Cap and trade is stupid. It's a form of "carbon credits" designed to create a market for the likes of wall street while allowing for politics to also play a role. The simplest thing to do is TAX the carbon coming out of the ground (oil or coal) or coming into the country. This cost will automatically be passed on to whomever uses that fuel in direct proportion to how much the use. However, we continue to subsidize some carbon producers, so you can clearly see that reducing emissions is NOT the primary agenda here.
The issue with taxing carbon out of the ground is that it doesn't address what is really relevant: carbon being released into the atmosphere. For example, under a carbon tax, there would be no incentive to research something like carbon capture systems.
As for the issue with Wall Street: it would be good to create a market and get Wall Street involved. The politics surrounding Wall Street's involvement in say oil is classic populist dreck: they hate paying more for gas, so they blame "oil speculators" rather than acknowledging the oil traders are just helping the market price-in the fact we're in an era where new oil discoveries come in a firm that's expensive to exploit.
You can always have a seperate credit for sequestration. However, none of the proposedNlong term systems are anywhere close to being as cost effective as going from coal to wind power.
More to the point: a carbon tax introduces price certainty, which (naively) allows efficient long-term planning. (Carbon caps set volume by fiat; carbon taxes set price by fiat. The other variable floats with the market).
You can look at the EU carbon market's total failure as an example. It's a cap system, where the price collapsed almost immediately, and so to date it has had zero effect of any sort [0]. The cap right now is way above what the market actually wants. It's useless.
The opposite -- price overshoots because of a too tight cap + demand inelasticity -- could also be a really bad thing. Both directly from the pain it causes, and indirectly from the predictable political backlash, which would screw up something else in a new & more creative way.
Your analysis of EU Cap is off base. The price collapsed in the first phase for two reasons:
1. They set the cap far too high; and
2. They did not allow banking between phases.
They correct the first error in the second phase of the system. For the second, they still allocated too many permits but the economic collapse in Europe led to far lower output than had been expected, and for a time declining confidence in the future existence of the EU led to a collapse in confidence in the long-term existence of the policy, making "banking" the credits for future abatement less attractive.
Finally, the cap is a "backstop" mechanism, which exists to ensure that the marginal abatement takes place, with inframarginal abatement taking place through, e.g., the Renewables Directive and the Large Combustion Directive as well as very high fuel taxes among many other mechanisms the EU uses to drive renewable energy and consumption efficiency.
The cap worked perfectly from a qualitative perspective - there is a highly visible price on carbon with complete capital market instruments available (forwards, futures, options, etc.) to give long-term investors what they need to make investment decisions. It has been the quantitative parameters that have not been ratcheted high enough. You'd have the same issues with a tax.
Both forms of pricing carbon can work, but both need good design.
I'm not sure - how arbitrarily setting prices introduces certainty? Today the Congress or EPA decides the price is X, tomorrow Republicans take the Congress and the presidency and appoint the head of EPA which drops the price to Y, then next cycle Democrats take the power and rise the price to Z, etc. etc. - where's certainty in that? I don't see any objective way of setting such taxes, and as such - any reason why they would be stable is the price is purely arbitrary and thus subject to political games.
Well it doesn't, no. IF you have stable government policies, than a carbon tax would be a predictable cost, where a cap would be highly volatile. Obviously if the policies are changing too, then you can't predict much of anything.
"I don't see any objective way of setting such taxes,"
How about: estimate the economic damage of a marginal kg of CO2 (external cost), and set the tax equal to that? [0]
As an order-of-magnitude guess: [total climate change damage] / [total CO2 emitted], both discounted to present dollars.
I would personally rather see a carbon tax; it'd be simpler. But I see three big differences with cap and trade that make it more practical.
One is that a cap-and-trade program acknowledges the status quo. There are a lot of businesses that are currently emitting CO2, and saying, "Surprise! Big tax for you!" will generate enormous political resistance. If I understand cap-and-trade programs rightly, we'd start out by giving those businesses the right to keep emitting, but let them sell the right if they aren't using it. Suddenly they have choices, turning the response from, "Rawr! Tax bad!" to "Hm, can I get a competitive advantage from this?"
The second is that in cap-and-trade, the right price for carbon flows not from government fiat, but from market outcomes. What's the right level for a carbon tax to drive the right amount of reduction 15 years out? Hard to say. Cap and trade lets us fix what we care about, the reductions, and then lets market mechanisms work out how to do that most economically.
