Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Tackling climate change with new permits to pollute

07.01.2009
A new way to reduce carbon dioxide emissions and tackle climate change had been unveiled by leading economists.

Under the proposals, companies would buy what are in effect permits to pollute, but the price of those permits would be controlled because the government would retain enough, at a fixed price, to stop the cost increasing above that level.

The economists, whose work is published tomorrow [Tuesday 6 January] along with two other research papers, say it could appeal to supporters of a carbon tax and also to those who favour the alternative, so-called cap-and-trade.

``It may well to turn out to be the kind of proposal that the new White House and the new Congress wind up converging on,'' says Professor Robert N. Stavins, Albert Pratt Professor of Business & Government, at the John F. Kennedy School of Government, Harvard University, and Editor of the Review of Environmental Economics and Policy (REEP) which is publishing the papers.

He added, ``These papers on domestic US climate policy could not be coming at a more important time. The eyes of the world are turned towards Washington. People worldwide are not just asking how the new administration will participate in the global measures going forward, but more importantly, asking what the US is going to do domestically.''

The three papers looking at different ways of tackling carbon emissions are published tomorrow in the online edition of the Oxford University Press journal.

Until now there have been two options for reducing emissions – carbon tax and cap-and-trade. A carbon tax is a tax on the carbon content of fossil fuels. The result is that the more CO2 a company emits, the greater the cost, with most or all of the money raised from the tax possibly redistributed to the public, because the aim is to discourage emissions rather than raise revenue. The problem with this approach is that it leaves uncertain the quantity of emissions reduction that will be achieved.

In the second approach, cap-and-trade, the government would set a limit for the annual emissions, and companies would buy permits or allowances for set amounts. Again, the money raised would be redistributed. While that would directly tackle the amounts of gas produced, the downside is that there is no control on the price of the permits and hence the cost of emissions reductions, resulting in significant cost uncertainty.

The neat solution proposed in one the papers[1] is a hybrid cap-and-trade, where allowances are issued and bought, but a ceiling price enforced by the Government holding back a=2 0proportion of them. They would have a predetermined set price which would ensure that the market price of those already issued would never rise about that price.

``The government would hold allowances for the purpose of selling them at a predetermined price,'' says Professor Stavins. ``As a result they will keep the price of allowances in the market from ever going above that that level, thereby eliminating the upside cost uncertainty that has been of great concern to private industry.''

A second paper[2], suggests a carbon tax with a modification to protect poorer households who may suffer disproportionately. The more tax that energy providers pay, the greater the price rise to consumers. This paper proposes a novel system for distributing the money raised, with the lowest income group getting a credit worth 2.7 per cent of income and the highest income group, a credit worth 0.8 per cent of income.

The third paper[3] argues that a cap-and-trade approach has a number of important advantages, and that a system of tradable permits offers a great deal of flexibility in allocating the value of emissions: `Trading promotes cost-effectiveness, broad participation, and equity in the international context, without the high-level coordination that a tax would require,'' it says.

[1] Balancing Cost and Emissions Certa inty: An Allowance Reserve for Cap-and-Trade

Brian C. Murray (Director for Economic Analysis, Nicholas Institute, and Research Professor, Nicholas School of the Environment, Duke University), Richard G. Newell (Gendell Associate Professor of Energy and Environmental Economics, Duke University), and William A. Pize r (Senior Fellow at Resources for the Future). Review of Environmental Economics and Policy

[2]Designing a Carbon Tax to Reduce US Greenhouse Gas Emissions
Gilbert E. Metcalf (Department of Economics, Tufts University) Review of Environmental Economics and Policy
[3]Cap-and-Trade, Rehabilitated: Using Tradable Permits to Control U.S. Greenhouse Gases

Nathaniel O. Keohane Review of Environmental Economics and Policy

Professor Robert Stavins | EurekAlert!
Further information:
http://www.oxfordjournals.org/

More articles from Ecology, The Environment and Conservation:

nachricht Upcycling of PET Bottles: New Ideas for Resource Cycles in Germany
25.06.2018 | Fraunhofer-Institut für Betriebsfestigkeit und Systemzuverlässigkeit LBF

nachricht Dry landscapes can increase disease transmission
20.06.2018 | Forschungsverbund Berlin e.V.

All articles from Ecology, The Environment and Conservation >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: First evidence on the source of extragalactic particles

For the first time ever, scientists have determined the cosmic origin of highest-energy neutrinos. A research group led by IceCube scientist Elisa Resconi, spokesperson of the Collaborative Research Center SFB1258 at the Technical University of Munich (TUM), provides an important piece of evidence that the particles detected by the IceCube neutrino telescope at the South Pole originate from a galaxy four billion light-years away from Earth.

To rule out other origins with certainty, the team led by neutrino physicist Elisa Resconi from the Technical University of Munich and multi-wavelength...

Im Focus: Magnetic vortices: Two independent magnetic skyrmion phases discovered in a single material

For the first time a team of researchers have discovered two different phases of magnetic skyrmions in a single material. Physicists of the Technical Universities of Munich and Dresden and the University of Cologne can now better study and understand the properties of these magnetic structures, which are important for both basic research and applications.

Whirlpools are an everyday experience in a bath tub: When the water is drained a circular vortex is formed. Typically, such whirls are rather stable. Similar...

Im Focus: Breaking the bond: To take part or not?

Physicists working with Roland Wester at the University of Innsbruck have investigated if and how chemical reactions can be influenced by targeted vibrational excitation of the reactants. They were able to demonstrate that excitation with a laser beam does not affect the efficiency of a chemical exchange reaction and that the excited molecular group acts only as a spectator in the reaction.

A frequently used reaction in organic chemistry is nucleophilic substitution. It plays, for example, an important role in in the synthesis of new chemical...

Im Focus: New 2D Spectroscopy Methods

Optical spectroscopy allows investigating the energy structure and dynamic properties of complex quantum systems. Researchers from the University of Würzburg present two new approaches of coherent two-dimensional spectroscopy.

"Put an excitation into the system and observe how it evolves." According to physicist Professor Tobias Brixner, this is the credo of optical spectroscopy....

Im Focus: Chemical reactions in the light of ultrashort X-ray pulses from free-electron lasers

Ultra-short, high-intensity X-ray flashes open the door to the foundations of chemical reactions. Free-electron lasers generate these kinds of pulses, but there is a catch: the pulses vary in duration and energy. An international research team has now presented a solution: Using a ring of 16 detectors and a circularly polarized laser beam, they can determine both factors with attosecond accuracy.

Free-electron lasers (FELs) generate extremely short and intense X-ray flashes. Researchers can use these flashes to resolve structures with diameters on the...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Leading experts in Diabetes, Metabolism and Biomedical Engineering discuss Precision Medicine

13.07.2018 | Event News

Conference on Laser Polishing – LaP: Fine Tuning for Surfaces

12.07.2018 | Event News

11th European Wood-based Panel Symposium 2018: Meeting point for the wood-based materials industry

03.07.2018 | Event News

 
Latest News

Global study of world's beaches shows threat to protected areas

19.07.2018 | Earth Sciences

New creepy, crawly search and rescue robot developed at Ben-Gurion U

19.07.2018 | Power and Electrical Engineering

Metal too 'gummy' to cut? Draw on it with a Sharpie or glue stick, science says

19.07.2018 | Materials Sciences

VideoLinks
Science & Research
Overview of more VideoLinks >>>