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Before capping carbon, open eyes to local costs

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The Tampa Tribune

Published: April 8, 2009

Most Americans are eager to do their share to help reduce emissions of greenhouse gases, as long as they don't have to pay for it. Reflecting the national mood and the new president's priorities, Congress is moving forward with contradictory plans to raise the price of carbon while shielding consumers from the costs.

Florida and other states that depend heavily on fossil fuels need to pay close attention to the details. Various versions of a carbon-pricing system are being debated that could financially punish areas like Tampa that burn coal to generate electricity. Promises of tax credits for middle-income workers have eased some of the anxiety, but the key is how any rebates or tax cuts are distributed. If they are distributed equally across the country, they won't come close to offsetting the higher electric bills necessary to seriously crack down on emissions.

The Tax Foundation has estimated that the average annual household cost would be $1,218, which is three times higher than the $400 tax credit being discussed for a single-worker family. In any case, credits distributed through the tax code would be a bad way to compensate for big increases in energy costs because those costs would be much higher in some areas than in others.

The Senate has passed budget amendments that prohibit new taxes or fees on energy that would raise overall costs to consumers. It's unclear what that means, especially when the Congressional Budget Office estimates climate revenue could add $300 billion to the federal budget by 2020.

The risk to coal-using states is that the program would create a wealth transfer from dirty-energy states to states that get more of their electricity from hydroelectric dams, nuclear plants, windmills and solar panels.

The greenhouse-gas strategy most discussed is called cap-and-trade. It would limit the total amount of carbon that could be released into the atmosphere and create a market to buy and sell emissions permits. The federal government could either auction off the first permits or give them away. The goal is to make carbon emissions so expensive that utilities and manufacturers will switch to cleaner technologies.

Unless the price of carbon goes up, the scheme won't work.

There is more at stake than the electric bills of working-class families. Strict limits on emissions will also affect where many energy-hungry businesses relocate or expand, both within the country and within states. High-tech data centers, for example, might gravitate to clean-energy, low-cost areas, taking jobs with them.

Clearly, many vital details have not been thought through.

Even if Congress can't soon agree what to do, Florida is right to continue its push toward greater use of renewable sources of power. Tampa Electric Co. is planning to buy 25 megawatts of power from a new solar plant in Mulberry. Such investments are good for the environment, but they'll also help the local economy if Congress ever does limit carbon emissions. A comprehensive energy law likely would give urban areas credit for their overall efficiency, with rewards for effective transit, dense growth patterns, and per capita carbon consumption.

Florida needs to fight to make sure climate-control laws don't put it at a competitive disadvantage. Meanwhile, the state should continue to clean up its act as fast as it can.

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