The Future of Cap-and-Trade Markets and Nuclear Power in the U.S.

co2-sign.jpgAt last week’s Point Carbon Conference in New York City (October 29-31), policy professionals and industry leaders met to discuss present and future trends in the carbon market and policy realm. Two important likely developments emerged: (1) the U.S. government will implement a cap-and-trade market system, probably by 2009, and (2) the energy sector will meet the growing energy crisis by developing nuclear power plants.
Experts from the Pew Center for Climate Change presented an analysis of the most prominent of the seven cap-and-trade proposals in the 110th Congress. (For a side-by-side comparison, see the Pew Center for Climate Change cap-and-trade proposal chart They remarked that the “tide is turning” in the U.S. House of Representatives when it comes to addressing climate change. Most of the debate between the plans involves devising a system to maintain environmental integrity in a way that fosters economic development. Senate and House members hope to reach consensus on a bill that they intend to pass during the 2008-2009 congressional calendar year. However, without administration input, this process is akin to “playing blackjack without a dealer at the table.”

NRGEnergy evaluated current and future trends in oil/gas prices and carbon output in the energy sector. In the short term, oil prices will rise and make natural gas a more economic alternative. This will have the effect of driving up natural gas prices, which might make oil more attractive in return. Coal will not likely remain a cheap source of energy production with a cap-and-trade market system. With the development of carbon sequestration techniques, however, we can expect to continue to use coal as a major source of energy production. For the most carbon-neutral approach to meeting the growing energy demand, we will need to look towards nuclear plant production. NRGEnergy announced that they are the first energy company to apply for a nuclear power plant license since the Three Mile Island incident.
Can nuclear power and cap-and-trade policies save the day? According to James Lovelock, carbon policies probably won’t have that much of an environmental effect at this stage in the game, but nuclear power is the way to move forward. I feel reluctant to agree with him, given the environmental degradation that comes from nuclear waste disposal and occasional toxic accidents. On the other hand, solar and wind have not yet developed to the point of mass, cheap distribution. As for cap-and-trade policies, it may be too early to judge on their overall effectiveness in enhancing environmental intergrity. Nonetheless, it is a promising direction for the U.S. government to take and one in which we should have started long ago.

Shannon Arvizu, Ph.D., is a clean tech educator and cutting-edge consultant for the auto industry. You can follow her test drives in the cars of the future at