About half-way through making a windfall profit estimated at 5 billion euros (with a fluctuating dollar, let’s call it an even, still quite understated $6 billion USD) since 2005 from selling carbon credits given to them for free by their governments, European utilities are fretting over the potential cost of extending the Emissions Trading Scheme that’s been so good to them through Kyoto’s 2008-2012 period. Swedish-German utility Vattenfall estimates the cost at up to 1 billion euros a year over the course of Kyoto’s five-year plan. And that’s really bad (warning, German-language text!).

Hmmm…carry the one…aha, it looks like the real problem is that — factoring in the time value of money and presuming that will pay the overhead for running their ration-coupon trading floors — they will only break even. So, given the rhetoric used to promote this scheme (end of the world, etc.), does that really seem such a high-price to pay? Or was your enthusiasm for cap-and-trade really not about the end of days, but maybe something else instead, after all?

Wait, there’s more. Not to be outdone, German flag-carrier Lufthansa chimed in, complaining that a shift to the less irrational, distorting and windfall-conducive approach of selling allocations when the EU extends the very same ETS to aviation, is not a good idea.

“Mandatory auctioning doesn’t make any sense,’ said Lufthansa’s head of environmental issues Karl-Heinz Haag.” Well, knock me over with a bag of economy class peanuts, whooda thunk they’d say that? But wait, it’s better.

The reason this wouldn’t make sense is: “It works like a tax”.

Well, yes, that’s what CBO, green pressure groups, and everyone pushing cap-and-trade in order to avoid having to propose a tax knows. Indeed, take the rent-seeking angle out of it, and that’s entirely the point of imposing such a scheme. After all, even Al “the-cap-n-trader’s-pal” Gore credited the failed BTU tax in 1993 with the Democrats losing Congress (Financial Times, 11/4/06).

Now, before I hear another word about how the US needs to play catch-up with our moral and climate superiors the EU and adopt their ETS — without all of the warts, of course, though no one has yet to articulate how their scheme avoids those — a little additional note from the same story to ice the cake of the ETS’s brownouts, market collapse, and job exporting:

“‘Nobody is chainging investments’, said Guy Turner, analyst at New Carbon Finance. ‘In Germany, they’re still buidling coal-fired lignite power stations’.”

Before “they still build coal plants” is invoked as a “see! don’t cost nuthin’!,” remember those job losses, brownouts, market collapses, and jobs exported. And don’t forget, Kyoto’s Article 18 says the treaty could be made binding and enforceable, but only upon amendment by its Parties. That amendment was proposed, and rejected, during the 2005 Montreal COP (the Saudis proposed it…guess who rejected it? The prize is a EURO coin, cough cough). The U.S. would be the only country finding itself in a “legally binding, enforceable” pact were it to join. European jurisprudence does require such an outcome (and, no, a Directive is not the same thing, as anyone familiar with the Economic Stability Pact and/or European Court of Justice can attest); since early in the 20th century, ours does, however, a reality which doubtless has the citizen-suit pressure groups drooling in anticipation.