Greed Goes Green

(enviro-friendly.com)
(enviro-friendly.com)

By: Wayne Brown

President Obama has made it clear that he wants to get Cap & Trade legislation past on his watch and the sooner the better.  Senator John Kerry has clearly expressed that he is in favor or it and wants to move forward.  Former V.P., Al Gore is said to have already profited in the multi-million dollar range with his voluntary carbon credit business.  Rumor has it Obama may be one of the investors in a carbon credit operation in the Chicago area.  Certainly there seems to be a number of folks in high places who are more than willing to move forward with this legislation.  So what does it mean for you and I, the ordinary “Joe Citizen” you might ask?

 

Cap and Trade as a global concept could certainly become quite complex but let’s boil it down to a simple model that we can grasp.  First, there is the reference of “Cap” in the legislation.  Basically, that is a reference to say that this legislation is going to establish upper cap limits for greenhouse gases generation on the basis of how much tonnage of carbon dioxide is released into the atmosphere.  With those caps established various industries will then be analyzed for the amount of carbon footprint they have on an annual basis in the environment.  Carbon credits will be established as a means of offsetting these emissions.  

 

Now, mind you, the carbon credits do not stop the emissions, they simply represent a fee that a company has paid in order to emit that level of carbon dioxide into the atmosphere.  The hope here is that the companies will find this purchase of carbon credits to be an irritating added expense to their operation and look for more and more ways to reduce their dependence on fossil fuel products in order to reduce their carbon footprint.  In reality, there are few real alternatives to fossil fuel use in the near term future that will support the load of industry on a competitive economical basis.  Thus, this purchase of carbon credits really becomes a penalty or tax for emissions. As with all types of fees, taxes, etc., this becomes “overhead expense” to the companies and they simply then build it into the pricing of their products and pass it on to the consumer…you and I.

 

As consumers, we do not have anywhere to ‘pass the expense’ thus we have to absorb it and the effort to reduce carbon emissions then falls at the feet of the individual consumer rather than the large companies who are actually producing them.  So, theoretically, every time you turn on a light, or start your car, or crank the lawn mower, you, as a consumer, are expanding your individual carbon footprint.  You then pay for that expansion through higher prices in the market place or an increase pricing for your electricity based on your proportional share of the total consumption in a given period.  Ultimately, it is simply a tax on the consumer.

 

Now, does someone stand to get rich in the process?   The answer is ‘most definitely’, and herein is the basis for the popularity of the concept.  Yes, we all should be environmentally conscious and do what we can to reasonably take care of our world.  With this carbon credit approach, there will be businesses established (already are out there) who will sell or broker these credits.  They in turn make a margin or fee off of each transaction just like a stockbroker.  Since there will be a defined quantity of carbon credits in the market based on the tonnage cap established in the legislation, these credits will begin to have variable values based on the demand for them in the market by various companies.  Just like stocks, bidding wars could drive the price up or down, and the fees these companies make will likely be a percentage of the agreed upon end price when the transaction is made in the market.  This is the “trade” portion of the name reference.

 

Realistically, corporations which produce products do not look for ways to reduce production.  Given the reality of availability and the associated costs, the near term future result for Cap & Trade will hinge on acquiring enough carbon credits to keep your company producing on a daily basis at the production level necessary to satisfy demand and make a profit.  The status quo will remain and the amount of carbon dioxide released into the atmosphere will be capped at best.  Those companies exceeding their carbon credit level with emissions will likely just be assessed a fine under the legislation.  Thus the government gains revenue from potential fines and the private sector has another avenue to ultimately soak the poor consumer who is standing at the bottom of the consumption ladder and has no where else to pass the expense.  Until companies have a viable way to earn carbon credits which become more profitable to them than making product for sale, they will continue to pass-thru the expenses associated with this legislation.

