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Old 09-13-2006, 10:09 AM   #1
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Carbon Trading Effectiveness?

The Kyoto Protocol’s costs are coming as a shock to many German businesses and consumers. They’re finding higher utility costs resulting from their government’s implementation of the climate change treaty, The Wall Street Journal reported on September 11.

Reporter Jeffrey Ball noted that in Germany, Kyoto-inspired rules “have upset the business status quo” as they have ended up “creating winners and losers. The winners include utilities that can charge higher rates and profit from trading allowances” while the losers “include energy-intensive manufacturers.”

Later in his article Ball noted that the average German consumer also loses, with “wholesale electricity rates” going up “25% to 60% in the past few years.” Ball wrote that this is because while the tradable carbon allowance credits are free, “the utilities incorporate the value” into the price of electricity.

“It becomes part of your production cost,” explained Ralf Schafer of RWE AG, Germany’s largest utility.

Ball’s reporting contrasted sharply with a report filed 11 days earlier on the “Evening News” by CBS’s John Blackstone. Blackstone’s story portrayed a similar credit-trading plan passed into law in California as a green policy that was favorable to business.

Blackstone noted that an “unlikely supporter,” Pacific Gas & Electric CEO Peter Darbee, praised the plan. What Blackstone neglected to mention is that Darbee’s company, which can import more electricity produced out-of-state, could profit by trading unused credits.

“The utilities signed on to it because they have a way out, and in fact they may benefit because they produce everything out-of-state,” Myron Ebell of the Competitive Enterprise Institute told the Business & Media Institute.

As such, Ebell told BMI, buying energy produced out-of-state would curb emissions created in-state, but those “greenhouse gases” would still be produced outside California as the state shifted away from energy production while growing its energy consumption.

“It’s a nutty thing that they’ve done, and it’s going to have a lot of costs” passed on to the consumer, Ebell concluded of the Kyoto-inspired “greenhouse gas” legislation signed by Gov. Arnold Schwarzenegger (R-Calif.).
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