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Tuesday, May 26, 2009

So much for cap and trade

Germany is preparing to help domestic industries overcome the economic crisis by cutting electricity bills of that country’s largest energy users. And the bulk of that relief is expected to be in the form of reimbursement to companies for the cost of carbon dioxide emissions trading certificates that utilities currently pay and pass on in their electricity prices, i.e., cap and trade.

Berlin successfully argued at an European Union summit in December that energy-intensive industries should be not be forced to buy emission cap and trade permits between 2013 and 2020. It now wants to go further by compensating energy-intensive companies in the intervening years.

This news comes at a time when so-called “cap and trade” is gaining traction in North American jurisdictions, and most notably with President Barak Obama’s administration, which is trying to pass cap and trade legislation.

Should Germany follow through with its plan, we are sure to see other European countries follow suit and move to exempt entire industries from the regulation lest they simply relocate their operations to more business-friendly nations.

Where will that leave Democrats in Washington who are devoting so much of their efforts to impose the very system on struggling U.S.-based industries that Europe seems to consider economic suicide? Until now the Democrats have pointed to Europe as a model for cap and trade.

It leaves them with a dog that won’t hunt, that’s where. But will they re-think this ill-advised job-killing legislation?

© 2009 Russell G. Campbell

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