This legislation which is called the Waxman-Markey Bill (HR 2454) is actually an Energy Policy bill but the part that has caused the most discussion is the Cap and Trade provision. This bill was railroaded through the U.S. House of Representatives with a vote of 219-212 on June 28.

This provision places a cap on the amount of carbon that could be emitted from a given factory or other facility. If a facility emits beyond that cap, it would be required to reduce those emissions below the cap (spending whatever monies are necessary to do so) or pay a tax on the excess emissions. Those who run such a facility could also trade (buy) carbon credits from facilities that are below the limit or buy those credits from entities that have installed various “carbon sinks” such as new forests, or carbon sequestration schemes.

The impact to the citizens in Tennessee and the 3rd Congressional District is in the indirect tax increase, the rising cost of electricity produced from coal fired electricity generating plants and the rising cost of gasoline. In this region about 60% of electricity is produced from coal compared to an average of 50% nationwide which will result in higher electricity cost increases because TVA will convert some coal based generation to non-coal based generation. TVA has a good base of nuclear generation, but, strangely, nuclear energy is only mentioned in the heading of one section of the bill, and the current provisions in the bill provide no benefit for nuclear power generation even though nuclear is totally non-carbon based.

The basis for this legislation is the so-called “man-made Global Climate Change.” It is claimed by a minority of climate scientists that the climate of the earth is trending warmer and this warming trend is caused by the activities of man in releasing carbon into the atmosphere. Furthermore, it is claimed that those activities by man are resulting in a serious enough threat to mankind and the earth’s environment as a whole to warrant expenditure of significant money from the American consumers of energy.

This is the first article on the subject of Cap and Trade and Energy Policy. Future articles will present a further view of the basis for this legislation, a summary of the costs associated with the legislation, the history of the idea of the cap and trade, who is set to benefit from this legislation and, most importantly, what a good energy policy related to electricity might look like.