The unpopular policy nicknamed “cap-and-tax” has reemerged under a new name.
Think cap-and-trade legislation is all but dead? Don't be so quick to shovel dirt on the effort to curb greenhouse gases. Climate change, reducing greenhouse gas emissions and identifying carbon footprints remain high priorities for the Obama Administration and Congress.
Despite being stalled in the U.S. Senate for almost a year, the so-called cap-and-trade legislation is not yet dead. Repackaged and under a new title, the American Power Act, cap-and-trade legislation is preparing for a comeback. In addition, EPA head Lisa Jackson is pushing her team of regulators to pursue aggressively any regulatory options to implement major components of cap and trade.
Fortunately, only extremely large bakeries and other food manufacturers will be targeted for coverage under the various proposals by Congress and the EPA. Most of the major energy suppliers to the industry, however, are in the cross hairs. Bakers who derive their electrical power from coal will feel the impact in several ways. The first and most direct is through higher rates, as these utilities are forced to offset their emissions via credits. The second, and less direct, way is that as coal power plants convert to natural gas, a new “competitor” for gas and gas infrastructure will emerge. All of this will lead to higher input costs, especially for smaller bakers who may not be able to use sophisticated hedging strategies to manage those costs. Ultimately, the consumer will pay the price at the restaurant or grocery store.
One area where bakers are targeted, apparently inadvertently, is biogenic emissions. Biogenic emissions is a fancy, Washington way of saying naturally occurring emissions, such as the byproduct of fermenting yeast. As bakers well know, yeast is a naturally occurring organism whose entire life and existence is devoted to producing carbon dioxide. In countless meetings on Capitol Hill and with regulators, ABA staff and members have been assured these policy changes are not intended to count and thus capture naturally occurring emissions of CO2.
But bakers were similarly captured under the 1990 Clean Air Act and thus forced to spend precious capital on catalytic oxidizers and other emissions scrubbing equipment. That is fresh in the minds of bakers as they watch this debate unfold. ABA is working feverishly to protect bakers from a similar occurrence and resulting costs a second time, even as broader climate change policy moves forward.