The third comes from the combination of the first two. The US right is fervently anti-tax, and has been for decades. They are, however, pro-market, at least nominally. Plus, Wall Street loves anything market-like, as it gives them an opportunity to make a buck. A carbon tax will be fought hard by the people facing it before, during, and after. But markets mean winners and losers, and the opportunity for a lot of capitalist reindeer games.
I think that climate change is the most important issue facing humanity. I think we will all have to see lower economic growth if our civilisation is to survive. However, I think slapping a straight tax on would be quite disastrous. There are some high carbon industries that going to be vital in the short and medium term, and simply closing them over night, as a flat rate tax is likely to do, is not the way to get our economy to adjust.
Lower economic growth, better try your bets elsewhere because unless you can suddenly remove a third of the population from the planet we ain't going anywhere but up.
Energy production will simply shift to what is the most affordable and don't expect it to ever become less than today. If anything our energy expenditures will continue to climb. The only change will be how we create it. When cheaper energy becomes available expect usage to dramatically spike, if anything our biggest threat won't be carbon, it will be heat; waste heat.
Carbon tax can be vary effective while having minimal impact. The important point is it causes conservation in the most economically efficient way possible, carbon credits even with a significantly lower tax rate are far more harmful. The real issue is there is less to lobby about just rate and what to do about imports /exports.
I don't think your conclusion follows from your other points. The people pushing for this may very well have emissions reduction as their primary goal, but they are in a system that forces the solution to something like this.
All of our lungs should breathe a collective sigh of relief for not having to deal with so many particulates from coal burning after these rules go into force. Not to mention saving our water from pollution of coal ash.
It will be pleasant to have less of these types of plants in operation:
And this country will be just a little bit greener knowing, we don't need to have trains crossing the country 24/7 from Wyoming just to keep the boilers running.
Is there any data that our lungs are seriously hurt by these particulates right now?
>>> And this country will be just a little bit greener knowing, we don't need to have trains crossing the country 24/7 from Wyoming just to keep the boilers running.
We will have to get the energy from somewhere. The only viable alternative on that scale that I can see is nuclear energy, but given current panic mood about it, does not seem very likely. If not, are we ready to seriously cut energy consumption and accept the accompanying life standards drop? I don't think so.
A cursory reading of the literature would suggest that American Lung Association, Natural Resource Defense Counsel, and Physicians for Social Responsibility all concurred that coal burning does impact our respiratory system.
Your second argument is a bit like saying, well we have to get nicotine from somewhere. If not smoking, what else will people do to get their fix. Are we really ready to give up our nicotine habit?
A lot of people did give up smoking once they figured out it was killing them. If people realize the same thing about coal, I suspect there will be a much faster and stricter set of regulations coming into force.
As for the problem of where to get energy, natural gas is a more efficient and cleaner burning alternative that you didn't mention. Of course if that gas is delivered via fracking there are a whole lot of other problems with ground water pollution. So the energy mix needs to change and it needs to be found in a less impactful fashion.
>>> Your second argument is a bit like saying, well we have to get nicotine from somewhere
No it does not. Human organism has ways of producing substances that work with the same receptors that respond to nicotine. Thus, there is no biological need to introduce nicotine to the organism. More correct analogy would be vitamines, proteins, minerals and other substances that we commonly call "food". If you want to give up food, it would be reasonable to ask, how you replace energetic and nutritional needs of the organism? Modern economy has energetic needs which need to be satisfied if you want to have modern economy. Either you go back to pre-industrial economy and subsistence on the constant brink of starvation, or you produce a lot of energy. There's no other way. The question is how you are going to produce it.
>>> natural gas is a more efficient and cleaner burning alternative that you didn't mention.
As carbon emissions are the problem being discussed, and burning gas produces carbon emissions, naturally I did not consider it as a true alternative with respect to producing energy while reducing carbon emissions.
> We will have to get the energy from somewhere. The only viable alternative on that scale that I can see is nuclear energy, but given current panic mood about it, does not seem very likely. If not, are we ready to seriously cut energy consumption and accept the accompanying life standards drop? I don't think so.
