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Who Wins Under a Cap-and-Trade System?

exxon

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The idea behind the cap-and-trade system for greenhouse gas emissions is simple: Energy companies that rely mostly on oil and coal will have to pony up big bucks, while those who rely on more diversified forms of power will benefit. The new “Carbon Exposure” (PDF file) study from market research firm PointCarbon digs deeper into who, exactly, the winners and losers are.

Under the system proposed in the Kerry-Boxer bill, energy companies such as Exelon and Pacific Gas & Electric come
out on top, thanks to their use of
low-emissions fleets and diversified forms of alternative energy. But ExxonMobil, for example, will face $5.9 billion in annual losses after being required to buy carbon allowances. It’s no wonder why CEO Rex Tillerson has referred to the system as “doomed to fail.”

Exxon and like companies plan to pass on the costs of cap-and-trade to consumers, leaving us to pay an estimated 13 cents extra per gallon at the pump. The hike is even more drastic in the Midwest, South, and West, where energy prices could leap $10 to $17 per megawatt hour. In fact, after passing the buck, Exxon, Chevron, ConocoPhillips, BP, and Royal Dutch Shell will pay only $247 to $355 million extra for carbon credits.

There is a bright spot on the horizon, though, as cap and trade does seem to be pushing coal-happy utilities like Duke Energy toward solar and wind power for future projects. In many cases, however, these utilities are turning towards alternative energy anyway to hit statewide greenhouse gas emissions targets.

But even if cap-and-trade affects consumers more than it affects energy companies, it’s still a good thing–higher prices at the pump and on the power meter will increase the demand for alternatives.

[Via Green Inc.]

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