Monday, February 18, 2008

Kansas legislature "carbon tax" update

Here's an update on the Kansas legislature and the carbon issue I wrote about awhile back. The good news is that it looks like the state is dropping the effort to put a cap on the price of ag offsets at the paltry amount of $3/ton. The bad news, as the Wichita Eagle points out in the story below, is that the state may make decisions now that cost it dearly in the next few years because they refuse to accept the reality that a mandatory, national climate law is coming soon.

[Kansas] Legislature refuses to tackle carbon issue

The Wichita Eagle


The Kansas Legislature seems determined to pay no attention to the sweeping changes under way on energy and environmental issues outside our state's border. In the Holcomb coal-plant debate, lawmakers are acting like children who stick their fingers in their ears and make loud gibberish noises to block out what they don't want to hear.

The Senate last week voted 33-7 to approve a bill that authorizes the huge coal-plant expansion near Holcomb and overturns Kansas Health and Environment Secretary Rod Bremby's permit denial, which was based on the 11 million tons of annual carbon dioxide the plant would emit. The House is rushing to pass a similar bill, setting up a showdown with Gov. Kathleen Sebelius.

Climate change? Not to worry. Carbon regulation? Won't happen here.

In fact, you'd be hard-pressed to find any serious discussion of climate change and how it affects state energy policy under the Capitol dome.

That stunning provincialism and state of denial could be setting up Kansas for a serious economic backlash in years ahead.

Among the warnings coming from beyond our borders: Rep. Henry Waxman, D-Calif., last week questioned the financing of coal-fired plants -- and specifically of the Sunflower Electric Power Corp. project -- in a letter to the U.S. Department of Agriculture's Rural Utilities Service.

"If RUS failed to take (carbon dioxide regulations) into account," he wrote, "it has put both taxpayer funds and Kansas ratepayers in jeopardy. If this plant is built, Kansas ratepayers may be stuck with billions of dollars in stranded assets and skyrocketing costs for power."

Waxman's concerns echoed those of three of the largest Wall Street investment banks, which recently issued a new rule that utilities seeking financing of coal plants must demonstrate in their business plans that they've taken into account the projected future cost of carbon regulation.

Sunflower's project estimates do not appear to include those costs. Is that an economic roll of the dice the Legislature is willing to take? Is this what passes for energy policy in the state?

Kansas lawmakers can choose to ignore these signals if they want.

They can choose to believe that global warming isn't a problem and will have no impact on the state. They can choose to ignore the climate action plans that 36 other states have undertaken. They can choose to override state regulatory rulings. They can even choose to ignore the opinion of a majority of Kansans, who by a 2-1 majority in a recent poll expressed their support for Bremby's Holcomb plant decision.

But that doesn't change the stubborn reality that Washington, D.C., and most of the world are preparing for big changes in energy and environmental regulation that will change the cost-benefit analysis of coal plants.

By choosing to ignore those well-signaled trends, Kansas lawmakers are flirting with economic disaster.

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