WISHING FOR TAX, GETTING READY FOR CAP-AND-TRADE IN FLA

Despite the fact that this article is about Florida and yet not about the presidential primary, it still is worth taking a look at.

In a recent Florida discussion about the coming U.S. emissions trading plan, a speaker posed the crucial question of our time: What about a tax on carbon and other emissions? Is a cap-and-trade system that caps emissions and lets market forces drive businesses and industries to their own means the only viable choice?

The advantage of a tax is that everybody can know exactly how much emissions will cost. The disadvantage is that it’s a tax and virtually politically impossible. The advantage of a cap-and-trade system is that everybody believes in the power and wisdom of the market. The disadvantage is that nobody knows for sure what the market will do.

Reassuringly, the EU has several years of experience in a cap-and-trade system from which the U.S. and other nations can learn and thereby avoid pitfalls. Mike Sole, Secretary, Florida Department of Environmental Protection: "We're very fortunate that carbon markets have been developed so we can see what works and what may need some adjusting…

Observing Florida’s preparations for the coming U.S. emissions trading system is instructive. Alex Sink, Florida’s Chief Financial Officer: "What we've come to learn is that the impact of climate change has financial impact in many different ways…We want to be investing in the companies that are going to be at the leading edge of taking advantage of these (clean-energy) opportunities."

Either way there will be costs. (click to enlarge)

FPL seeks flat fee on carbon
Kristi E. Swartz, January 19, 2008 (Palm Beach Post)

WHO
Florida Power & Light Co., a subsidiary of FPL Group Inc. (Christopher Chapel, director of governmental affairs); United States Climate Action Partnership (USCAP), a 35 corporation and clean-energy advocates group; Mike Sole, Secretary, Florida Department of Environmental Protection; Alex Sink, Florida Chief Financial Officer

WHAT
The FPL representative and others discussed measures for determing the price of carbon dioxide and other greenhouse gas emissions in the generating of energy. FPL advocates a flat fee $10 per-ton on carbon dioxide or carbon dioxide equivalents (CO2e) with an annual $2/ton increase. US CAP’s Call For Action vigorously advocates for the cap-and-trade system.

An FPL-operated solar power plant in California. FPL is now developing a prototype solar power plant in Florida. (click to enlarge)

WHEN
- The subject of carbon pricing was discussed at the Emerging Opportunities in Carbon Markets conference January 17-18.
- Proposals for a national cap-and-trade system are presently under consideration by the U.S. Senate.
- Florida Governor Charlie Christ signed a series of executive orders in July 2007 to set FL in action on the development of New Energies. One of the orders was aimed at controlling and marketing emissions.

WHERE
The conference was at the Westin Colonnade in Coral Gables, FL.

WHY
- Governor Charlie Christ has formed an action team to prepare the state for the coming cost of carbon. FL Secretary of Environmental Protection Sole is gathering resources from business leaders, clean-energy advocates and financial experts to guide the state toward New Energy development.
- FL CFO Alex Sink is preparing the state treasury to identify and evaluate risks associated with climate change. He is also considering the development of a state clean energy fund.
- FPL is working with Palo Alto, CA-based Ausra on a 10 megawatt pilot solar thermal power plant. When it proves the concept, FPL and Ausra will develop a 300 megawatt plant for Florida.

The most important description of the carbon tax. (click to enlarge)

QUOTES
- Chapel, FPL: "We hope the market sets a good price…We also are political realists and realize that it's much more likely that this country will have some sort of cap and trade…"
- Sole, FL Secretary of Environmental Protection: "We're very fortunate that carbon markets have been developed so we can see what works and what may need some adjusting…Everybody is watching the news and looking at what is going on in the price of gasoline…Why should Florida not invest in the resources that are here today in biomass, wind and solar, that we can generate profit from, that will help our economy and not the economy of a foreign nation?"