Wednesday, February 24, 2010

Carbon Credit Cha-Cha

Our President made us a promise:

Coal burning power plants better pay-up or go out of business. At his behest, The House of Representatives passed the Waxed-Malarkey Bill. The Senate, on the other hand has stuck this bill into the recesses of their dusty shelves. To this legislative inaction, our President is moving to implement Cap and Trade by regulatory fiat.

First up is the Director of the EPA announcing an Endangerment Finding, declaring Carbon Dioxide emissions a pollutant to our environment. Furthermore, it has issued a REQUIREMENT dictating that large industrial facilities that emit at least 25,000 tons of Green House Gases a year will be severely restricted (i.e. regulated and taxed to death, implied).

Well, what is a large Coal Burning Power Plant or large Coke Burning Steel Mill to do? Roll over and die? Nah - Just take a page out of the Puerto Rican Sugar Industry, and dance.

You see, at that time Sugar was King in the Island. Growing it for the ravenous U.S. market required thousands upon thousands of acres. The Social Democrats in government (as all socialists do), resented that the Sugar Industry had gobbled-up all of the acreage for itself and its production. What do they do? In 1941 they passed a law limiting to 500 acres, the amount of land that anyone could own. Did Big Sugar roll over and crumble? Oh Noes! It created a series of paper companies who's sole purpose was to hold title of no more than 500 acres of land. In the Land Registry, all of these paper companies all of a sudden became next door neighbors, and Sugar kept growing upon the land UNIMPEDED (pictures in the above links are of the industry in 1940).

Flash forward to today, the EPA is ready at the hammer to punish energy producers far and wide. If our President and his gaggle of Eco-chondriacs want to run power companies out of business, I say let's do it. Power Companies must adapt and get out of this business. This is my modest proposal.

Let's take Kansas City Power and Light Company KCP&L, for example. As of today, they must pump thousands of tons of Carbon Dioxide into the air. As it stands they are hunkering down to getting walloped for every ton of CO2 that they produce above 25K Tons. I do not know what their real output really is, but for sake of argument let's say that they currently belch out 40K Tons.

What if KCP&L becomes a holding company, and it allows a plethora of companies to form under its sheltering umbrella as follows

A) Company Alfa: In charge of distribution and customer service,

B) Company Zulu: Owner of the physical power plant,

C) Company Bravo: In charge of 1/2 of power production,

D) Company Sierra: In charge of 1/2 of power production.

KCP&L is just the plain repository upon which the ownership of all of these "independent" companies are parked. Thus, it does not pollute.

-Company Alfa (distribution and customer service) does not emit a single molecule of carbon.

-Company Zulu only owns the inert machinery of the power plant (i.e. railroad siding, elevator, furnace, generator, etc) The machines by themselves do not pollute. It is only the burning of the coal that does.

Which brings us to Companies Bravo and Sierra. Company Bravo is in production only between January and June, and Company Sierra from July through December. They both lease the physical plant from Company Zulu for six months out of a year. Personnel running the power plant become contract workers, with 6-month terms. They immediately get "rehired" upon being "dismissed" every June and December. Each company only produces 20K Tons of CO2. To boot, they can even sell their 5 remaining Tons as Credits to AlGore's Carbon Shakedown Exchange Company!

The above sounds like a lot of Bravo-Sierra, but if that's the way the EPA wants to drum the industry down, that's the B.S. that the industry must dance to.

In the business world today there are many holding companies, which shelter even more "independent' companies. This is done mainly to get around our onerous Tax Code.

For example Sears Holdings Company, shelters:

Sears, Roebuck and Company,
The Great Indoors,
Land's End,
Structure Men's Clothing and,
Radio Shack.

If this type of corporate structure is good enough with the IRS and its Tax Code, it will be good enough too with the EPA and its Environmental Code. The precedent is already set, all power companies must do is to follow this corporate structure and make their case.

I say: Put on your Carbon Cha-Cha dancing shoes and DANCE!


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