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View Full Version : Emissions trading scheme - please explain



kick
20th May 10, 08:48 PM
This is not a thread about whether global warming is real but rather what simply is an Emission tradings scheme, how does it work, will it work etc.

For example, i understand that first you seek to measure co2 production and then set limits which if you go over you have to purchase other businesses credits.

Then what, does the government get the money, if so how do they spend it?

I did see a news report that many African nations at the latest round of climate meetings wanted compensation for the fact that developed nations had screwed the world, and a significant portion (billions) of ETS funds were proposed to be given to underdeveloped nations as 'compensation'

With the trading if I run a business with very low emissions, and I trade them to say a mining company, does any carbon actually get reduced or we just figuratively trade our emissions and feel better about it.

Do any countries have one up and running, if so where does the money flow?

kick
23rd May 10, 11:11 PM
This is what I thought, I dont think anyone can in plain language describe what an ETS is or how it is supposed to help.

We can talk about whether Global warming is real, or even man made or in our control, but if we cant fix it what does it matter.

Just a thought.

Conde Koma
24th May 10, 01:51 AM
The process is called "Cap and Trade," so after the initial cap, you are no longer reducing emissions.

Theoretically, after the cap, people would cease to produce more emissions total, and either buy more credits to produce more individually, or improve their technology to become more efficient.

If you stand to make more money just producing more and paying the fines for the excess emissions, then you're increasing the total amount of emissions produced.

The credits are supposed to be distributed by the government, either by auction or by handing them out in proportion to emissions produced. Of course, this gives more incentive to produce more emissions to get more credits, and kind of screws over any smaller sized business that wants in on the action.

Also theoretically, the money paid to the government for the credits or fines should be going to reducing the damage done by the emissions, or by reducing the amount of greenhouse gases in the atmosphere, or on green technology to improve efficiency, etc. I suppose this means it could go to help the global South as well, but I've never heard of such a plan specifically.

Steve
24th May 10, 02:16 AM
As long as the first world countries continue to avoid diligently bringing everyone else up to speed it is a wasted effort. It's just a "when no body is looking, you pollute there, and I'll pollute here" scheme.

Kiko
25th May 10, 11:13 AM
Perhaps this belongs in a more serious folder than CTC?


Done!

EuropIan
25th May 10, 11:21 AM
DO IT!!

Ajamil
25th May 10, 04:25 PM
Cap and Trade and other various "stop global warming" economic projects are getting kind of silly to me. Like this one. (http://marketplace.publicradio.org/display/web/2010/05/19/am-greenville-residents-oppose-burying-co2/)


They laugh about it now, but when Greenville residents heard about a federally-funded "carbon sequestration" project...
"We were scared," says Frankie Gilmore, a local mailman.
Gilmore and many of his neighbors in rural Ohio had never heard of "carbon sequestration." But in 2008, scientists from Battelle, a major R&D lab, came to call. They wanted to demonstrate that you could capture and bury CO2 emissions miles beneath the earth. The government is looking to apply the technology widely to burning coal.
But local newspaper editor Christina Chalmers says townspeople were grumbling from the get-go.
"A lot of people did not even believe in global warming," says Chalmers. "So they just thought it was a bunch of garbage."
Battelle held several public meetings but townspeople were uncomfortable. It wasn't clear to them who was responsible if anything went wrong. There was a slight chance the CO2 injections could cause earthquakes. And what if the CO2 somehow leaked into the water supply? Battelle assured them quakes and leakage were an extremely low risk. But by 2009 a couple of Internet-savvy grandmothers had started Citizens Against CO2 Sequestration.
Co-founder Jan Teaford wrote their blog.
"This is our home. We live here. Those people don't live here. They're never going to live here," says Teaford. "And we felt we had a right to protect it and we should have a say in what goes on here."
The group wrote letters to the editor, knocked on doors. They even held a prayer rally. And hundreds of lawn signs reading "No CO2 Waste in Darke County" peppered the town. On August 19th, Battelle scrapped the project, citing "business considerations."


Maybe I'm not fully understanding "CO2 waste," but don't we inject CO2 into our soft drinks to make them fizzy? Why are people freaked out by CO2 so much that they fear it being under their feet? I heard of this and thought, "How nice - a silly project to bring jobs and notoriety into a small town." They're treating it like someone's trying to build a prison for radioactive zombies.

EuropIan
25th May 10, 04:28 PM
Stop it! Volcano! Stop it!

stop it or we tax the shit out of you!

