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Today Financial means to slow warming

Today Financial means to slow warming. How do you monetize CO 2 and its effects? Who can charge fees? US? EU? Carbon cap and trade Taxes on CO 2 Incentives to do otherwise All power point images are only for the exclusive use of Phys3070/Envs3070 Spring term 2014.

norman-knowles
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Today Financial means to slow warming

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  1. TodayFinancial means to slow warming How do you monetize CO2 and its effects? Who can charge fees? US? EU? Carbon cap and trade Taxes on CO2 Incentives to do otherwise All power point images are only for the exclusive use of Phys3070/Envs3070 Spring term 2014

  2. SCC = Social Cost of Carbon

  3. SCC=Social cost of carbon

  4. SCC

  5. Per metric tonne of CO2  Probability that the investment will pay off

  6. Conundrum--- It is global and national prosperity that will enable the investments at cheap rates to improve the future, but that current prosperity is based upon consuming fossil fuels, which increase the problem we want to solve!

  7. US regulations • 2007- US Supreme Court ruled that CO2 is a pollutant, and thus subject to the Clean Air Act • Dec. 2009- EPA ruled that six GHG constitute a threat to public health and welfare, and thus are subject to EPA regulations • Sept. 2013- first steps for power plants were presented

  8. Cap and trade, as for SO2 Gov’t. sets a number for each major CO2 emitter, tons of CO2 per year. Based upon emissions in some standard year. Perhaps lower/higher depending upon age of plant, type of fuel. In practice, only electrical ,cement, steel etc. plants. Q? How do you know that number for each plant?

  9. EPA rules New fossil fuel power plants will be limited to emission of 1000-1100 pounds of CO2 for MW-hr of energy sold. I promise a final exam question on this!

  10. Sulfur cap and trade Clean Air Act

  11. Then, for CO2 • Issue a permit to emit that amount, or a bit more or less, each year. • Give away or charge for that license. • Decrease that CO2 level each year, and raise the price per ton each year. Q? Will Congress chicken out? • Those permits are ‘financial instruments’ • Monitor and fine violators

  12. Does NOT • Say how to do it change fuel, coalgas Replace by wind, solar Increase plant efficiency Encourage customer efficiency Replace old plants • Set your CO2, since you can buy permits

  13. Other options- • Purchase ‘carbon offsets’, perhaps around the globe. Pay a land owner in Brazil not to cut the trees. Pay a nation in Africa to plant trees. Pay Germany to install solar……

  14. Waxman-Markey HR2454 • American Clean Energy and Security Act • Passed 219/212 June 2009 • 946 pages !

  15. Renewable Energy Standard • 6% of electricity from renewable sources by 2012 • 20% by 2020

  16. CO2 emissions • Cut CO2 by 3% by 2012 • 17% by 2020 • 42% by 2030 • More than 80% by 2050

  17. Carbon credits, pollution allowances…. • Year One—85% free, 15% by auction • More auctioned by gov’t each year • Cost $11-15 per ton of CO2 • Value in 2012 ~$60 billion

  18. Anticipated result • CO2 at 97% of 2005 levels by 2012 • 83% by 2020 • 58% by 2030 • 17% by 2050

  19. EU Cap and Trade 1 January 2005

  20. and/or a carbon tax To include transportation, home heating, etc At $40/ton of CO2, how much additional federal gasoline tax per gallon? Now 18.4 cents/gal.

  21. C10H22+15.5 O210 CO2+11H20 Relative weights- gasoline 10x12+22x1=142 -CO2 10x12 + 10x2x16=440 So 142 tons of gasoline make 440 tons of CO2 x tons of gasoline make 1 ton of CO2 x=142/440=0.323 $40/ton of CO2$40/0.323 =$124/ton gasoline=$0.0620/pound 1 gallon of gasoline weighs 6.156 pounds, so Tax = $0.0620/pound x 6.156 pounds=$0.38/gal

  22. Result? A federal tax of $40/ton of CO2 will cost drivers 38 cents a gallon. Should we do this?

  23. model question 3. (6) If Congress decides to tax CO2 at $40 per ton, how much per ton is that for burning carbon? Per ton of coal, if it is half carbon? Per ton of natural gas (CH4)? (per ton of 235U)

  24. 1. If the EPA issues cap and trade permits or adds a carbon tax, spewers of CO2 will have to pay $40/ ton (English short ton=2000 pounds) of CO2. (5) How much is this in terms of dollars per ton of carbon in the CO2? This is just another way to make the statement. (10) If our local Valmont plant got all of its power of 312 MWe from burning coal at 30% efficiency, how many tons of coal are burned each hour? (5) If that coal is 70% carbon, how many tons of CO2 would be emitted each hour? (5) What would the EPA charge for emitting that much CO2? (5) Final part—How much would you the customer have to pay per kW-hr for that CO2 from coal?

  25. (10) Why would it be cheaper for you if gas, not coal, were burned? Y • ou need not be quantitative. • (10) US electricity generation from coal now emits 2600 million tons of CO2 • per year. How much would the EPA collect each year from that $40/ton? • Now—suggest something useful and relevant to climate change for that money. • (10) What problem has the Montreal Convention fixed? • This happened easily and quickly. Why?

  26. (5) Why would it be cheaper for you if gas, not coal, were burned? • You need not be quantitative. • (10) US electricity generation from coal now emits 2600 million tons of CO2 per year. How much would the EPA collect each year from that $40/ton? Now—suggest something useful and relevant to climate change for that money. • (10) What problem has the Montreal Convention fixed? This happened easily • and quickly. Why?

  27. this week Wednesday Making estimates about energy Friday International agreements

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