Looking out for Nebraskans over cap and trade

I get a fair number of letters, calls and e-mails from many Nebraskans who fear that any cap and trade plan coming out of Washington will damage the economy, especially Nebraska's economy where we rely on large amounts of coal, and our manufacturing and agricultural industries depend largely on affordable electricity and fuel.

I, too, share their concerns and will do all I can to make sure nothing happens that has a big negative impact on our economy. I'm not the only senator who feels this way. Many of my colleagues on both sides of the aisle have similar concerns regarding the bill's impact on their home states.

As a result, I believe that support for the legislation that is being talked about just does not exist. It is highly doubtful that 60 votes can be found to move it forward.

"Cap" and "Trade" Hurts Nebraska

At this point, it's difficult to see how the cap and trade system could avoid hurting states like Nebraska. I am skeptical that putting a "cap" on greenhouse gas emissions and then having a system for power plants and others to "trade" allowances for emissions they produce will work without adversely impacting states like Nebraska.

Like other proposals that have come before the Senate and the House, the Kerry-Lieberman plan still has a steep ramp up of 17 percent reduction of 2005-level carbon emissions by 2020, and an 83 percent reduction by 2050, despite continuing concerns whether the technology will be even available or affordable for our utilities to meet this ambitious goal.

Also, while the authors of the bill believe it has the mechanisms in place to prevent the possibility of manipulation in a future carbon market, I'm not yet convinced that will be the case. The Senate's continuing efforts on Financial Regulatory Reform this month are just another reminder that creating a massive trading system in a short time frame that involves the trading of permits on pollution, with the potential for secondary and derivative markets, is fraught with the potential of price volatility. It also opens multiple opportunities for undue influence on distribution of allowances and speculation on the sale of credits.

Finally, even if you take into account the offsets and incentives put in place in the legislation for rural America, farmers and ranchers are far more likely to face greater increases of production costs. They would likely see significant increases in feed, fuel, and fertilizer and increased electric rates doubling the cost to irrigate their crops. Nebraska farmers would suffer and so would our economy.

Bottom Line

While I do hope the Senate would take the time to address our nation's challenging energy needs, I don't expect a bill to come forward this year, unless it drops the cap and trade provisions. I am not alone in this thinking since senators from coal-dependent states, like Nebraska, will likely refuse to back a bill that has a trade system, or a carbon tax that is bound to raise energy prices.