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What will carbon caps cost Florida?


Figuring how much a new cap-and-trade system might cost the average Floridian and who will win and lose in business proves as complex and controversial as the climate.

Advocates of "cap-and-trade" say the state could win big, given so much sun to feed solar panels and cropland for future biofuels.

But opponents warn a federal plan to limit carbon dioxide and other greenhouse gases amounts to energy rationing and would decimate jobs in Florida and nationwide.

Estimates of what it will cost the average household range from a $72 annual savings on energy bills to an extra $3,100 a year. And even the cost of doing nothing defies precise, apolitical figures.

The bill, which passed the U.S. House of Representatives late Friday, would:

Cut carbon emissions by 17 percent by 2020 and about 80 percent by 2050 (compared with 2005 levels).

Force electric utilities to meet 20 percent of their electricity demand with renewable-energy sources and energy efficiency by 2020.

Create new energy-saving standards for buildings, appliances and industry.

The bill still must pass the Senate and be signed by the president to become law.

While Florida farmers would get paid to store carbon, critics such as the Heritage Foundation, a conservative think tank in Washington, D.C., say the money farmers make from carbon offsets won’t make up for their losses from increased energy costs.

And the foundation estimates an average family would see its energy bill increase by $1,500 a year.

But another analysis, released by the nonprofit Natural Resources Defense Council, says that the average American will save about $6 on his or her monthly electric bill because of the bill’s consumer-protection provisions. Floridians would save $4.90.

"I think one of the things that we have done very poorly is capture the economic value of our natural environment," said Randall Parkinson, an environmental consultant in Melbourne who supports the bill. "What is the value of clean air? What is the value of clean energy?

"We haven’t come up with a way of measuring that, so I think it always ends up getting underestimated."

How it works

In theory, cap-and trade systems reduce overall environmental compliance costs, proponents say, because it’s cheaper to buy pollution permits or credits from firms that can cut emissions more cheaply. The government shrinks available permits over time, cutting overall emissions.

Under the program, the federal government would cap overall pollution from power plants, factories and refineries and issue allowances for polluters. Most allowances would be given away. About 15 percent would be auctioned. The proceeds would be used to help offset higher energy costs for low-income families and individuals.

U.S. Rep. Bill Posey, R-Rockledge, says the plan could cost America 2.5 million jobs. He called the Congressional Budget Office estimate of $175 a year per household "fatally flawed" and no longer applicable, because days after the estimate, more than 600 pages were added to the climate bill.

The most critical flaw is that CBO picked 2020 as the basis for its estimate, he said, which is before the most costly parts of the bill kick in.

"Most estimates conclude that it will result in $1 trillion to $2 trillion in lost economic activity in the U.S., translating into a loss of over 2.5 million jobs," Posey said in a statement. "The CBO fails to incorporate tens of billions of increased costs to the states which will be passed on through higher state taxes," he said.

"When you factor in the deficiencies of the CBO estimate, most analyses put the cost estimate at between $750 and $3,100 per year."

The U.S. Environmental Protection Agency estimates the per-household cost at $80 to $110 a year.

FPL a big winner

Among the biggest winners in a cap-and-trade system would be low-carbon-emitting and nuclear power generators, such as Florida Power & Light Co., which could sell other dirtier polluters carbon allowances. FPL is the largest renewable energy and wind producer in the country.

Capping and pricing carbon is "the equivalent of buying an insurance policy against the worst effects of climate change, such as more intense hurricanes and droughts," FPL Group Chief Executive Officer Lew Hay and Environmental Defense Fund President Fred Krupp wrote in a FLORIDA TODAY guest column Thursday.

They point to success of the acid-rain program in the 1990s as proof that cap-and-trade can work with carbon dioxide as well.

But William Yeatman, energy policy analyst for Competitive Enterprise Institute, a nonprofit libertarian think tank, sees cap-and-trade as a giveaway to Wall Street.

"Is Goldman Sachs for this? You bet. Why? They get to broker the deals. It puts a value on a ton of carbon. By creating this commodity, somebody’s going to have to trade it," Yeatman said.

Enron had pushed for a cap-and-trade system for years as a way to increase energy’s market price. So have renewable-energy producers.

Florida could become an incubator for green technologies, advocates of cap-and-trade say.

"Renewable-energy technologies get an extra benefit in the marketplace," said Philip Fairey, deputy director of the Florida Solar Energy Center in Cocoa.

"Solar basically creates carbon credits that can be sold in the marketplace," he explained.

Good for Florida?

A recent study at the University of California-Berkeley, commissioned by the Environmental Defense Fund, concluded that the cost of cap-and-trade to Florida’s economy would be negligible, even under a worst-case scenario, and are far outweighed by the potential economic damages if nothing’s done.

They assume stronger hurricanes, requiring more beach renourishment, coastal armoring and other countermeasures to adapt to more extreme weather events.

But some studies have suggested fewer hurricanes would form in a warmer world.

The Berkeley study predicts Florida’s economy will grow from the current $809 billion to about $1.5 trillion in 18 years. Under a carbon cap, Florida would reach that same growth only two months later, they found.

Fairey of the Florida Solar Energy Center is convinced of the payoff.

"All of the scientific studies indicate that it’s going to cost a tremendous amount less to do it now, than if we don’t do anything at all," he said.

Contact Waymer at 242-3663 or