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Cap and Trade And the Economic Effects

Cap and Trade And the Economic Effects. By: Brandi Thompson, Cody Vojacek, Seth Wenninger, Kelly White. Greenhouse Effect.

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Cap and Trade And the Economic Effects

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  1. Cap and TradeAnd the Economic Effects By: Brandi Thompson, Cody Vojacek, Seth Wenninger, Kelly White

  2. Greenhouse Effect • “The phenomenon whereby the earth's atmosphere traps solar radiation, caused by the presence in the atmosphere of gases such as carbon dioxide, water vapor, and methane that allow incoming sunlight to pass through but absorb heat radiated back from the earth's surface.” • 1st discovered in the 19th century • Gained attention in the 1960’s when it was hypothesized to be increasing global temperatures. • Carbon Dioxide is being targeted • 0.038% of atmosphere • Prior to Industrial revolution - CO2 - 280 ppm • Now - CO2 – 360 ppm • Burning of fossil fuels, mineral and metal production, deforestation

  3. Global Warming • Many scientists believe increased CO2 emissions are increasing global temperatures. • World temperature has increased 1°F since 1970. • Increased melting of glaciers and arctic ice shelves • Decreased animal populations • Fears: • Rising sea levels • Hurricanes, storms, floods, droughts • Disease • Ecosystem disruption

  4. Kyoto Protocol • 160 nations met in Kyoto, Japan in 1997 • “The goal is to lower overall emissions from six greenhouse gases - carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, HFCs, and PFCs.” • Goal was to reduce total emissions by 5.2% of the 1990 level. • Entered into force in 2005 with 187 countries ratifying.

  5. United States Position • Did not ratify Kyoto protocol due to harmful effects on economy • The Bush administration offered incentives to businesses to voluntarily reduce emissions. • There have also been incentives for companies to produce and use renewable energy.

  6. Cap and Trade Bill • In June, 2009 U.S. House of Representatives passed the American Clean Energy and Security Act of 2009. • Requires 20% of electricity to be renewable by 2020. • Improve energy productivity by 2.5% by 2012 • Establishes a cap and trade system • Cut emissions by 17% of the 2005 level by 2020 and by 83% by 2050.

  7. Cap and Trade System • Government sets limit (cap) of emissions • Companies are required to buy permits or allowances to emit gasses, most importantly CO2. • If they emit more than they are allowed, they are taxed. • Companies can sell or trade their allowances to other companies • Each year the nationwide cap is lowered.

  8. The bill now has to be voted on in the senate. • Support has greatly fallen in the last few months. • Republicans are nearly unanimous in their disapproval. • A growing number of democrats and most independents disapprove.

  9. Pros of the Cap-and-Trade Bill • Limiting total U.S. emissions of carbon dioxide - An effort to prevent threatening weather conditions in the Midwest farm states, massive coastal flooding, and frequency in Gulf coast hurricanes. -Reduce carbon emissions by 65% 0f 2005 levels.

  10. Pros of the Cap-and-Trade Bill • Provides bonuses for companies - Companies can sell unused carbon credits to other companies who have not met the goals. - Offers bonus allowances for carbon capture and storage.

  11. Cons of the Cap-and-Trade Bill • Driving already rising energy costs even higher • Obama: Energy prices will “skyrocket.” - Higher prices cause lower industrial output - Greater competition from overseas manufacturers. - The loss of thousands of jobs.

  12. Cons of the Cap-and-Trade Bill • Adding devastation to an already weak economy - Disposable household income would decrease by up to $6,000 by 2030. - Gasoline prices would increase by almost 100% by 2030. - Electricity prices would increase by over 100%. - School and hospitals will experience a tremendous expenditure increase.

  13. Cons of the Cap-and-Trade Bill • Unfairly targets U.S. manufacturers - Industrial sectors will pay twice through additional costs of carbon embedded in energy purchases and higher costs of natural gas and electricity. - Industry sectors carbon emissions have risen 2.6% since 1990. - Residential sectors carbon emissions have risen 29% since 1990.

  14. Our Proposal In response to cap and trade legislation

  15. Suspend Cap and Trade If… • Gas prices reach $5 per gallon • Electricity increases beyond 10% of prices in 2009 • Unemployment increases to 15% • Prevent companies from placing full burden on consumers

  16. Without Fuel Limitation • Cost of living increases • Wages will not increase since profit is not increasing • CNS News • Gas expected to rise to $4.50 by 2050 • With cap and trade • Gas increases to $4.50 by 2030; $5.50 by 2050

  17. Electricity Increases • Gradual increase is natural • Dramatic increase harms small businesses and consumers • Small businesses may close as result of rising costs • Not enough profit to compensate • Consumers • Natural increase projected at $0.04 by 2050 • With C&T: Increases of 22% by 2030

  18. Unemployment Limitation • Restricts unemployment from increasing beyond: 15% • Current rate of unemployment: 10% • Natural rate of unemployment: 5%

  19. Additional Legislation • Government can outline expectations • Require companies to take responsibility • Consumers should not have to accept full transfer of costs

  20. Other Alternative • GOP’s Energy Alternative • American Energy Act • Idea by Pence, Shimkus, and Upton; 3 Republican congressman • Controls CO2 emissions by increasing supply of carbon free nuclear energy • Establishes a goal of licensing 100 new nuclear reactors • Revitalize an entire manufacturing sector- creating hundreds of thousands of jobs • Burdensome regulatory process-fast track approval program for PP applications

  21. Disposal of waste • Safe storage for spent fuel rods • Fuel recycling • Nuclear Regulatory Commission can finish review of national repository without political interference • Gov’t prevented from blocking storage facilities from private company contracts

  22. Own Natural Resources • Areas in the US are off-limits • Allows exploration in the Arctic National Wildlife Refuge • Environmentally safe leasing of oil and natural gas fields in the outer continental shelf in the west. • Revenues from the leases would fund development of tech. to increase clean, renewable energy sources (Wind and solar)

  23. Incentives • Bill offers tax incentives for purchases of new plug-in cars and hybrid vehicles • Expands the successful tax incentives that have encouraged homeowners to make their homes more energy efficient • http://www.youtube.com/watch?v=yeALwQtJa0E

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