions are exacerbating. If so, would a reduction in carbon emissions cool the world, or just slow the rate of heating? Or, conversely, if the world naturally would be approaching a period of cooling, which happens every 10,000 years or so (we are due for another), wouldn’t a certain amount of global warming actually turn out to be a good thing?

Point number two: the changes we’re talking about making will have costs. These costs will be reflected in higher prices. Going “green” isn’t going to be cheap or easy even if we all get on the same page about it. So what if we do everything the experts tell us to do, but other big emitters like China, don’t follow suit? Also, it’s not just a matter of politics and policy. At any time, a large volcanic eruption could spew tones of emissions into the air and drastically alter climate within a relatively short period of time. This is what happened when Krakatoa erupted in 1883. The following year, the average global temperature fell 1.2 degrees Celsius. It was known as the year without summer, and crops around the world failed. Krakatoa is active and had a smaller eruption as recently as 1999, and there are many more active volcanos around the Pacific; is it smart to act as if we can change the climate just by changing our habits, when natural events can rapidly undo all the progress we made through cutting back and restructuring out energy portfolios? Some people are arguing that our increased weather incidents, like hurricanes, are a result of global warming, which is blamed squarely on humans. Let’s assume that is true. If we stop all our carbon emissions, would it change things? How long does it take the global climate system to re-balance itself? Is there even such a thing as a balanced climate? In other words, at what period in our planet’s history can we point to and say, “this is the standard of climate we should aspire to.” I think that’s impossible, and at this point in my research, I’m wondering if the cost benefit analysis is falling on the side of adaptation rather than reversal.

My friend asked me how cap and trade works. I told him the basic idea is this: the government establishes an acceptable level of emissions. Once the level is set, the big emitters, namely utility companies, are given quotas. Some utilities like nuclear power plants, solar and wind farms, and hydro electric dams use less than their quotas, so they sell the remainder of their quota to bigger emitters, like coal-fired power plants, where the bulk of our electricity generation comes from. If a utility goes over its quota, it is fined. Fines are additional tax revenue. All of these costs to the utility company will be passed on to the “dirty electricity” consumer (ie. every one of us) in the form of more expensive electricity. Perhaps after several years of higher bills, the public will demand even more fervently that cleaner electricity is provided, but even then, the construction of new facilities takes time. Especially considering how many obstacles there are in the United States preventing utility companies from expanding as quickly as we’d like them to. For example, the youngest nuclear power plant is more than 30 years old, and windmills are back-ordered at least three years. But once you have the windmill, it’s not like you can just plant it in the ground and start making electricity. Take a look at the marathon obstacle course that the Cape Wind project has been through. Better yet, take a look at the documentary my friends have made about Cape Wind. Building energy generation facilities takes a tremendous amount of red-tape navigation.

So the theory is that forcing up the cost of dirty electricity will create more demand for cleaner electricity. But in reality, it’s a lot harder to create cleaner electricity than we’d like it to be. This has nothing to do with technology and everything to do with regulations. Ironically, regulation is what is preventing projects like Cape Wind from coming to fruition.

In defense of those who are fighting against projects like Cape Wind, windmills are noisy and take up a lot of space. Some, like me, think they look cool. Others, like those who live on the southern Cape overlooking Nantucket Sound think giant white towers with spinning blades are a blot on a pristine landscape. Would you be okay with ExxonMobil drilling for oil in Yellowstone? No? Then would you be okay with Yellowstone Wind building windmills up and down the Grand Tetons? I’m not so sure I’d be okay with that either…After all, the coast of Cape Cod is protected national seashore. That law was passed by JFK, whose family famously owns a large compound in Hyannis, and whose views would be dotted with windmills.

These are my worries about cap and trade: we set up a system and start capping before the necessary steps to make way for new energy takes place; and the huge push on clean energy creates unintended consequences which make new problems. We saw this with the disaster of corn-based ethanol, which had a hand in increasing food prices both in wealthy nations like the United States, but also in poor places dependent on humanitarian food air. Another quick example: a law that required more renewable energy powered utilities in the Netherlands led to the acceleration of slash and burn farming on the tropical island of Borneo, where massive palm oil plantations continue to replace important rain forests. Another ironic aside: the second highest demand for palm oil comes from restaurants, especially in areas like NYC that have passed trans-fat bans. Never mind the effect palm oil has on your cholesterol…

I don’t think we can provide for most of our nation’s energy needs with wind, solar, and water anytime in the near future. Perhaps we could follow France’s example and rely more on nuclear energy. That would be a good compromise in my book. But where are we going to build them?

No joke, if I were a leader of a Native American tribe, I would use the casino model and set up dual facilities on tribal lands for the construction of nuclear power plants and the disposal of nuclear waste. I would make deals with the utility companies that stated that the tribe owned the waste once it was stored, but that the utility company had to manage it for the privilege of doing business on tribal lands. And then, in 100 years, when technology for recycling the waste has been developed, the tribe could sell the radioactive material back to the utility company to be used again. Call it a long-term investment for the grandchildren. In the meantime, everyone on the reservation is paid handsomely and lifted from squalor.

But how likely is that? No, I think it is more likely for a cap and trade scheme to go into effect faster than new, greener power plants sprout up, and in the meantime, we all get screwed with higher electricity bills. Let’s just hope that we’re out of the recession before this all starts to happen. A man-made energy crisis on the heels of a banking crisis could be worse than another massive Krakatoa explosion.

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I’m writing this the day after posting. Check out Krugman’s article in today’s Times about the new cap and trade plan.

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