Is Cap-and-Trade Unfair to North Dakota?

Opposition to the Obama administration's proposed cap-and-trade program for carbon credits is mounting as the implications for states with high carbon emissions become more clear. Among those seeking clarification of the proposed policy is North Dakota Public Service Commissioner Tony Clark, who has called for meetings with industry leaders and the state's congressional delegation regarding the matter.

According to comments made yesterday, Clark believes the tax credits provided under the cap-and-trade plan would be far less than the rate increases that state energy producers would pass along to consumers. Clark went on to say that states such as California would gain an unfair advantage from the plan since their economies are less dependent on coal-fired energy and would therefore likely receive more in tax revenue than consumers would pay out in added energy costs.

According to a chart in today's Wall Street Journal, North Dakota ranks second in total per capita CO2 emissions, estimated at 94.5 tons. Wyoming leads the nation at 154.4 tons per capita. California, meanwhile, is third from the bottom, with 12.8 tons. The state with the least emissions is Rhode Island with 12.1 tons. Note that these are per capita estimates. According the Wall Street Journal, California is the No.2 state in total greenhouse gas emissions, but the total is distributed over a large population and economy. The per capita numbers highlight the potential inequity that Commissioner Clark and others are questioning.

In the opinion piece that accompanied the chart mentioned above, the Wall Street Journal was highly critical of the cap-and-trade plan. "Putting a price on carbon is regressive by definition", according to the article,"because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating."

The article also pointed out that 25 states get more than 50% of their electricity from coal-fired sources--the percentage for Indiana is 94%, for Ohio its 86%--and that these states would see dramatic energy rate hikes compared to states with more diversified energy sources.

Comments in a Detroit News editorial echoed many of the Journal's sentiments. The cap-and-trade plan "is a multibillion-dollar tax hike on everything that Michigan does, including making things, driving cars and burning coal," the editorial stated, while pointing out the Michigan gets 60% of its energy from coal-fired plants and "the state's economy is still reliant on heavy manufacturing such as car and truck assembly and auto parts production."

As the controversy gathers steam, at least one U.S. Senator is pessimistic about chances for cap-and-trade legislation to be passed this year. According to Reuters India, Senator Lisa Maslowski, ranking member of the Senate Energy and Natural Resources Committee, stated that it would be premature to pass cap-and-trade legislation this year in view of the weak economy and the questions that still need to be resolved.