Sequestering Thought

I sat in on an interesting meeting today. The presenter was an analyst who studies Exploration and Production (E&P) companies in the oil and natural gas business. At the end and as part of chatter wrapping up the meeting he made an interesting point.

He said that the Obama Environmental Bill essentially forcing certain CO2 emitters to "cap and trade" had an interesting rider - of 300 pages! Apparently, one of the amendments was a concession to coal companies. This amendment would give coal companies some form of credit to pay for the underground sequestering of emitted CO2. Apparently the amount of the credit made one operator in West Virginia pretty confident that profits would be maintained.

This is at least one cautious view on Carbon Sequestration, not to mention that in order to sequester all the coal fired emitted CO2 in the US, you would be sequestering 6x per day the amount of natural gas that is removed from the ground: http://www.awwa.org/files/ClimateTestimony.pdf

These actions by our politicians amaze me. I am not a scientist but similar to ethanol, it sounds as though Carbon Sequestration may not even be Co2 neutral (I am hard pressed to find anyone that will defend corn based ethanol today). In other words we create more of a carbon footprint with the combined megawatt creation through coal and sequestering of the resulting Co2 than in not sequestering at all. Additionally, just like the negative externalises of corn ethanol production, skyrocketing food prices, there are potential negative externalises of sequestering CO2, and the research has not even been completed yet to confirm or deny them!

If you think lying down for Big Coal is audacious, get real. The pols are trying to please everyone (Coal and Environmentalists) and in doing so are just creating more taxes for you and me and a less efficent market on the whole.

This returns to a key point I made in response to a comment yesterday: http://2outof4.blogspot.com/2009/06/thoughtfulness-and-free-markets-one.html

As I think about it more, I think it defines my philosophy toward a lot of the issues highlighted on 2outof4 on a much larger scale. You cannot have a free and competitive market when prices are obfuscated. When you do not have a real market, innovation is suppressed. So, if coal production is artificially made cheaper than say solar through the above credit, then consumers will clearly buy coal. Those guys tolling in the basement will not get their more efficient solar device to market because coal is pricing them out, albeit at a non-market price.

The same is true with regards to the high cost of education, the high cost of health care, the low teachers wages, the high cost of oil, the high cost of a machinist at a GM plant, etc. The politicians that we elect are far too frequently rolling over for the entities that can swing their votes, and not giving us a true free market society in which a rising tide will raise most of the boats.

When government is artificially controlling pricing, the greater cost burden falls on all of us. We can be sure of that.

-2outof4