 

Now ask yourself, if this President is so against the wealthy class getting wealthier, why is he so for this legislation.  There are two apparent reasons, the first of which is that he will likely reap some of that wealth himself if he indeed is invested in the carbon credit business as rumor states.  Secondly, he courts the ‘rabid environmentalist’ vote by pushing this legislation.  The more votes he gathers, the higher his chances of re-election. The same held true with Obama-Care and will hold true with the comprehensive immigration legislation this president will propose.  It’s about money and votes clearly.

 

As you can see the pressure to reduce the carbon footprint in America will clearly fall into the domain of the consumer on the short-term in the form of assessed fees and increased prices.  In most cases, these costs will be assigned to items that are considered essentials to our daily lives, essentials that could become luxuries depending on the price of carbon credits.  The reality is that the American consumer is not likely to do without for very long and will ultimately absorb the costs with a minimal reduction in their normal habits.  Thus, Cap & Trade will simply become a scam which pays well for those who are in the business of buying and selling carbon credits on the open market.  It is certainly capitalism at work but not in a positive way.

 

This is not something we as consumers should just shrug our shoulders and ignore.  We will certainly feel the effects just as if the government decided to tax us for our consumption.  In the end, that is really what this is about…a tax on consumption.  It puts money into government coffers which can then be spent on pork barrel projects by those in high elected places.  While the intention is there to reduce carbon footprint and ultimately reduce the volume of greenhouse gases, the pass-thru to the consumer will minimize the effect and the true end result is that we consumers, we taxpayers, will be paying more taxes to support more tax and spend legislation in America.  The concept certainly has “green” implication but the reality is the green is more about money than the environment.

 

© Copyright WBrown2010.  All Rights Reserved.

 

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Comments 16 comments

sheila b. profile image

sheila b. 6 years ago

These 'greens' deny all we've done to clean up our country. They travel, they see the rest of the world, and they know the U S is the cleanest of all countries. It's just another way to rob us.


breakfastpop profile image

breakfastpop 6 years ago

Wayne, thank you for a clear and concise explanation of yet another fraud perpetrated on the public. I would venture to say that many people don't have a clue about how badly they are going to be affected by this tax, because that is all that it is. Voted awesome!


pick807 profile image

pick807 6 years ago

is there any disclosures the president needs to sign that would let us know for sure if he is invested in these companies?


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@sheila b....very true. In fact, environmentalism is too often more about money that it is our surroundings. The environment simply becomes the platform to perpretrate the scam. WB

@breakfastpop...Thanks Poppy. I really think too many Americans are ignoring this issue thinking that it is something that will only affect the manufacturing and production sector...it is definitely a consumer issue. One estimate I saw sighted the price of gasoline going up by 80 cents per gallon with Cap & Trade in place. WB

@pick807...supposedly the President's assets are in a blind trust while he is in office. Still, blind trust or not, he knows what he is invested in and intersted in for the long term. At the same time, I would guess you would have about as much luck getting an affadavit from him as you would a birth certificate. LOL! WB


eovery profile image

eovery 6 years ago from MIddle of the Boondocks of Iowa

Pretty soon we will be taxed just to breath.

Keep on hubbing!


Tom Whitworth profile image

Tom Whitworth 6 years ago from Moundsville, WV

Wayne,

As a resident of West Virginia this Cap and Trade scheme will put almost 35% of my state's manufacturing, and associated service industries out of business permanently. It's a travesty we can't afford!!!!!!!!!


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@Tom Whitworth...Amen to that Tom. Guess what...based on the lack of alternative fossil fuels sources at the present, it will also likely leave much of America sitting in the dark and cold as well. This is another direct frontal attack on our liberties and welfare done in the name of being "conscientious". WB


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@eovery...Theoretically, since we exhale CO2, we just might have to buy carbon credits to breathe! LOL! WB


TimBryce 6 years ago

Wayne -

As you say, it's about money and votes (and pushing forward a social agenda).