Easy answer: natural gas. It's already a bigger source of electricity than nuclear, and it'll inevitably play a large role in the grid in the future as it neatly solves the dispatch problem (renewables can't really be controlled, but NG plants can be dispatched at a moments notice to make up for lost capacity).
I agree that gas is more clean then the coal, but speaking in context of carbon emissions, does it really change that much? It's still burning hydrocarbons.
- thus, you can calculate approximately how much energy is stored in each of the above fossils per mole of carbon dioxide:
- methane = 4CH = 1640 kJ / mol CO2
- petrol = 2CH + CC = 1170 kJ / mol CO2
- coal = CH + CC = 760 kJ / mol CO2
This is obviously a gross simplification, but hopefully you'll see the outline of why gas is much cleaner than coal. Methane, since it's a gas, also burns much cleaner than liquids or solids since you can better mix the fuel with oxygen, so methane tends to produce much less particulate matter, soot, and other products of incomplete combustion.
EDIT: spenrose below has a great point about uncombusted methane in the atmosphere. Methane is a NASTY greenhouse gas, so it's absolutely worth taking into account how natural gas production affects methane levels in the atmosphere. Namely, there was a worrying metastudy a few months ago about how natural gas production is quite leaky, which has nontrivial greenhouse gas considerations: http://news.stanford.edu/news/2014/february/methane-leaky-ga...
The burning creates about half the CO2 as coal does. Unfortunately unburned methane is a worse GHG in the short term (when it matters). That said, old coal plants are much worse than the best new coal plants, so the regulations are important.
The bracket they give is, as Retuters reports, is "as low as $175 billion or as high as $523 billion" but there is much more costs than specifically lung impact. Unfortunately, direct link from Greenpeace site to the actual study does not work, but I'll try to find it and see what they say about specific health impact.
See edits/corrections. The breakdown starts on page 91. The effects of air pollution on lungs is discussed on page 85. The breakdown pegs the 'best' estimate for health costs from air pollution at $187 billion per year.
Interestingly, the impact on Appalachia, $75 billion per year, is substantially more than the GDP of West Virginia ($57 billion per year). The economic return of coal mining in Appalachia is very probably net negative.
Ever been somewhere where coal is a real issue? I lived in SLC for years and, particularly thanks to the mountains creating a nasty inversion in the winter, there were times when the air was downright toxic. I recall doing a project about it in high school and finding a lot of data related to increased health issues when it got particularly bad.
Of course SLC is an extreme example, most cities never see inversions like that, but it is certainly the case there that probably the largest contributor, and far and away the main source of power, is coal emissions.
I don't doubt there are bad places and bad factories that pollute. But the parent post made it sound as if literally everybody is affected by it, including people not living in SLC or near any coal plants. Which exactly what got me interested to see the data about how I could be affected (curiously, though not unexpectedly, it was received by some as if I was somehow defending coal burning by just asking to see the data that explain how harmful it is).
Are you familiar with the recommendation that children and pregnant women limit their intake of seafood to one serving per week, because of mercury exposure?
Almost half of that mercury comes from coal emissions.
That's an entire type of food being significantly contaminated across the planet. And that's just one of the many nasty things emitted by coal burning.
It is not at all an exaggeration to say that the entire planet is affected by burning coal.
And that is the reason why all coal burning plants are being required to retrofit with equipment to capture mercury and other toxic metals (along with retrofits for SOx and NOx). But that is not good enough.
This is a good point, and illustrates (1) the magnitude of what we are stealing from future generations and (2) that it would be economically disastrous to try to make that difference up overnight via a 200% carbon tax. However, there is no need to make up the difference overnight, or really even to make up the entire difference.
If coal power costs $0.1/kWh, and solar/wind/whatever costs $0.15/kWh, then you would only need a $0.05/kWh equivalent carbon tax to shift investment in research and infrastructure. Or really even just the promise of such a tax in five years. And it is fine for the tax to gradually approach $0.2/kWh equivalent, because by that point the only applications using coal would be specialized and could afford it without wrecking the economy.
Interestingly, most of the external costs they estimate aren't CO2 emissions. Table 4 on page 92. In the "median" case, it's 9.3 c/kWh air pollutants, 4.4 c/kWh public health burden from Appalachian mining, and then 3.1 c/kWh from climate effects. In the "high" case climate goes up to 10.2 c/kWh, still less than half of the 26.9 c/kWh total.
