Download - GREENHOUSE GAS 101
GREENHOUSE GAS 101
Policy Matters Ohio
All materials taken from Dr. Hummel’s Climate Policy Design website
Figure: www.myclimatechange.net
Explaining the Greenhouse Effect
Warming is unequivocal:clear and unambiguous.
Source: IPCC, AR4, WG1, Chap 6, Fig. 10
Scripps Institution of OceanographyNOAA Earth System Research LaboratoryScripps Institution of OceanographyNOAA Earth System Research Laboratory
Rise in CO2 Concentration is Accelerating.
One fifth of our CO2 emissions today will remain in the air in 3009
Atmos. Chem. Phys. 7, 2287-2312, 2007
IPCC TAR SYN SPM Fig 5-2
Stabilization of CO2 concentration, temperature, and sea level takes centuries after emissions are reduced
Rongbuk glacier in 1968 (top) and 2007. The largest glacier on Mount Everest’s northern slopes feeds Rongbuk River.
Slide from Dr. James Hansen’s Congressional briefing June 23, 2008.
Water supply in Himalayan watersheds is a major humanitarian concern.
Western Climate Initiative (WCI)
Regional Greenhouse Gas Initiative(RGGI, “Reggie”)
EU Emissions Trading System(EU ETS)
Cap-and-Trade Systems Under Development
Participant
Observer
Cap-and-Trade Climate Policy• “Cap-and-trade” means a government authority establishes a cap that
limits the total amount of pollution allowed, and then distributes allowances for “permission to pollute” the global
atmosphere, which can be traded as private property.
• The amount of greenhouse gas emissions permitted declines each year, creating demand for a new commodity: carbon permits.
• When offered enough money (or faced with high enough costs), polluters who own permits (or need permits) will reduce their emissions.
• These trades establish a market price for greenhouse gas pollution.
A familiar game can help illustrate the concepts…
Got it?
Musical Chairs A Helpful Analogy for Managed Scarcity
Each chair represents the “permission to pollute”: one metric ton of carbon dioxide (1 mtCO2) or an equivalent amount of any other greenhouse gas
If you have an “allowance”, you can have a chair.
Players: Polluters at Points of Regulation
Oil Refineries Natural Gas
companies
Chemicalcompanies
Aluminumsmelters
PowerPlants
Cap-and-TradeDeclining Cap
Covered Entities
Polluters Compete for Scarce Permits
Carbon Price Established by Market Activity
So, is it more profitable to: buy a permit, OR reduce my own emissions?
Profit opportunities are a main driver for innovation and investment, and the climate challenge needs both.
Carbon Price Established by Market Activity
Would anyone accept $40 for your permit?
$40
Carbon Costs Passed to Consumers
$40$40 $40 $40 $40
35¢per gallon
2.5 ¢per kWh
0.6 ¢per therm People
Respond…?
Sending a price signal is the point of the policy!
Moving to Clean Energy
Players seek better options as costs rise.
Cap-and-trade lets players choose at what price they leave the game– and how they want to make that change.
$30$150$20
$100
$200$50
2050204020302020
Wind power
Rail Transport
Green buildings
Nuclear power
2010
Solar power
Hybrid vehicle
h
PriceOn Carbon
$20
50 MtCO2
$50
Quantityof PermittedEmissions
100 MtCO2
Demand
Quantityof PermittedEmissions
PriceOn Carbon
$20
50 MtCO2
$50
100 MtCO2
Supply
Quantityof PermittedEmissions
PriceOn Carbon
Q
P
SupplyDemand
Carbon Cap vs. Carbon Tax
Quantityof PermittedEmissions
PriceOn Carbon
Q
P
CapDemand
Carbon Cap vs. Carbon Tax
Quantityof PermittedEmissions
PriceOn Carbon
Q
P Tax
Demand
Carbon Cap vs. Carbon Tax
Carbon Cap vs. Carbon Tax
PriceOn Carbon
Q
P
CarbonCap
Demand
Quantityof Emissions
Q
P
Demand
CarbonTax
Should we set the price and let markets determinethe quantity of pollution?
Should we set the quantity and let markets determinethe price for a scarce resource?
JOBS:
1)New Green Jobs 2)LEAKAGE
Climate Policy Design
• All credits to Dr. Holmes Hummel of the University of California
• Google ‘Climate Policy Design for complete curriculum
• These slides were taken from her site, which is available for your use as well – a great resource of explaining climate policy to your colleagues and members.