Cap and Trade affects on the coal industry in Kentucky

Cap and trade is a system by which the government sets an arbitrary level, or “cap”, on the amount of carbon that companies are allowed to emit. Companies must then purchase credits from the government that represent the right to emit a specific amount. Companies that wish to increase their emissions must buy credits (the “trade”) from those who produce less.

Most energy production is from burning coal and natural gas. This produces a gas called carbon dioxide from the complete combustion of carbon with oxygen. Any utilities using coal or natural gas for electricity will be required by law to purchase "carbon credits" from the Federal Government to offset the carbon dioxide that is emitted from the combustion of carbon with oxygen when burned.

In an effort to maintain United State’s competitiveness and productivity, there is not a current cap and trade system in effect. Every cap and trade system proposed in the U.S. Congress has been rejected by not only members, but the general public as well.

Over 95 percent of Kentucky's electricity comes from coal generated power plants. Kentucky is third in the nation in coal production, generating over $3 billion in sales and hundreds of millions in tax revenue. The Kentucky coal industry employs more than 15,000 people.

The "cap and trade" provision will not only devastate the coalfield communities in eastern and western Kentucky, it will destroy large segments of Kentucky's manufacturing base, particularly energy intensive industries like steel and aluminum.

Cap and Trade would have a devastating effect on Kentucky economy. It wouldn't result in a world wide carbon reduction. The cap and trade program would put thousands of Kentuckians out of work, and would put thousands of Kentucky's highest paid union and engineering jobs at risk. The coal mines, power industry, chemical manufacturers, petroleum refineries, steel mines, and auto manufacturers would be put in an Obama made economic crisis. These businesses would end up closing, and would stop expanding. Many coal plants would go over seas where less efficient and less regulated overseas coal plants would produce our products and increase worldwide carbon emissions. Energy cost will increase as will prices.

Kentucky currently produces 30 percent of our nation's steel and aluminum. Together, these industries employ thousands of Kentuckians in communities like Ashland, Russellville, Sebree, Hawesville and Lewisport. The energy tax in the "cap and trade" provision will significantly increase the cost of producing steel and aluminum, putting our companies at a severe competitive disadvantage compared to their competitors in other countries.

High-end estimates suggest that Cap and Trade will cost the average Kentuckian an extra $1000 a year on their utility bills. This increase in cost may come to Kentuckians when they are already boiling over with the consequences of a weak economy and are least able to condone an attack on the Coal industry, the state's backbone.

While a Cap and Trade battle in Congress may or may not materialize; the EPA has reported that they may consider going around Congress via regulatory statute in the Clean Air Act.