All the Best,

Tim


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@TimBryce....Yes Tim and also another area where too many Americans are apathetic, sadly. Thanks for the read and comment! WB


American Romance profile image

American Romance 6 years ago from America

How come the ones who stand to get rich in this one, get the carbon credit money,? see how ironic this is, they get money for nothing, even if they plant a tree or whateve they get it for nothing, kinda like a giant union, move in and take it for nothing! Yes I'm ranting, but this crap drives me crazy! great write Wayne!


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@American Romance...once this thing gets up and going and the initially level of charges are assessed for corporations to obtain their operating credits, the the trading will start. It is already on a roll in Europe. This could be bigger than the stock market in some ways and one only needs to be set up in the brokerage chain to profit by it. The word on the street is that Al Gore has already seen millions of dollars flow into his organization just on a voluntary basis for purchasing credits. The average joe of the streets is looking at this as if the government plans to tax industry for pollution but it is far bigger and far reaching than that and we are the ones standing at the bottom of the hill that this crap is running down. In the end there is a far greater possibility that people in high places will get rich than there is that the environment will be improved to any great degree. WB


Springboard profile image

Springboard 6 years ago from Wisconsin

Time and time again I just want to slap anyone who shouts out, "Yeah, stick it to the rich! Stick it to the rich!" I've had many a rant about CEO's who rob the till, and yes I DO think they are overpaid and most of America's workers are underpaid...

But that's all for another day.

The reality that so many people simply miss is that corporations don't pay taxes. You point out very correctly that they won't pay these taxes (cap & trade) either. WE pay all taxes. The people. You and I. Businesses are in business to make a profit. Any and all costs incurred by the company will be passed on in the form of higher prices, lower wages, reduced benefits, and job cuts...

Especially any taxes they have to pay.

The interesting thing, as well, is how deep this bill could go. EVERYTHING about every product in the pricing could rise. From the plastic wrapper to the tires on the truck that delivers it and of course the gas—it will all be taxed. We will all pay more for everything we buy, and that's simply less bang for our buck once again, and less money at the end of the day to get ahead and do the fun stuff.

I think Eovery is right. We better close our mouths. Our own CO2 emissions might be next up for grabs.


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@Springboard...I agree! So much of this stuff is not about what it sounds like it is about on the surface and either the people who are writing it do not understand the business cycle in America or they don't care, who knows. When you follow the money, there is no real environmental concern here except from a voting standpoint. It fills that box but ultimately it is a bill about special interest as it applies to making money and bringing America down. If you could track it deep enough, I would not be surprised to find George Soros at the other end of the line. The point would be make that the focus is on fossil fuels and finding alternatives. That's just the point, the viable alternatives which are currently or in the near term available would either bankrupt these businesses or place them into a totally uncompetitive position with their competition who did not make the switch and a bunch of carbon credits will likely not offset the impact on loss and cash flow. The more likely alternative is to consider moving out of America with your manufacturing lock, stock, and barrel to a third world country where you can continue your methods. That is the reality of this legislation...lost business, lost jobs, lost revenue and ultimately more and more burden for the taxpayer who is having greater difficulty finding viable employment. Thanks for the good comments. WB


akirchner profile image

akirchner 6 years ago from Central Oregon

I think blind trust is what we do when we elect our officials, right?

Very informative, Wayne and something else to worry about as we middle Americans get beaten up day in and day out and try to figure out how the heck this happens!

I will have to run this Cap and Trade term by the folks in my redneck town - my fellow Prinevillians as I call them. I have a feeling that they're going to think Cap and Trade means bring in a ball cap and go home with a gun!

Staggering what goes on right in front of our own eyes and brains and we don't see the potential rebound effect on ourselves, the little people.


Wayne Brown profile image

Wayne Brown 6 years ago from Texas Author

@akirchner...Based on my experience in that neck of the woods, I suspect that you will find that it is a popular concept as most "environmentally-correct" concepts in Oregon. That will be the light most folks there will look at it from...the environment thus nothing else matters. If it is for the environment, it must be good. Never mind the pockets that get lined in the process with money. WB

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