Understanding Cap and Trade
By Ken Fairchild, PE
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To stay current on this important issue, Olsson's Power Electrical team signed up for a "Cap & Trade 101" Webinar, one of a series hosted by Colin Hansen, executive director of the Kansas Municipal Utilities (KMU). This Webinar was designed to share background on issues driving the call for climate legislation and details about the proposed cap and trade mechanisms.
Some major statistics from the presentation included the following:
- The goal is to "cap" then "reduce" the greenhouse gas CO2 levels.
- Forty percent of CO2 emissions are from the electric power sector.
- Coal and natural gas fuel make up 60-70 percent of the U.S.'s electric generation.
- Twenty-three states have 50 percent or higher coal-fired generation, and, of these, 15 states are at 65 percent or higher.
- The American Public Power Association's cost model for the House's bill (HR 2454) predicts a first-year cost increase for a community profile of 68,817 mega-watt hours (65 percent coal, 28 percent gas, and 18.7 percent Western Area Power Administration) to be $257,274 per year. In this example, this community has a population of 3,350 people and 2,922 electric meters. This divides out to be an $88 increase for each electric customer.*
- The same community in 2030 could see an additional cost of $1,884,072 per year.
*These figures were calculated using a very conservative $20 per mission allowance "trade" value. Supply and demand could drive that cost much higher.
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You can reach Ken Fairchild with Olsson's Power Electrical team at kfairchild@oaconsulting.com.
