I started summer school last week. No, I don't ride the short bus. I am taking Social Responsibility and Business Ethics. So of course we are going to be talking a lot about people being unethical. I'm really going to enjoy this class because it will require us to share our opinions on a lot of things.
And if there is one thing I am not short on its opinions.
Then, my position as an environmental compliance specialist at a copper mine also lends me a very unique perspective.
One question that came up in class the other day that I didn't comment on because the conversation turned too rapidly away from it was the proposed CO2 cap and trade system. The question was asked: Is it ethical to trade pollution credits?
The simple answer is that it is unethical not to. If a production facility is told to simply cap their emissions they will do so precisely at the legal limit because there is no economic incentive to do otherwise. Where, if the same facility is rewarded for reducing their emissions below the required limit by being allowed to sale the excess pollution to less clean facilities, they will do so.
The great part is that the "dirty" facility that is purchasing the excess credit will still be limited by pollutant limits because there is a financial disincentive to purchase credits.How cap and trade really excels is in the second round of emission reductions.
Then, say five years into the program, the government reduces emission limits even further than the initial round and the most innovative polluters have prepared by installing even better control technologies.
Also, if an environmental NGO wants to be forward thinking, they can purchase the excess credits thereby directly reducing pollution. It would be unethical to use any other system because no other system works as smoothly or efficiently to reduce pollution
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5 comments:
Thanks for the lesson... I had no idea about pollution credits etc.
You guys are amazing... kids, work, summer school... just as well you are still young.. :-)
The problem (unfairness) with cap and trade systems does not come from inside the same region, it is when it crosses political borders...
Are you going to tell Mississippi that they can't expand their industry because New Jersey already "owns" Mississippi's share of 199X emission levels? That is why global cap and trade systems will not work, as we have seen. China, India, and the like, although major players, truely are "developing".
You are right that it is probably the best system we have, but it still will not work accross political borders precisely for its "unfairness". Its effectiveness will only be if it leads to new technologies that are more cost effective than what the undeveloped nations have right now.
Bro,
Even with the political boundaries factored in. The US is in a position economically to shift it's electrical production to renewable resourses. That alone would be worth selling the credits to other countries.
Bro,
The sad truth is that the fastest way to kill Kyoto would be for the US to sign it. First of all the renewable energy wouldn't appear overnight so those big US companies would run out and have the ability to pay far more for carbon credits than others. The shear spike in price of the US entering that market would lead to many countries realizing the true cost of Kyoto and killing any hopes of improving it in 2012 (if they even honor their commitments in the first place). You are right that the US lead in technology would eventually lead to selling credits but not at first and not for a long time. You have to remember that Kyoto (and most other proposals) are based on 1990 emissions when the US was in recession just before a period of rapid expansion. The US is much further past those emission levels than most of its industrialized partners. That is why Russia love Kyoto so much, they may b actually lower than 1990 levels right now making them a net exporter from day one! (I don't know exactly where they are but I have heard that statistic before)
I think it is an idealistic goal and the cap and trade is the only solution that even gets out of the starting block but I would bet money that given the true market forces if the US signed Kyoto, other countries would back out... jmho
Hey, I'm with you there. I think it was very astute of W to propose a new plan. It will allow us to belly up to the table, but it won't have to be the Kyoto table.
I'm sure that most rational folks realize that in order for the system to work we need to have EVERY nation on board. And to do that you need to allow nations that are moving to industrial economies to do so without hamstrings.
The best thing that could happen to switch America away from fossil fuels isn't regulation. It is a sustained spike in the oil market. The current oil prices actually make alternatives attractive which will eventually lead to economies of scale that will allow them to compete even as prices start falling once oil demand drops below output levels.
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