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Examiner Editorial: U.S. should heed failure of cap and trade in Europe

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Alternative energy
Opinion,Editorial,Environment,Energy Department

Logging was dead in North Carolina a few years ago, but it's booming now with the timber industry hardly able to meet demand. In West Virginia, mining continues despite falling domestic demand and the Environmental Protection Agency's regulatory efforts to shutter the industry permanently.

Big Green environmentalists in America can thank their counterparts on the other side of the Atlantic for these developments. European demand for wood and coal is up, but it can't be satisfied by sources over there due to the European Union's rigorous limits on greenhouse gases. Those limits have created a series of perverse incentives that have boosted Europe's carbon-fuel demand instead of reducing it, forcing consumers there to turn elsewhere, including the U.S., for alternative sources.

Here's how it happened: Environmentalists successfully pushed the EU to embrace a cap-and-trade system to limit carbon-based pollution. They assumed a future of renewable wind and solar energy that would shame other nations into following the EU's example. Under cap and trade, businesses have limits on how much emissions they can produce. If they produce less than their limit, they can sell the difference to others. The idea was to make reducing carbon a profitable enterprise. The EU nations were also granted credits for renewable fuel use.

But renewable energy sources produce too little energy at too high a cost to replace fossil fuels like oil, coal and natural gas. To offset the higher costs, EU regulators issued more carbon credits. Then the regulators recalled that harvested forests eventually grow back, so they began crediting imported America wood pellets as renewable. As a result, the Wall Street Journal recently reported, American pellet exports to Europe that were at negligible levels in 2007 soared to 1.72 million tons last year. Meantime, imports of American coal shot up 73 percent in 2012 because of limits on European coal production, according to the Washington Post.

Europe can at least point to a decline in its carbon output over this period but that has more to do with the global recession than any intentional policy. Indeed, recessions have thus far proven to be the only effective way for nations to reduce carbon output.

Some environmentalists reading this are probably thinking, "The Europe market only failed because the regulators cheated." Maybe, but they cheated because economic incentives to do so proved irresistible. There is simply no way around the fact that the low-carbon economy envisioned by environmentalists depends on renewables that do not produce nearly enough power at affordable costs for America or other advanced economies like the EU.

Liberals often brand conservatives as "anti-science" in global warming discussions, but the EU experience demonstrates that it is the Left that resists facts and logic about the limits of renewables. Remember, the EU's failed cap-and-trade system is the same basic idea that liberals shoved through Speaker Nancy Pelosi's House in 2009 and that President Obama is moving now to establish via Environmental Protection Agency regulations. It didn't work there and it won't work here.

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