When it comes to coal these efforts and those who support them seem to always make the assumption that there is nothing that can be done to make burning coal "cleaner". After working with the utilities industries (mostly natural gas industries) I can tell you with 100% certainty that more than 80% of the by products from the burning of coal, including CO2, can be removed using scrubbing technologies and filters. In many cases the cost to install these technologies are lower than the costs to convert a plant to natural gas. The problem is that EPA regulations on coal are driving the costs up (by making it harder to mine and transport) to the point where in the long run natural gas is cheaper (though get a change in the US administration and that could sway the other way again)(Edit: Which is why a lot of coal plants are being converted to natural gas). My point is that if coal didn't cost as much as it currently does (because of federal regulation) a number of technologies could be installed that would enable coal plants to continue to be used with much much less environmental impact.
Carbon capture and sequestration (CCS) of CO2 is still in very early development and pilot testing, so costs are quite uncertain, and it is not in use in any reasonably sized coal plant in the US. For all plants >60MW planned to have CCS, they are either still in planning or under construction [1] (note that 60MW is a relatively small power plant).
Quite separate from CO2, there are NOX wet/dry scrubbers and flue gas desulfurization units (removal of SO2). While having a very helpful large reduction in fine particulate (PM2.5) and ozone downwind health impacts (SO2 and NOX form PM2.5 and O3 downwind), it unfortunately does not remove CO2 emissions.
In talking to power companies, my guess is that natural gas is being switched out for coal for many reasons, some more subtle. In part due to new PM2.5 and ozone regulations, in part because in some years it has been cheaper than coal due to new extraction techniques (fracking), and in part because it is easier to dispatch natural gas plants (ramp up and down) to meet electricity demand or high variance renewable energy generation like solar and wind (large spikes in generation).
Natural gas is not being switched out for coal. At least not in the USA. I think that might be a typo. I unfortunately can not site a fancy link like you have but from experience I can tell you that the actual costs I have encountered for projects showed that the price of scrubber tech/equipment (and installation) was less then the cost of a plant conversion from coal to natural gas.
The costs of coal are higher than they were before and are growing. This is a direct result of government regulation. The other problem is that these regulations and the continual call for more is causing a great deal of market uncertainty, which is also driving up costs (not just for the coal but for equipment). Natural gas is currently not in the same position, it is cheaper and less regulated (no mining regulations/legislation). Further, because there has been so much drilled for there is a surplus (supply and demand ==> gas costs are lower). This is mostly because of the lack of good, viable, stable export terminals. So when some terminals open in the future we will see higher natural gas prices.
Coal is being switched out for natural gas here in the US... as a specific example, in 2012, see Plant McDonough right next to Atlanta, GA [1]. As I stated before, the reason is in part due to the effects on air quality (an externality), not just price. For Atlanta with this switch over, it has proven air quality improvements (and no one was surprised by this since it was a coal plant operating full blast right there next to Atlanta!).
I actually agree with you on several points. Agreed that the economics are uncertain, and agreed that scrubbing is very useful, and is definitely worth the cost vs. a full switch over to natural gas (but that doesn't ignore the fact that a switch to natural gas happens for other reasons). And I agree with you that natural gas has higher variance (historically at the least), and higher future expected prices, particularly with exports.
I replied the way I did because you wrote "my guess is that natural gas is being switched out for coal for many reasons". That is not true. That is why I said it might have been a typo. This is clear because in your reply above your write the opposite, that coal is being replaced by natural gas. I agree with this, and as you wrote above, 100%.
EU carbon is trading at $6.88/tonne. Working back from an enrollment mailer I found that TVA's green power program prices it at $42/tonne (in terms of lbs of CO2 emissions avoided by purchasing blocks of renewable generation).
What's the deal with using 2005 as the reference date for the 30% cuts? Do we not have more accurate carbon measurements since then? Is it to make the cuts seem smaller since 2014's emissions are probably bigger than 05. There must be some specific reason to pick a reference date of almost a decade ago. Any thoughts?
2. The recession messed with a lot of energy and consumption so that the years from 2008-2012 or so are something of anomalies.
3. There have been significant rollbacks and cuts to getting datasets complete. It used to be we were only a year or two behind in lots of the published federal data. I've found it to be far more scattershot today, and sometimes just cross my fingers and hope they have managed to stay up to date. That said, the EIA has mostly managed to stay on top of their annual publications.