Cullion
25th May 10, 04:41 PM
It's about Manbearpig. This creepy, money-grubbing democratic Manbearpig (and many like him, around the world) here:-

esoFaupuMMg

Look, if you were a smart, but kind of lazy and ammoral, politically connected ivy league graduate, which would you rather do:-

i) Make your living via the risky, dirty, accountable results-oriented heavy-industry of getting fossil fuels out of the ground where fuckups like we're seeing BP make in the gulf cost you billions of dollars.

ii) Find a numbers guy from an investment bank and use your political contacts and name as a reasonably in demand public speaker to travel around the country on expenses to drum up support for laws which meant you and your partner got a cut of whatever those dimwitted 'do stuff and make things' people were doing with all that delicious, delicious oil.

Oh yes, I'm that cynical.

Cullion
25th May 10, 04:51 PM
P.S. I'm sorta into this soft-spoken blonde milf here:-

WbLK4RZDdzI

SFGOON
25th May 10, 08:09 PM
The way it was explained to me by Wolfram Latsch is that the government issues a finite amount of carbon licences. For this, they get money.

These licenses are transferrable. Meaning, companies who buy them can later sell them at any price they so want.

So, if a business buys X amount and goes green and doesn't use them, they can then sell them at inflated prices to the Republican down the street who's business model is pollution-heavy.

Basically, it's applying a market strategy to carbon emissions. Theroretically, it sounds reasonable. But there's something fucked-up about it. Something I can't put my finger on. Maybe the false scarcity? Maybe the republican down the street would rather lobby congress to issue more licences than buy them from the hippy?

I don't know. Something's off and I don't know what.

elipson
25th May 10, 08:40 PM
I finished my undergrad degree with a 40 page paper on this. There are a few different ways of making this scheme happen.

Europe has had a C&T system for a few years, Canada just brought ours into effect January 1st, and the US has had a C&T system for SO2 emissions for many years (and its been very successful).

I'll try to break it down and keep it simple.

First a baseline has to be established. This is usually an emission level for a given industry/source for a decided year (1990 is used a lot. Canada used 2006 emissions). This baseline is measured by either intensity (emissions/output) or total emissions. Both measurements have different quirks about them, and which one you like is really a matter of opinion/circumstances.

The way Canada issues permits is to take the 2006 levels, reduce that number by 18% in 2010, and then you have your baseline for the beginning year. Emissions for that baseline are taken as granted. If you reduce your emissions below that given number, you can sell those extra emissions to companies who emit more than the legal maximum. In this way the government doesn't actually collect any money. Transactions are between companies. Governments are simply responsible for setting the reduction levels for each year and the companies take care of compliance for themselves.

The other way of doing it, like the way the EU does it, is to auction them off in the beginning. The government collects a lot of money in this case. (you can also auction off a percentage of the permits, if you dont want to auction 100% of them, which may be too costly for business). Again, both methods have consequences which should be considered uniquely for each situation.

So why is this an effective method of reducing emissions?

Lets say a company can reduce its emissions very cheaply, but only has to reduce them by 1-ton to be in compliance with the law. Another company has to reduce emissions by 10-tons to be in compliance, but has a very high cost of doing so. In this case, the first company can reduce extra emissions and sell them to the second, for a price that is less than reducing the emissions of the second company. In this way, the second company meets compliance much more cost effectively, and the first company is able to profit from their reduction in emissions. This allows the first company to fund emission reductions which it otherwise may not have been able to afford.

Basically when you repeat this process over a whole economy, then the whole system finds the cheapest ways of reducing emissions. Companies which would need to spend huge amounts of money to reduce emissions are able to upgrade slowly over time, instead of forcing giant expenditures all at once, while companies which can make cheap reductions are able to justify and fund further reductions which may not be necessary to simply meet legal standards. This system makes it profitable to go beyond legislated emissions reductions.

Phrost
25th May 10, 09:35 PM
China.

Cullion
26th May 10, 04:48 AM
The way it was explained to me by Wolfram Latsch is that the government issues a finite amount of carbon licences. For this, they get money.

These licenses are transferrable. Meaning, companies who buy them can later sell them at any price they so want.

So, if a business buys X amount and goes green and doesn't use them, they can then sell them at inflated prices to the Republican down the street who's business model is pollution-heavy.

Basically, it's applying a market strategy to carbon emissions. Theroretically, it sounds reasonable. But there's something fucked-up about it. Something I can't put my finger on. Maybe the false scarcity? Maybe the republican down the street would rather lobby congress to issue more licences than buy them from the hippy?

