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What is ‘cap and trade’ anyway?

Date Posted: December 4 2009

President Barack Obama is following on a campaign promise to impose caps on the emissions of greenhouse gases from primarily coal-burning power plants. He proposes reducing U.S. emissions 14% below 2005 levels by 2020 and 83% below by 2050. To do so, his plan is to auction off the rights for power plants to emit carbon.

In theory, the cap on emissions will increase the price of fossil-fuel-based energy, and prompt utilities to trade their methods of power production to greener alternatives, like more efficient coal-burners, or wind, solar and even nuclear power.

“The bullets are already flying,” Business Week wrote earlier this year, “but mainly over details of the plan, not the general idea. While there are still fierce opponents of emissions limits, such as the U.S. Chamber of Commerce, much of business is supportive.”

Boilermakers, other unions support climate controls, but warn of jobs threat.

WASHINGTON (PAI) – In a position reiterated by much of organized labor, the Boilermakers told Congress the nation’s unions strongly back the cap-and-trade climate control bill – designed to cut carbon emissions that threaten the environment – but that the legislation must include measures to prevent threats to U.S. jobs.

Testifying in early November to the Senate Finance Committee, which is writing the tax provisions of the climate control cap-and-trade bill, Boilermakers Legislative Director Abraham Breehey said the best ways to cut carbon emissions while putting the maximum number of U.S. workers to work involve building and manning nuclear power plants, followed by “clean coal” technology via “carbon-capture” coal plants. 

Breehey cited a study showing a nuclear plant would create more than 14,000 person-years of work per gigawatt of electricity produced, in construction and later plant operations.  The study from the National Commission on Energy Policy, which included environmental groups, industry, government, the IBEW, the AFL-CIO and the Mine Workers, added a clean-coal carbon plant would come in second, with just under 11,000 person-years of work per gigawatt.  Wind-powered plants trailed behind.

“It is not just jobs or ‘green jobs’ our union is interested in,” Breehey testified.  “Our members are interested in high-quality jobs that enable a clear path to the middle class and that support a family.”

To ensure the construction workers who get jobs building such plants benefit, Breehey advocated inserting a mandate into the cap-and-trade law saying any plants built with its federal funds must be built under rules of the Davis-Bacon Act, which gives prevailing local wages to construction workers.

But the bigger problem, Breehey said, is that without border controls, which would bar importation of “clean energy” technology made dirtily – in other words, in nations without environmental standards in its production – the U.S. would lose the lead in green technology’s production, and jobs with it.

The border controls issue promises to be one of the fights as the Senate considers the cap-and-trade bill, which has now been pushed back to next year. 

Jobs are another issue in the bill.  A group of at least 10 Midwestern Democratic senators, led by Sherrod Brown, D-Ohio, is making the same point that “green production” jobs must stay here at home –  without incentives to export them abroad, especially to cheap-labor no-standard nations.  That’s linked to the border controls, since lack of controls would have the same impact as the job exports.

“Climate policy must not undermine the competitiveness of U.S. manufacturers in the global marketplace,” Breehey warned.  “Industries such as steel, cement and chemicals are more sensitive to cost increases” – such as those needed to retrofit plants to capture carbon and cut global warming – than other sectors of the economy.

The senators who sent their warning about the bill added that without protections for U.S. workers, it would lose their votes, and sink.  The bill is a major cause of the Democratic Obama administration.  Sen. John Kerry, D-Mass., a longtime leader on the issue, is trying to construct a bipartisan coalition for the cap-and-trade bill, by offering the Republicans more support for nuclear power development and offshore oil drilling, in return for their agreement on emissions controls and cap-and-trade.