The Carbon Dioxide Dilemma Promising Technologies and Policies (2003) / Chapter Skim
Currently Skimming:
Economic Issues
Economic Issues
Pages 105-122
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Economic Issues
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From page 107... ...
Second, it will be more than a hundred years before we reach the point when the net value of fossil fuels is negative. Even though we are beginning to realize that the net value of fossil fuels is substantially lower than we thought it was because of negative externalities, I assume that fossil fuels will continue to be used and, at the same time, that the optimal level of greenhouse-gas emissions is not zero.
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From page 108... ...
With public goods, the economy often yields what is termed a "market failure," that is, the market fails to provide the right amount of a good or service, in this case, a stable climate. A market failure that damages local commons or global commons is often considered a rationale for a coordinated response, which is often thought to be most effective when taken by a government.
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A very tragic example is the world's fisheries, a global common resource. With some very important exceptions where trading instruments have been used effectively to manage the resource, we have not sufficiently restricted access to fishing stocks.
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From page 110... ...
Second, we divvy up the shares, establishing ownership rights to the property, called an "emission allowance." Third, we require that the emission sources be monitored according to standards and that the emission levels be reported on an ongoing basis. Then we allow emission allowances to be transferred among those who find it advantageous to do so.
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From page 111... ...
The economic advantages of emissions trading arise when there are differences in mitigation costs among emission sources and mitigation projects. In other words, some sources face high costs to cut emissions, and others face low costs to cut or mitigate emissions.
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Fearing that the price might climb too high, Congress established a set-aside pool of allowances for independent power projects at $1,500 a ton. Some people believe that this might be the eventual market price.
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We want to know what it costs to mitigate greenhouse gases. The CCX will provide real market information from actual mitigation activities.
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The founding members include diverse energy, manufacturing, and service sector entities, several with global reach. The initiative has already spread beyond industrial sectors to other major sources of emissions, including a municipal government (the city of Chicago)
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In addition, economic mechanisms will still be necessary a hundred years from now because fossil fuels will continue to be consumed. Markets, which are a proven tool, seem to be the
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From page 116... ...
116 THE CARBON DIOXIDE DILEMMA only logical way to orchestrate efficiently all of the mitigation options (e.g., agriculture, forestry, industry, energy, and transportation)
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From page 117... ...
These technologies will make fossil fuels more expensive, which in turn will help nonfossil-fuel technologies penetrate the market. Sequestration can not only help reduce carbon emissions from fossil fuels, but can also help other technologies enter the marketplace sooner.
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From page 118... ...
The point I want to make is that wind has been called a viable energy source because of a 1.7 cent/kWh production tax credit. If you give fossil-fuel plants a 1.7 cent/kWh production tax credit for sequestration, you will see quite a bit of sequestration at those plants.
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From page 119... ...
Using dollars per ton avoided to compare projects or technologies that have different conditions is really misusing the term. A better analysis can be done using integrated assessment models that include all of these technologies and then ask at what marketplace price of carbon these technologies will advance.
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We should look into four major kinds of reservoirs for carbon sequestration. Three are geologic reservoirs coal beds, aquifers, and oil and gas reservoirs; the fourth is the ocean.
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From page 121... ...
I would rather see a statement that geologic diposal is emerging as a promising option because of A, B and C, than a statement that geologic disposal is worthwhile because it is not ocean disposal.
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