I don't know. Something's off and I don't know what.

It's a false scarcity due to their being no falsifiable hypothesis (which hasn't already being falsified) demonstrating that allowing these companies to carry on producing carbon would harm us. It's just a tradable tax on useful work.

You're talking about imposing hugely burdensome licensing scheme not dissimilar to the guilt indulgences of the mediaeval catholic church on your economy in order to avert, well, avert what exactly ?

Meanwhile, Wall Street has another source of income.

EvilSteve
26th May 10, 09:29 AM
Next up on the NYSE- climate derivatives! I'm shorting the May 70 degree puts on India.

Spade: The Real Snake
26th May 10, 11:48 AM
Then what, does the government get the money, if so how do they spend it?
Now you just don't need to be asking them sorts of question now.

elipson
26th May 10, 03:54 PM
Cullion the question wasn't about climate change. The OP wanted to know the specifics of a cap and trade system. The justification for the system is another question entirely, and one that already has a million threads dedicated to it.

"How do reduce carbon emissions" is an entirely different line of argument from "should we reduce carbon emissions".

Please stay on topic.

Phrost
26th May 10, 04:31 PM
And then there's China, who gives less than a timeshare tittyfuck about emissions limits.

SFGOON
26th May 10, 05:24 PM
Meanwhile, Wall Street has another source of income.

Oh yeah. If this goes through you can bet your sweet ass I'm going to do everything I can to get my greasy dickbeaters on them. I'll also participate in lobbying congress to keep emissions low.

It'll fuck a lot of people out of a lot of jobs. They'll then be willing to fix my car, bring me a salad, mow my lawn, and let me punch them in the face for way less than they do now.

The environment won't be any cleaner.

What I wonder is why there's no effort to use synthetic photosynthesis to produce ethanol from CO2. You want two big birds with one easy stone, that's it right there.

Spade: The Real Snake
26th May 10, 05:43 PM
Oh yeah. If this goes through you can bet your sweet ass I'm going to do everything I can to get my greasy dickbeaters on them. I'll also participate in lobbying congress to keep emissions low.

It'll fuck a lot of people out of a lot of jobs. They'll then be willing to fix my car, bring me a salad, mow my lawn, and let me punch them in the face for way less than they do now.

The environment won't be any cleaner.

What I wonder is why there's no effort to use synthetic photosynthesis to produce ethanol from CO2. You want two big birds with one easy stone, that's it right there.
Nah.
They will all go work in the polluting factories that have been retrofitted to manufacture solar cells and wind turbines

Cullion
26th May 10, 06:12 PM
Cullion the question wasn't about climate change. The OP wanted to know the specifics of a cap and trade system. The justification for the system is another question entirely, and one that already has a million threads dedicated to it.

"How do reduce carbon emissions" is an entirely different line of argument from "should we reduce carbon emissions".

Please stay on topic.

Please try and keep up with the thread. I was responding to this specific point:-


Basically, it's applying a market strategy to carbon emissions. Theroretically, it sounds reasonable. But there's something fucked-up about it. Something I can't put my finger on. Maybe the false scarcity?

The reason the scarcity seems false is that there's absolutely no measurable or otherwise scientific way of deciding how much CO2 should be licenced in the first place.

You can't really seperate the two. You might as well start issuing Wall St. tradable breathing permits.

kick
26th May 10, 08:41 PM
Theroretically, it sounds reasonable. But there's something fucked-up about it.

I don't know. Something's off and I don't know what.

Thanks for the explanations, so in short:(tell me if I am wrong)

Government sets baseline for co2 production, sells licenses for companies who produce co2 then if someone wants to produce co2 more than others they buy the licenses, this then caps CO2 emmissions at a certain annual level.

'IF' the whole world capped CO2 emmissions would this in 'theory' stop global warming? or do we have to go negative in carbon emmisions to reduce the effect? Wont a cap just slow global warming as opposed to stopping or reversing it?

quote above is what i am feeling, something just doesnt quite add up.

Why for instance should the government make money out of it, why not just set cap, then trade go on, like taxi licenses, I dont like the new pool of money for governments to spend 'wisely' aspect of it.

Conde Koma
27th May 10, 12:31 AM
Theoretically, if the whole world did it and stuck to it, we would only halt the rate at which CO2 was produced. We don't know if the rate being produced is equal or greater than the rate at which it is sequestered by natural processes, so this would not stop global climate change.

elipson
27th May 10, 02:30 AM
Why for instance should the government make money out of it, why not just set cap, then trade go on, like taxi licenses, I dont like the new pool of money for governments to spend 'wisely' aspect of it.

