Cap and Trade ?

[Tom-D]

Can some one explain "Cap And Trade" and how it will effect the aviation industry. I've heard all the political BS, so let's not go there, just how our industry will be effected.
As I understand it, its a fuel tax. other than that, what?

 

[Ravioli]

Hard thing to discuss without some politics.

I learned of it in the 80's in Environmental Economics. (I have a BA in Economics)

The way it works is, you have an umbrella over a region and you Cap the amount of a pollutant (NO2, SO2, etc) that can be generated in that region. Then the firms (or in school we call them polluters) are given their pollution credits that conform to the Cap. Usually there are automatic reductions to the total credits in 5, 10, 15 years.

The CAP portion causes the long term reduction in the region for that pollutant.

Now comes TRADE. Firms have the option to a) ride it out until they are no longer viable with their level of credits, b) modernize to reduce their emissions to meet the new lower caps, or c) BUY the credits on the market and keep on polluting.

This works because the policy goal of reduction is met regardless of the firms choice. All options result in less pollution.

Sounds great, yah? Well, in Southern California the SCAQMD found out that the firms who stay had a windfall. They were selling credits galore because they were already below all the published limits. More often, the A firms would buy for a while until the supply of credits priced them out. Not a lot of evidence of option B being adopted.

In the end, jobs eventually left but the air got cleaner.

So that's an umbrella over SoCal and the jobs that left are in Phoenix, Tucson, etc. where they could fresh build, move existing equipment and escape the rules.

Now some macaroons think Cap and Trade can work nationwide. How can that be? If the natural outcome of the policy is to push industry out, where will they go?

 

[GRG55]

China.

 

[Tom-D]

Hard thing to discuss without some politics.

I learned of it in the 80's in Environmental Economics. (I have a BA in Economics)

The way it works is, you have an umbrella over a region and you Cap the amount of a pollutant (NO2, SO2, etc) that can be generated in that region. Then the firms (or in school we call them polluters) are given their pollution credits that conform to the Cap. Usually there are automatic reductions to the total credits in 5, 10, 15 years.

The CAP portion causes the long term reduction in the region for that pollutant.

Now comes TRADE. Firms have the option to a) ride it out until they are no longer viable with their level of credits, b) modernize to reduce their emissions to meet the new lower caps, or c) BUY the credits on the market and keep on polluting.

This works because the policy goal of reduction is met regardless of the firms choice. All options result in less pollution.

Sounds great, yah? Well, in Southern California the SCAQMD found out that the firms who stay had a windfall. They were selling credits galore because they were already below all the published limits. More often, the A firms would buy for a while until the supply of credits priced them out. Not a lot of evidence of option B being adopted.

In the end, jobs eventually left but the air got cleaner.

So that's an umbrella over SoCal and the jobs that left are in Phoenix, Tucson, etc. where they could fresh build, move existing equipment and escape the rules.

Now some macaroons think Cap and Trade can work nationwide. How can that be? If the natural outcome of the policy is to push industry out, where will they go?

Thanks for that

 

[denverpilot]

You also have to account for the fact that entire nations, as well as sectors and individual businesses will cheat. Any system can be gamed and will be. And these systems are often exceedingly expensive to operate from a regulatory and enforcement perspective.

 

[Jumpmaster]

Can some one explain "Cap And Trade" and how it will effect the aviation industry. I've heard all the political BS, so let's not go there, just how our industry will be effected.
As I understand it, its a fuel tax. other than that, what?

Tom,

Washington just adopted a cap and trade program in the form of the new Clean Air Rule. Ordered by our Governor who failed to get the Legislature to enact a carbon tax or a cap and trade program, the Dept. Of Ecology has implemented a new rule that focuses on industrial emissions (100,000 metric tons C02 equivalent) and the requirement for set-offs, etc. through the marketplace. The offsetting credits can be purchased from certain sources, but primarily only within the State of Washington or in other states having a cap and trade program. At least 10 lawsuits have been filed in federal and state court and the rule has only been in effect less than a week. It's doubtful the Rule will survive but it's up to the courts.

Also, we have a ballot initiative in this election that is carbon tax. The tax will hit you at the gas pump (not sure about AV fuel) and then supposedly roll back the state portion of the sales tax by an equivalent amount.

The more interesting fact is that under the federal Clean Power Plan criteria, Washington has no carbon emission problems; in fact Washington has to virtually do nothing to meet the 2030 federal mandate.the vast majority of our power is from hydro, nuclear and wind. The only coal fired power plant is shutting down in 2018. The number one source of carbon in Washington is automobiles and over the road trucks. A few thousand more hybrid or electric vehicles solves the problem. So one has to wonder why all of the fuss over cap and trade or a carbon tax.

Overall, you, me and the rest of us Washington residents are going to get a personal lesson in cap and trade and carbon reduction programs.

 

[Tom-D]

Tom,

Washington just adopted a cap and trade program in the form of the new Clean Air Rule. Ordered by our Governor who failed to get the Legislature to enact a carbon tax or a cap and trade program, the Dept. Of Ecology has implemented a new rule that focuses on industrial emissions (100,000 metric tons C02 equivalent) and the requirement for set-offs, etc. through the marketplace. The offsetting credits can be purchased from certain sources, but primarily only within the State of Washington or in other states having a cap and trade program. At least 10 lawsuits have been filed in federal and state court and the rule has only been in effect less than a week. It's doubtful the Rule will survive but it's up to the courts.

Also, we have a ballot initiative in this election that is carbon tax. The tax will hit you at the gas pump (not sure about AV fuel) and then supposedly roll back the state portion of the sales tax by an equivalent amount.

The more interesting fact is that under the federal Clean Power Plan criteria, Washington has no carbon emission problems; in fact Washington has to virtually do nothing to meet the 2030 federal mandate.the vast majority of our power is from hydro, nuclear and wind. The only coal fired power plant is shutting down in 2018. The number one source of carbon in Washington is automobiles and over the road trucks. A few thousand more hybrid or electric vehicles solves the problem. So one has to wonder why all of the fuss over cap and trade or a carbon tax.

Overall, you, me and the rest of us Washington residents are going to get a personal lesson in cap and trade and carbon reduction programs.

You are talking I-732, we voted no, to more taxes.
we have already voted by mail in ballot, as every one in the state does.

 

[deonb]

You are talking I-732, we voted no, to more taxes.
we have already voted by mail in ballot, as every one in the state does.

You technically voted for more taxes. Keep in mind I-732 would drop the sales tax by 1% and eliminated the business & occupancy tax.

The main objection against I-732 is that it reduces revenue for the state. It's supposed to be revenue neutral, but it won't be - on average people will save more by the reduces sales tax rate than they would spend on the carbon tax.

According to the calculator, the initiative would save me about $200 per year even with 50 gallons a week consumption of gas/diesel/avgas and another 25000 miles of commercial air travel. That sales tax reduction is quite the kicker.

I think most people would come out ahead... which is the problem with the initiative. There's no way that this thing is revenue neutral.

 

[Tom-D]

That is the problem with most of these they are written in lawyer lingo. It does not surprise me this state wants more money.

But now we are going political and I'm out.

Thanks for the insight as to cap and trade is just another tax.