From my post on investor village, thought I would get some discussion going here

Mirant stands to gain 1 to 2 billion in tangible assets in the form of greenhouse gas emission allocations from the Waxman-Markley cap and trade bill when implemented.

Myths 1. Carbon utilities will suffer more than natural gas and nuclear utilities.

Pure Bunk - Allocations will be issued based on CO2 emissions in a base year most likely 2005. As a utility you want to have the most allocations of allowed emissions in terms of allowed tons of CO2e per megawatt of energy produced. Poor Entergy and Exelon are too green going into to the new carbon constrained world they will not have much potential in terms of excess allowances to sell on the open market from a decrease in energy demand and they have minimal potential for fuel switching as an allowance credit generator. Stuck with those zero emission nuclear reactors. poor guys get no credit for being green.

Coal has twice the CO2 emissions per BTU when compared to natural gas. So poor Mirant what to do if forced to cut emissions by 20%, the costs of buying emission allowances on the open market may be up to 20$ per ton. Wake up guys never gonna happen, most modern utility boilers can swith fuels or co-fire fuels . So you wanna 20% foot-print reduction simple then go to 40% natural gas 60% coal firing easy and with the price of natural gas maybe even cheaper.

Those in the know dont want you to know because coal utilities still have to scream bloody murder to Washington so they can come out on top the the best position. Coal Utilities should be selling at a premium because cap and trade will add billions to their asset base in terms of allowances.

So think im blowing some hot air? Its already happened in Europe twice now read the following article;


"A second carbon windfall
| Sourced From Business Spectator |

The European carbon market – the largest in the world by some considerable margin – is having its second price meltdown in three years as European industries find themselves once again with more carbon credits than they need.

The cause this time is not just blatant over-allocation – as it was in 2006 – but the biting effects of the economic downturn, which is reducing manufacturing output by up to 14-15 per cent in some areas.

This is having the perverse effect of delivering yet another windfall to those parts of European industry that receive free permits.

According to market analysts, these industries have been selling excess credits at the rate of some €150 million per week over the last two months. Some in the EU might like to think the companies are reinvesting these windfalls into clean energy or energy efficiency projects, but that seems unlikely in the current market.

The flood of credits into the carbon trading market has caused the European carbon price to slump by two thirds from its northern summer peak of €31 to its current levels of around €11. Some analysts tip it to fall as low as €5 or €6.

This will not quite be the disaster produced a few years ago when the carbon price fell dramatically to less than €1 when it was suddenly realised that European countries had put their hands up for more carbon credits than they needed.

But it does highlight the fraught nature of the carbon market when it is manipulated by government handouts, and the perils of relying on a carbon price as the sole mechanism to forge a retooling of the economy to clean energy.