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EPA’s Love Affair with Carbon About to End

Nick Hodge | Monday January 5th, 2009 | 1 Comment

epa-logo999.jpgThe Environmental Protection Agency is, yet again, not doing the very thing its name implies.
For the umpteenth time in the past few years, the EPA is simply turning its nose up to carbon emissions, as if it shouldn’t and couldn’t regulate them. And that’s bologna.
It started early in 2005, when California asked the EPA if it could more stringently regulate emissions from its millions of automobiles. By 2007, the EPA still hadn’t answered the question, and California sued the EPA in April of that year.
Of course, all this came after most of the civilized world was already three years into the Kyoto Protocol, by which over 150 countries signed-up to voluntarily reduce their emissions by millions of tons.
We better get our act together. Our hubris in failing to regulate emissions on a national level could quickly turn out to be a multi-billion mistake, with expensive ecologic and economic consequences.


Carbon, the Liability Grows
What the EPA has ben avoiding, and the rest of the world has known for years, is that carbon dioxide, along with several other gases, is a greenhouse gas that has a temperature-regulating effect on the planet. When the balance of greenhouse gases is misaligned, in part by human activity, the Earth’s temperature can change.
I’d say preventing the now-familiar consequences of climate change, including damage to the environment, should fall squarely in the lap of the Environmental Protection Agency. And so does the Supreme Court.
When California decided that it wanted to reduce the acceptable amount of carbon emissions from vehicles and the EPA stalled, claiming it didn’t have the authority to regulate greenhouse gases, the Supreme Court ruled, as any third grader could, that the EPA could regulate greenhouse gases. Seems silly, I know.
That ordeal began in 2005 and continues today. It will endure until the administration that rejected Kyoto and worked at every step to ensure the EPA’s impotence is finally finished its reign. The next administration, on the other hand, has already supported some sort of carbon mitigation strategy with financial implications.
It will either be a carbon tax or a cap-and-trade program. Either way, if your business requires dispensing carbon dioxide into the air, the free ride is over. You now have a very expensive liability on your hands.
Carbon, Still the EPA’s Friend
We’re now just a few weeks away from operating in a business climate where carbon could cost billions with the stroke of a left-handed pen. You’ll see coal producers like Peabody (NYSE: BTU) and emission-intensive utilities like Southern Company (NYSE: SO) shaking in their carbon-laden boots.
But the EPA is trying to have just a bit more fun before Obama takes office. In a 19-page memo a few weeks ago, EPA administrator Stephen Johnson said that carbon dioxide isn’t a pollutant that should be regulated when approving new power plants.
I don’t know how that’s possible, or even fathomable, when, just two months ago, the EPA’s own Environmental Appeals Board ruled that the EPA must consider CO2 emissions when determining whether to issue permits for new power plants. It’s hard to believe some of this stuff is real anymore.
At any rate, carbon is about to be regulated. And Corporate America knows it.
Perhaps that’s why Dynegy Inc. (NYSE: DYN), which generates electricity in more than a fifth of the states, recently dissolved a venture with LS Power Associates LP that would have made it the largest proposer of new coal-fired power plants in the country. In a release, the multi-billion-dollar company cited the ongoing credit crisis and “regulatory factors that make development much more uncertain.”
Those ‘regulatory factors’ are limits on carbon emissions bound to be put in place by an Obama administration. Eat your heart out current EPA.
Other utilities better follow Dynegy’s lead. In the incoming president’s own words, “. . .If somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.”
What’ll become of the money that is generated from a carbon tax or cap-and-trade scheme? According to the next president, in addition to finally putting the U.S. on par with the rest of the world when it comes to cleaning up our act, a carbon cap “will also generate billions of dollars that we can invest in solar, wind, biodiesel and other alternative energy approaches.”
So while the EPA’s attempts to inject industry-favorable, do-nothing regulations may have stymied the climate fight of late, carbon is now on the most wanted list. Its abatement will bring with it renewed respect from the international climate community, investment opportunities for alternative energy, and the beginning of the end for mighty king coal.


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  • http://www.super-gas-saver.com Steve

    Depending on whose statistics you believe, coal produces about 48.3% of the power in the US, natural gas generates 21.5%, and oil produces 3%. That means that about 2/3 of the energy production in this country is linked to carbon emissions.
    According to the U.S. EIA, nuclear power (produces no carbon) accounts for about 19.4% and hydroelectric (ditto) is responsible for just shy of 6%. Many environmentalists hate these power sources almost as much as they detest carbon emitting ones due to their long term pollution or the whole damming thing.
    That leaves solar and geothermal, neither of which are real, long term solutions that will serve us any time soon. Other possibilities include personal solar and water generators, great alternatives for those who like to exist “off the grid”. Neither are a real solution for the masses in many locations, though. Try using either one in Manhattan or Chicago.
    Those who say “we have to develop advanced, non carbon emitting power sources” have a great point, however they are just not very realistic in the near term. Fueling the majority of our electric needs from advanced technology is still decades away, even if research is ramped up substantially.
    In the long term there will be a huge economic benefit from being the developer of clean, renewable power sources. In the short term, we must make sure we don’t irrevocably damage our economic viability that will give us the ability to do so.