4. Natural gas prices bottomed out a couple years ago, and we'll have a glut of it for a while, keeping prices much lower than they were in the early 2000s.
5. Coal plants are getting replaced with natural gas combined cycle because of the fuel costs, and also because of new regulations on the new MATS stuff (also in the link above).
6. "Clean" coal has mostly been a bust. Duke Indiana's been trying to get their gasification plant to full capacity for a while, and cost ovverruns has resulted in them asking for rate increases. Also, carbon capture still isn't up to snuff, and underground gasification never took off.
So, by 2030 even if the US cuts emissions by 30%, aren't there going to be 2-3 billion people in emerging markets moving up the economic ladder who will use a lot more energy.
Sure 300 million Americans are currently using a lot of energy but we're going to be much smaller part of the problem by 2030.
How does it help being smaller part of the problem? Sure, there are many ways to be smaller part of the problem - from reducing economic output to increasing the overall problem - but that doesn't seem to be a worthy target. If it does not lead to contraction of the whole problem - e.g. if strict regulations would just make manufacturing move to countries with weaker regulations - then why do it? Just to say "it's not us, it's those guys" - does not sound very helpful.
By that point renewables will be substantially cheaper.
I suspect that at that point, since many countries will be experiencing the effects of climate change full-force (especially the Chinese), there will be economic treaties which will tax according to emissions per capita or a similar metric.
That wasn't my point, at all. It's great that we're committed to reducing our usage by 30%. The problem is that 10x the number of people are going to increase their usage by a lot more than that amount.
Does anyone know of a study on how effective such programs have been in the past (assuming it passes and isn't significantly overturned by the courts)? As in, what is the expected success rate of long-term plans of the US government (or other nations)?
And let's not get any illusions. One of the main real changes in the world that make this possible is outsourcing of production to China, where instead of a mix of oil, nuclear and coal, goods will be produced with nearly exclusively coal. Obama is not an idiot and knows this.
His voters seemingly are not so aware.
So what it should really say is something along the lines of "in an attempt to improve earbon emission numbers in the US, the EPA doubles worldwide carbon emissions, in cooperation with it's European counterpart, moving the emissions where they are not counted on his report card".
Outsourcing manufacturing to China can increase emissions; closing coal plants in the USA does not affect in or outsourcing; therefore your summary is false.
This is not true at all. Making energy more expensive to harvest, store, and consume directly impacts production costs. The higher the price the more organizations move production to areas of lower costs. When they are prevented from moving they pass those costs on to their customers.
That plant broke ground before Fukushima. How many permits have been issued since then: 0. Perfectly good nuclear plants like Vermont Yankee have been shut down (decided not to renew operating license) due to "concerned citizens. We were headed to a nuclear power renascence until that accident happened and took the wind out of the sails.
If it had taken the wind out of the sales then we could have skipped the $6.5 billion federal loan guarantee we issued last February, which is mentioned in the article I linked to.
As for Vermont Yankee, the operating license was renewed in 2011 and remains valid until 2032, but Entergy said that a mix of price controls and economic inefficiency for a small single-reactor design made it uneconomical to continue operations: http://www.entergy.com/news_room/newsrelease.aspx?NR_ID=2769
The fact is that the federal government is putting its money where its mouth is as regards Georgia, and with the President about to announce a target of cutting US CO2 emissions by 30%, the door is open for other nuclear projects. A bigger problem for the industry has been the fall in power prices due to the huge surplus of natural gas that currently obtains in the US, with no sign of decline any time soon.
One thing that carbon taxes and cap-and-trade have going for them: they would increase the pent-up demand for nuclear power, allowing people to build coalitions for a viable, clean, safe future based on nuclear energy.
I hypothesize that with two years remaining, President Obama is again delivering big for the Futuregen 2.0 project in his home state. I mean, if he was really looking to reduce carbon emissions he might make that a priority in his dealings with China and Russia and the developing world. This is politics, not policy in my opinion.
Why, so he can get re-elected? Absurd. the sticking point with getting the BRIC and other developing nations to cut emissions has been the US failure to lead in doing so. The recent Supreme Court ruling that the EPA is authorized to regulate pollution that crosses state lines is a sea change and has been a long time coming.
