In the windy city and I get an email from friend Christian asking me what I think about Obama's recent decision to enforce tighter controls on mercury emissions to avoid hotspots that may occur under a cap and trade system: here's what came to mind:
I honestly don't like cap and trade for that very reason: there is no guarantee that capping and trading leads to real emissions reductions: and no guarantee that the price per unit C is reflected in the damages that it causes: i.e. the price is arbitrarily decided by the market: i think a national policy that sets a national cap on CO2 however may be somewhat effective:
I also think that mercury and CO2 are somewhat different, b.c mercury contributes to fairly serious health disorders: however, the linkage between the two should not be overlooked: I think it would be more appropriate to revamp the clean air act with legislation that addresses CO2 emissions as a pollutant, Past a certain level: fundamentally a carbon tax would have to tax people on certain levels of emission, or else all mammals and other aerobic respirators would be taxed (or tazered)...
what the Europeans seem to be doing is regulating pollutants and CO2 separately, but i also think this is because they have had a tighter control on pollutants (though Scandinavian countries still have a pretty serious issue with heavy metal contamination of the atmosphere, as does much of the old eastern bloc, and pollution persists in all major industrialized areas)...
where I'm really going with all of this is towards a systematic shift in addressing ecosystem services: of which Climate regulation is a subset: if we want to have earth's ecosystems regulate our climate we will have to acknowledge the holistic ways in which they do so: i.e. regulating weather patterns, water movement, Nitrogen and Carbon cycling, etc...
a policy that treats technology as separate and distinct from ecosystem services is sort of doomed from the get go: as it is drawing an artificial boundary between industrial and ecosystem processes: Now: to incorporate this into some sort of public policy is tricky, and not even being thought about (to the best of my knowledge)... we should really be taxing people on polluting the air period: and the overall tax a function of the types of different pollutants being emitted (i.e. there are different costs to emitting clean CO2, and emitting high particulate, NOx, SOx, Hg, etc....) then, there has been quite a bit of scientific study on the movement/cycling of these pollutants in the environment: and using this information it would be possible to set prices based upon the real consequences of emitting each type of pollutant: That would be science and policy, hard to hammer out a consensus on: but once agreed upon, it would be fairly robust, and technically heavy (i.e. harder to legally wrangle out of)...
the idea of trading emissions seems to me a way of people who are in the C intensive industries to capitalize on their activities: the requirement of additionality basically translates to "if you can make money on the carbon market by undertaking this procedure (as versus making money on the manufacturing, or direct operational side of things) then this project is additional" i.e. emit a little less than you were before, and now get paid to emit.... which is a strange way of looking at it I admit, but then again, I'm not running a cement plant...
However, the payment system makes sense from a psychological point of view: as you are rewarding people who emit less than they formerly did, i.e. there is reward associated with a directional activity: reducing one's GHG emissions. And we come full circle to price: a cap and trade system will only be effective if two criteria are met: a) caps are set at meaningful levels and increase periodically to meet a well defined long term goal, and b) the price per unit is regulated and agreed upon by environmentalists, economists and industry, all having an equal say.
Ideally this would work out through some fantastically complex model that takes into account the environmental costs associated with certain rates of emission and sets prices accordingly: i.e. should emissions continue at this rate the risk of property loss, damage to human health, etc.. is in this range: and therefore prices should be set in this range: however this concept would need to be developed.
I see at present at least one way in which the energy market in the States
The current energy grid operates off of the principle of economic dispatch, in that baseline load (of the grid) is met by the most efficient plants that can afford to run at the lowest price per unit of energy. As demand increases, other plants come on line that can only afford to operate at higher per unit prices, the final plants coming on line being those that operate at the least cost efficiency. Now, there is no strict correlate between price and GHG emissions in that scenario: but that would change if prices reflected GHG emissions either via cap and trade or a carbon tax.
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