Like I said, there is more than one way to do it. I'm more in favour of a revenue neutral approach like Canada is doing.

If the whole world were able to halt emissions growth, that in itself would be a huge accomplishment, nevermind actually reducing total emissions. If countries are serious about reducing CO2 emissions, first they must slow their CO2 growth, then halt it, then start to decline in emissions. Most countries are having trouble simply slowing their expanding emissions. One step at a time.

There is also the question of intensity vs absolute emission reductions. Setting limits on emission intenisty doesn't actually make a hard limit on them, it just requires a certain level of efficiency for producing them, such as 1 ton of CO2 per unit of output instead of 5 tons per output. Intensity systems allow economies to continue growing, so it is better for developing countries like China. The debate between the two choices is actually really interesting, as it presents itself as a game of choice, ala a Prisoners Dilemna. If an economy is doing really well, an intensity program is best so that you can continue growing. But if the economy tanks, then an absolute cap is best because an economy in recession is going to produce less emissions regardless of environmental standards, allowing emitters to meet its reduction requirements by simply producing less, instead of upgrading any of their equipment or becoming more efficient.

Knowing how much reduction is required to stop climate change (assuming it's happening) is complicated to say the least. The balls-to-the-walls environmentalists want such massive reductions in emissions that it would likely force us back to the friggen stone age. One paper I read said a 200$/ton-CO2 price would be needed to stop climate change (compare this to the 10-15$/ton used by the Canadian system)

Arhetton
27th May 10, 03:50 AM
What I wonder is why there's no effort to use synthetic photosynthesis to produce ethanol from CO2. You want two big birds with one easy stone, that's it right there.

You might want to invest in Celera.


And then there's China, who gives less than a timeshare tittyfuck about emissions limits.

Hmmm thats partially true, but Its only approximately true. There is a bigger thing going on here, and its not global warming, its about access to energy in general and the next big thing.

As a brief note on climate change:

Climate change does not favor China and India, it will make their continent drier, whilst on the other hand, North America will become more temperate (this is already happening). It may be in the interests of those countries to eventually reverse their stance on C02 emissions. Recently it was obvious how the Chinese government deliberately hamstrung negotiations about C02 emissions. Probably fairly, too, considering they will be the ones to suffer and the fact countries like Australia introduced clearly falsifiable methods to trade C02 (such as declaring areas of forest that have been planted - lol).

However in the short term, what is more pertinent is that the USA is acquiring and controlling access to future energy reserves and threatening the countries China relies on for their own energy growth needs (Iran). Perhaps this is part of a strategic attempt to slow the growth of China by limiting its access to energy reserves, or to preserve US standards of energy consumption. It doesn't bother me either way.

Which brings me to my main point - renewable energy is going to be one of the largest and most profitable area of industry in the next 50 years (and going forward beyond that). Far from less energy and lower standards of living, I think we will see energy surpluses, energy trading at a much larger volume than it is today, huge industries spring up and become dominant players - and the countries which nurse and invest in these companies are going to make a lot of money.

I see the ETS as an attempt to stimulate the renewable energy sector of the USA, which has the higher level design and manufacturing to build the energy grids of the future. Similarly to the way there is an IT industry and the petrochemical industry, there will be a renewable energy industry just as large (Billions of dollars of revenue, profits, hundreds of thousand of employees, many large competing companies and products).

If the USA doesn't create these companies, other nations (European or Asian) will.

Its going to happen organically anyway, but it will probably shift gears a bit faster with an ETS.

Cullion
27th May 10, 04:13 AM
Climate change does not favor China and India, it will make their continent drier

That's a very silly thing to assert. Nobody knows what local effects even the mooted (and highly unlikely) temperature changes asserted by the IPCC would have.

Arhetton
27th May 10, 04:32 AM
It's been happening for 30 years.

http://tinyurl.com/3a685yn

Cullion
27th May 10, 05:45 AM
I think you have a lot of back-material to catch up with before we engage in this. Shall we keep it to the skepticism thread ?

Arhetton
27th May 10, 06:09 AM
I won't let you derail my main argument about renewables. so go fuck yourself. not every thread is about your climate skepticism.

Cullion
27th May 10, 06:20 AM
If that's the way you want it, you passive aggressive little shit.

Only an idiot would assume that desertification in china is proof of AGW, and even AGW proponents with real credentials admit that.

I'll be blunter: You are clearly not well-informed enough to have an interesting debate with on this subject.